Corporate Restructuring is Hard – Transparency and Authenticity are Required

August 5, 2009
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“I’m really struggling with these changes” the woman told me at a recent change management training course I was delivering. Tears in her eyes, she shares,

“I just hung up the phone with my husband and I’m angry and sad – not mad at my husband, mad at my company.”

I ask the woman, “Why are you upset with your company?” She says,

“I’ve been with the company for 15 years. Less than 3 months ago, a corporate decision was made to lay off 25% of the work force due to the tough economic conditions and declining business levels.”

She went on to explain that employees were assured that the ‘restructuring’ was not a numbers game, meaning simply reducing headcount and expenses. Streamlining costs, mitigating negative cash flow, consolidating at major sites, and improving investment rating were a few of the reasons cited for the restructuring.  Communications included references to the worst downturn in more than 70 years and connections to our customers and competitors who were also restructuring – “so we’re not unique.”  

“Honestly, when I was selected as one of the 25% of employees to be laid off, I wasn’t upset. I understand making

“I’m really struggling with these changes” the woman told me at a recent change management training course I was delivering. Tears in her eyes, she shares,

“I just hung up the phone with my husband and I’m angry and sad – not mad at my husband, mad at my company.”

I ask the woman, “Why are you upset with your company?” She says,

“I’ve been with the company for 15 years. Less than 3 months ago, a corporate decision was made to lay off 25% of the work force due to the tough economic conditions and declining business levels.”

She went on to explain that employees were assured that the ‘restructuring’ was not a numbers game, meaning simply reducing headcount and expenses. Streamlining costs, mitigating negative cash flow, consolidating at major sites, and improving investment rating were a few of the reasons cited for the restructuring.  Communications included references to the worst downturn in more than 70 years and connections to our customers and competitors who were also restructuring – “so we’re not unique.”  

“Honestly, when I was selected as one of the 25% of employees to be laid off, I wasn’t upset. I understand making tough business decisions.”

In addition, she explained that she had received stellar reviews during her time with this company and was thankful for all the opportunities, the people she met, the relationships she established. I commented, “You seem peaceful with the business decision. What upset you so?” She explained,

“I found out today, not even three months from the announcement about the layoffs, that the company I am still working for through the end of the quarter, bought another company – a globally dispersed company!” 

She expressed that she had a hard time believing that her company did not know of this acquisition when the layoffs were announced less than 3 months ago. Tears in her eyes, she says,

“I would rather have been told, ‘We’re cutting off parts of our businesses to free up cash to expand into other markets.’ Instead, I was told that I was chosen because they were consolidating sites. Geographical diversity was suddenly perceived as the cause of ‘increased complexity which resulted in lower efficiency.’”

The acquired company evidently has 13 manufacturing plants worldwide in 13 different locations and 3600 people. Ouch!!! I can see why she was struggling with the announcement about the acquisition.  Tears in her eyes, she candidly shares “I said to my husband…

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When I think about how this relates to change management it has everything to do with transparency and authenticity – I believe people want to know the truth. I know I do. The woman that shared her story with me did as well. I think most folks, especially in these tough economic conditions, actually understand the tough business decisions that need to be made – even with restructuring. Where it gets ugly is how the change is implemented. This woman felt like she had been mislead, she was angry, she was sad. She went from understanding the tough business decision her company had to make to losing respect for how the restructuring was communicated.