What Is Workforce Restructuring?

From an HR, operational, and legal perspective, workforce restructuring is the structured adjustment of staffing patterns, job roles, and employment terms so the organisation fits today’s demands rather than yesterday’s plan. It can be proactive (anticipating an emerging market or technology) or reactive (responding to cost pressure or a merger). It does not always mean downsizing; redeployment, upskilling, and role redesign are often the better path. 

This guide addresses the topic from a global perspective, providing entrepreneurs and business leaders with practical advice on how to deal with operational changes.

Understanding Workforce Restructuring

Corporate governance and HR practices align people, roles, and costs with the operating model permitted by law and contracts. The objectives are practical: greater efficiency, tighter cost control, increased agility, and compliance when the corporate structure changes. It differs from simple layoffs because the horizon is broader: skills, locations, areas of control, and an operating rhythm appropriate for the future.

Proper restructuring becomes necessary in a variety of contexts. First and foremost during extraordinary operations such as mergers and acquisitions, but also during financial crises to rebalance liquidity and reduce inefficiencies. Finally, regulatory changes can also influence a reorganization.

Common Types of Workforce Restructuring

Among the most common types of workforce restructuring are:

• Redundancies and layoffs: Probably the most obvious but also the most widely used. Sometimes it is necessary to reduce personnel costs or eliminate redundancies and duplication after a merger.
• Reassignment of roles: In this case, responsibilities and salaries are changed to align staff with actual business needs.
• Redistribution: To avoid layoffs, organizations can redistribute employees to different operating locations or other roles.
• Voluntary termination programs: A very useful approach to improving corporate reputation. It allows those who wish to leave the company to do so on favorable terms (e.g., receiving severance pay, early retirement, etc.).
• Outsourcing and offshoring: Sometimes it is possible to outsource functions that are not considered vital to the company (HR, IT, accounting, customer service) to external professionals.

Legal and Regulatory Considerations

Some legal and regulatory aspects should also be considered during the restructuring process: 

• Labor law: Restructuring does not mean disregarding labor laws. In fact, during the dismissal phases, employees must be notified with the right notice. 
• Differences between jurisdictions: Not all jurisdictions have the same rules. For example, in the EU there is great protection for employee rights, while in the USA greater flexibility is guaranteed.
• Risk mitigation to avoid litigation due to unfair dismissal.
• Statutory obligations: Finally, the statute’s obligations must be taken into account. Many systems, in fact, require that committees and unions must be consulted before making dismissals. 

Planning a Workforce Restructure

When you evaluate a workplace reorganization, it is appropriate to start with a realistic analysis of the current structure. 

• Workforce assessment: Conduct a skills audit, identify any role overlaps, and quantify productivity and quality.
• Involvement of consultants: Whether they are financial, human resources, or a corporate restructuring consultant, their support is indispensable during planning.
• Setting objectives: Set objectives that are clear, measurable, and, above all, achievable.
• Developing risk mitigation plans: Organize severance packages and incentives or establish employee relocation plans to avoid risky disputes.
• Planning the timeline: Calculate as accurately as possible how long the restructuring will take to implement so that there are no surprises.

Communication Strategy During Restructuring

Communication strategies play an equally important role during restructuring. Communicating changes with empathy and transparency builds understanding and keeps morale high.

Outside the company, the situation is no different. Inform investors of changes, notify regulatory authorities of any issues, and engage openly with stakeholders to maintain a good reputation.

FAQs or information documents can be useful in preventing misinformation.

Implementing Workforce Restructuring

Once you understand what is workforce restructuring and communicate it internally and externally, it is time to implement it. This starts with a precise operational sequence that includes analyzing the jobs affected by the restructuring, consulting with unions and committees before making any changes, and finally, officially communicating the layoffs or repositioning.

As is only right, each phase must comply with labor law, not least to reduce the risk of disputes with disgruntled employees. In this context, a detailed business restructuring plan and the help of HR and legal advisors in preparing the documentation are important.

