3 reasons why responsible restructuring is an HR priority

Mass layoffs aren’t the answer to market uncertainty. Here’s what to do instead:

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By Nicole Schreiber-Shearer, Future of Work Specialist at Gloat

Most HR leaders know they’re in a talent landscape unlike any other—one that’s filled with priorities that seem contradictory on the surface, but tell the deeper story of a tumultuous labor market. As market volatility continues, 57% of companies are considering headcount reductions in an effort to cut costs; at the same time, widening skills shortages have the potential to sabotage future earnings, with Boston Consulting Group predicting that failing to meet new skills demand could cost as much as $15 trillion in lost GDP.

While some executives might be questioning how this paradoxical scenario is even possible, no business has time to sit back and wonder. Every organization must take action to overcome human capital management’s latest Catch-22 before it starts wreaking havoc on budgets and talent pools. Fortunately, there’s one solution with the potential to solve this skills and resources challenge: responsible restructuring.

What is responsible restructuring?

Responsible restructuring describes the process of shifting talent to address emerging business priorities. It’s an alternative to layoffs, rooted in the belief that employees’ capabilities can be put to use across other areas of the organization to ensure the company meets its business objectives.

To launch a responsible restructuring strategy, companies must identify transferable skills and roles and trust that their people will be able to learn and bridge the knowledge gaps they have through on-the-job learning. Organizations that use this approach can avoid cutting headcount and then ultimately hiring new employees to eventually bring emerging skill sets into the business.

What are the benefits of responsible restructuring?

Some of the benefits associated with responsible restructuring include:

Better morale

Layoffs can have a disastrous effect on employee motivation and morale levels. Responsible restructuring largely avoids a similar dip in enthusiasm because employees aren’t losing their jobs or having to pick up additional responsibilities for recently laid-off colleagues.

Improved cost savings

Ultimately, responsible restructuring can help companies reduce their hiring and recruitment costs. In addition to avoiding paying severance packages to laid-off employees, businesses will not need to invest as much into eventually hiring new talent, since they will be able to tap into their existing workforce.

Increased efficiency

Upskilling and reskilling employees to fill high-priority positions is a more streamlined process than bringing someone up to speed who is new to your organization. According to Deloitte, It takes two years for an external hire to gain the same level of insight into an organization that an internal hire has. Participating in on-the-job learning is a particularly effective way to quickly build skills, as employees will develop the competencies they need while completing critical tasks.

Why is responsible restructuring so important right now?

While responsible restructuring is always an efficient and cost-effective way to respond to shifting business priorities, it’s particularly critical in our current work environment. Now that priorities are constantly changing, every organization needs instant access to talent pools with the skills needed to take on emerging challenges. Companies that rely on mass layoffs to keep overhead costs down will struggle to find the skills and talent they need to execute business priorities.

Rather than focusing solely on the immediate need to cut costs, HR and business leaders must see the bigger picture and recognize that mass layoffs may lead to bigger problems down the line. When employees are laid off, businesses usually don’t have visibility into the skills and experiences these workers have. That means that in addition to sunk costs like recruiting and training, the company is also cutting off the use of skills workers have that they might not have even known about.

Responsible restructuring is a way to sidestep the cascading negative impacts associated with mass layoffs. It also helps encourage employees and leaders to engage in upskilling and reskilling initiatives, which will continue to prove valuable long after market turbulence subsides.

How to manage responsible restructuring

While responsible restructuring has many benefits, it also comes with a few challenges that managers will need to overcome. Leaders must build organic interest and encourage employees to embrace opportunities to expand their expertise so they can shift into new roles. Some companies are harnessing AI-driven platforms like talent marketplaces to surface talent for the most critical roles.

Leaders also need an in-depth view of their workforce’s skills to ensure they’re being reallocated in a way that plays to everyone’s strengths and addresses business priorities. Workforce intelligence tools help executives identify the critical roles and knowledge gaps they need to fill and pinpoint employees with transferable skills that can be leveraged to step into these opportunities.

3 best practices from Unilever’s responsible restructuring strategy

While responsible restructuring is a relatively new strategy, there are a few trailblazing organizations that are already harnessing it to ensure their workforces are future-fit—and Unilever is one of them. During COVID-19’s onset, the leading consumer goods enterprise launched an internal initiative known as “Raise a hand, lend a hand.”

As their former Executive Vice President of HR Jeroen Wels explains, “The campaign was designed to benefit our employees and our team leads. Managers could raise their hands when they needed help and people with capacity could step in and jump on that.” Within two months, the initiative helped Unilever staff more than 700 business-critical projects and unlock more than 26,000 hours.

There are a few best practices for responsible restructuring that leaders can learn from Unilever’s success including:

#1. Embrace a skills-based approach

Skills are the backbone of responsible restructuring. To reallocate talent into high-priority areas of the business effectively, leaders need full visibility into the capabilities their workforce has and how they might be transferable. Many organizations are harnessing workforce intelligence tools to gain insight into the skills employees have, the knowledge gaps that are holding their company back, and the adjacent positions people can be upskilled or reskilled to fill.

#2. Harness a talent marketplace to reallocate employees

Right before COVID-19’s onset, Unilever launched a platform that would prove crucial to their agile response: a talent marketplace. By aligning employees with in-demand skills to open opportunities, the platform took the guesswork out of redeployments and helped leaders identify opportunities to harness employees’ skills across other areas of the business.

#3. Break down silos and barriers

No organization can fully harness all the skills its workforce has while working in silos. As part of Unilever’s responsible restructuring initiative, employees began working with peers across the globe to complete the highest-priority projects efficiently. More than 60% of Unilever’s project assignments were staffed cross country, which Wels acknowledges “…could never have happened in a non-digital life because you would’ve been stuck in your team. Now if you’re in the US, you can help out in Canada, in Germany, and in the UK.”

To learn more about how you can upgrade your initiatives to prepare for the next chapter of work, check out tips from Al Gore, Josh Bersin, and Arianna Huffington by reading 3 visionaries, 1 strategy.

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