Five ways NOT to restructure

Five ways not to restructure

These are interesting times, so as not say straight away that these are hard times. When most organizations struggle with coping with the current challenges, restructuring is one of the first ideas that comes to the managing team as a solution. In fact, it is not always so. If we start from the assumption that you need a cost reduction of 20%, 30% or even more, that can be achieved through a series of concerted measures which can bring about this cut without eliminating jobs.

Reducing work time solutions such as technical unemployment or reduction of the working time from full time to part time will bring about a pro rata cost cut of the salary cost of 25% for the first solution or up until 50% for the second solution.

Applying unpaid leave by rotation will also create the same saving effect. Also, by involving the whole team and making this a wholly applied measure, it can enforce the message that the entire team is in the same boat and thus actively contributing to saving their jobs.

Another idea is to renegotiate all standing contracts with suppliers and achieve better offer packages, longer payment deadlines or defer the agreed projects altogether. From many sit downs with providers of recruitment, training, assessment, development solutions, I gather they were and are very open to such negotiations and fully understand the value of continuing to work with clients in these times.

Maximizing the use of benefits with a special fiscal treatment may not seem as a big saving per se, but depending on the size of the company it can produce a cost cut ranging from 2% to 5% : allowances for transportation to and from work, private pension contribution until 400 euros per year are completely deductible and also special events tickets, not exceeding 600 lei per year for Easter, Christmas, March 8^th and June 1^st.

And last but not least, a closely calculated scenario will show that reorienting business and redirecting a team working in a non-profitable effort towards another business line, new and adapted to the new normal will balance the training costs with the cost of actual restructuring. It may be more complicated but smarter in the long run to change tack and attack another potential business opportunity instead of simply shutting down one which is underperforming.

When applied together, these solutions will bring forth a significant reduction of overall staff costs, thus rendering restructuring no longer necessary.

As we are not only managers but first and foremost humans, let us make it a priority to always seek out ways to protect people and jobs and let us remember that the right way is often the hard one.