Finally, bear in mind that implementation is not a static process, but one that needs to be monitored and adapted as you go along based on feedback.

Supporting Employees During Transition

People absorb change at different speeds. Provide specific retraining or coaching that maintains valuable capabilities in the workforce. Provide access to mental-health support and financial-planning workshops if a severance path is involved. Equip managers for hard conversations—clear talking points, boundaries, and referral routes. Within groups that operate across borders, look first for redeployment within affiliates to preserve institutional knowledge.

Risks and Challenges in Workforce Restructuring

Restructuring your workforce therefore presents several risks and challenges to consider:

1. Legal disputes and reputational damage: Laying off staff is never easy. Such actions can damage your reputation if they are taken without considering your employment rights and, in some cases, lead to litigation.
2. Loss of talent and knowledge: During a reorganization, you may lose skilled staff.
3. Negative cultural impact: Restructuring inevitably generates uncertainty and a climate of mistrust. This will make employees feel less involved and weaken the corporate culture.
4. Redundancy and transition costs: Restructuring involves immediate costs (severance pay, legal advice, support programs), which can exceed the short-term economic benefits. Only a well-planned strategy can balance the costs of transition with future savings.

Long-Term Impact and Post-Restructuring Evaluation

Resets only work if they are measured. Monitor costs and productivity, but also quality and delivery.

Use analysis to compare planned and actual capacity by team, then examine backlogs and error rates. Within 6-12 months, conduct a governance review: decision-making rights, areas of control, and verification that the new organizational structure enables the desired results to be achieved. Close the loop with a post-mortem analysis: what worked, what didn’t, and how learning feeds into organizational development. Where gaps remain, modify the organizational design rather than letting old habits creep back in. Understanding what is a turnaround strategy helps ensure these adjustments are not just reactive but part of a sustainable recovery plan.

Global Workforce Restructuring Considerations

TNCs face additional layers of complexity. Transferring roles across borders can involve immigration controls, tax residency issues, and complexity in managing payroll. The closure or merger of subsidiaries raises questions relating to the responsibility of the successor and the rules on the transfer of employment. Remote and distributed teams complicate time zone coverage and oversight; redefine expectations in writing and verify each country’s specific compliance. When an operating model changes at the group level, align local programs with the central plan so that the entire workforce proceeds in unison. 

FAQs

What is workforce restructuring?

A structured program to realign people and roles with the business you want to run, using reassignments, role changes, or resignations as necessary.

Is workforce restructuring always about layoffs?

No. Reassignment, skills upgrading, and role redefinition often allow you to achieve your goals without reducing headcount.

How long does a workforce restructure usually take?

From a few weeks to several months, depending on the scope, legal requirements, and size of the workforce.

What are the legal risks of workforce restructuring?

Exposure includes claims for unfair dismissal, risks of penalties for failure to notify, and enforceability issues if consultation rules are ignored.

How do you communicate a workforce restructure to employees?

With clear and respectful messages, in line with the law and company policy, supported by legal and human resources review to avoid confusion and errors.

What support should be provided to affected employees?

Career transition services, wellness resources, and retraining options; in the event of resignation, ensure that severance pay is explained and handled accurately.

References

Organisation for Economic Co-operation and Development (OECD). (2023). G20/OECD Principles of Corporate Governance 2023. https://www.oecd.org/en/publications/2023/09/g20-oecd-principles-of-corporate-governance-2023_60836fcb.html 

International Labour Organization (ILO). (n.d.). Procedures for collective dismissal. ILO EPLex. https://eplex.ilo.org/en/procedures-for-collective-dismissal 

Advisory, Conciliation and Arbitration Service (ACAS). (2025, April 7). Managing staff redundancies: Redundancy consultations. https://www.acas.org.uk/manage-staff-redundancies/redundancy-consultations