Corporate restructuring, particularly when workforce reductions are involved, is a highly sensitive and complex process. Whether driven by financial necessity or operational demands, the challenge lies not only in ensuring legal compliance but also in communicating changes to employees and stakeholders with clarity and empathy. This delicate balance is essential to safeguard a company’s reputation, maintain stakeholders trust and ensure a smooth transition.
What are some of the key things to consider when navigating corporate restructurings? From legal aspects, communication strategies and the importance of collaboration, keeping these factors top of mind from the beginning will help with managing this change.
Legal Considerations and Compliance with Local Regulations
Each European market comes with its own legal framework when it comes to workforce reductions, though there are overarching principles that apply across jurisdictions. A critical point is understanding the threshold for when collective dismissal rules are triggered, which then requires prior information and consultation with employees or their representatives.
Although the rules vary from country to country, the European Directive 98/59 provides a general framework to ensure compliance, with the requirement for meaningful consultation and the collective examination of alternatives being a core principle. Whilst some countries, including France, may take a more confrontational approach and utilise unions to a greater degree, others may take a more consultative approach, such as the Netherlands. In these situations, it is crucial to be familiar with the local regulations, as failing to comply with the legal process can lead to lawsuits or reputational damage.
The Role of Communication: Clear, Transparent and Empathetic
Effective communication is perhaps the most critical element in managing restructuring processes. In an emotionally charged situation, there will be lots of questions from different stakeholders – why is this happening? How will this affect long-term growth? Is there a plan to support impacted employees? Communication pitfalls, such as misinformation or lack of clarity, can significantly damage a company’s reputation and erode trust among employees and other stakeholders, including investors, customers and suppliers. The key to navigating this challenge is clear and consistent messaging at every stage of the restructuring process, with communications experts collaborating throughout with legal teams.
An Integrated Approach
To navigate this change with confidence, it’s essential to follow legal requirements, anticipate potential risks, proactively mitigate disruptions, keep key stakeholders informed and engaged while safeguarding your business and reputation. This can be orchestrated through a four-stage integrated approach:
- Strategic planning: In this step, its important to establish the rationale behind the restructuring and define the overall approach. From a legal perspective, this includes ensuring compliance with country-specific labour laws, consultation obligations, and preparing regulatory filings. On the communication side, this is the stage to develop the narrative, anticipate stakeholder concerns and create a structured messaging framework. This phase is critical to balancing transparency with compliance while minimising potential legal risks.
- Consultation and communication preparation: Once the strategic direction is clear, the next is consultation and communication preparation. Legally, this is a structured dialogue phase with employee representatives, unions and regulatory bodies, ensuring due process is followed. From a communications perspective, its vital for priority spokespeople to refine key messages and ensure internal alignment to avoid inconsistent messaging. This stage is about building trust, mitigating legal risks, and preparing for a smooth announcement.
- Implementation: This is the stage where the actual restructuring announcements and legal procedures take place. Legal teams oversee the execution of formal notices, employee consultations and compliance with relevant legislation. Meanwhile, communication teams manage leadership messaging, employee engagement, external media responses and stakeholder outreach to ensure clarity and empathy throughout the process. This step is where alignment between legal and communication teams is most critical — misalignment can lead to confusion, misinformation and unnecessary disruption.
- Monitoring and rapid response: Throughout all these three phases, there is a parallel layer of monitoring and rapid response. Ideally, this should be just monitoring to ensure that communication is being received as intended. However, if unexpected issues arise — such as information leaks, public backlash or media scrutiny — crisis management measures need to be activated.
Success Factors
While not legally required, negotiating a social plan with the employee representatives is highly recommended in most restructuring situations. A social plan is an agreement between the employer and employees that lays out the terms of the restructuring, such as severance packages, retraining programs or support for employees who are made redundant.
Negotiating a social plan can help to minimise the risk of compliance issues and foster goodwill during a difficult time. By being transparent about the decisions being made and explaining how the company is supporting affected employees, companies can build trust and potentially avoid costly disputes.
From communications perspective, restructuring is not just about compliance and execution, it’s about guiding people through uncertainty. Based on our experience, strong leadership communication and enabling middle management are critical factors determine success.
Employees look to leadership for clarity, confidence and direction during uncertain times. Leaders must set the tone, explain the rationale and inspire trust in the company’s future.
Middle managers are the bridge between leadership and employees. They translate strategy into day-to-day impact and serve as the first point of contact for employee concerns. To be effective, managers need training on how to guide change and handle difficult conversations.
Final Thoughts
Successfully navigating a corporate restructuring is more than just a legal and operational process; it is about managing emotions, maintaining trust and protecting the company’s reputation. Clear communication, strong collaboration between legal and communication teams and careful strategic planning are all key to ensuring that restructuring efforts lead to a positive outcome for both the company and its employees. With the right approach, companies can emerge from a restructuring not only in compliance with the law but also stronger and more resilient for the future.
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Authors: Fatih Ayhan, Director (People and Transformation Practice), FTI Consulting, and Laurent De Surgeloose, Partner, DLA Piper.
The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.
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