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Restructuring is like spring cleaning.
The “spring cleaning” is overdue. Wake up the team, get out the scrubbers! Now all decks are cleaned sparkling clean.
According to the Roland Berger Restructuring Study 2024, this applies to almost all companies in the German automotive industry. Almost nine out of ten experts surveyed (88%) consider this pressure to be particularly high. All companies that need to remain competitive, adapt to declining sales or reduce their debt will restructure.
But beneath the surface of spreadsheets and strategic plans lies a human element. Studies show that while restructuring saves companies, employees suffer and struggle with mistrust and declining productivity. Only around 30% of all restructurings achieve their financial goals (Braun et al., 2019). The reason? Many companies overlook the people in them.
You could also say: If the decision is made to do general spring cleaning and scrubbing the deck, it is too often forgotten to wake up the crew. And to explain the necessity for the tasks at hand and to inspire them to take responsibility and complete them.
This picture is so clear, there are even research findings on it. They are coming now.
Two sides of a restructuring
Restructuring is rarely a neutral event without emotions.
For employees, it can feel like an earthquake that shakes their sense of stability, role clarity, and trust in leadership. A study by Vikas Chaddha (2016) highlights that downsizing and mergers often lead to lower morale, lower job satisfaction, and lower organizational engagement. Employees who are affected by layoffs or role changes often describe a “survival syndrome” characterized by feelings of guilt, anxiety, and disengagement. A systematic review by Pauliina Mattila-Holappa and Zosia Mockałło (2016) found that restructuring correlates with a long-term decline in employee well-being, including increased stress and burnout.
But why does the restructuring take such a toll? The answer lies in the impairment of three fundamental pillars of performance in the workplace:
- Psychological safety: Uncertainty about job security or changing roles undermines trust in leadership.
- Workload balance: Employees who “survive” the restructuring often have to take on additional tasks and responsibilities, which can lead to overwhelm and burnout.
- Cultural cohesion: Mergers as a result of restructuring or redivision of departments can tear teams apart and cause existing workplace norms to collide and lead to massive friction.
Consequential effects of restructuring
Not all employees are equally affected by restructuring. The effects vary depending on the function, gender, career level and performance level:
1. management vs. employees
Even though managers have more control over the results of restructuring, they are under particular pressure. A study of German companies (Hassel, 2014) found that managers in Western contexts are often under the stress of responsibility, as they have to implement unpopular decisions while maintaining team morale. Conversely, employees who are not leaders – especially in hierarchical cultures such as the Ethiopian government sector (Aregawi & Vijaya, 2023) – report feeling excluded from decision-making, fueling resentment and disengagement.
Conclusion: Managers need to find a balance between strategic goals and empathy and have to be aware of their dual role as implementer and mentor.
2. men vs. women
Restructuring often exacerbates existing gender inequalities. In Japan, women in part-time jobs are at a higher risk of losing their jobs in the event of staff reductions (Nemoto, 2013), while in Western contexts such as the US, women in leadership positions face the “glass cliff” scenario – they are promoted in times of crisis and then blamed for failures (Ryan & Haslam, 2005).
Conclusion: Special support measures, control of social plans by stakeholders, and coaching programs for more fairness are essential.
3. Young professionals vs. experienced staff
Entry-level workers, who often have fixed-term contracts, are disproportionately affected by redundancies. In Spain and Italy, youth unemployment is rising after restructuring (OECD, 2020), while experienced workers in Nigeria face incentives to take early retirement (Adeyemi, 2016). Meanwhile, mid-career workers may refuse to retrain as they cling to outdated skills.
Conclusion: Avoid cutting training budgets too radically. Invest in retraining programs and prioritize knowledge transfer between generations.
4. High-performing vs. low-performing employees
High-performing employees are usually retained during restructuring but are at risk of burning out due to the increased workload. A study of Chinese state-owned enterprises (Chen et al., 2019) found that top talent often leaves after restructuring to find stable opportunities, while low-performers in the South African mining sector face rapid layoffs (Mbeki, 2018).
Conclusion: Concentrate measures on top performers and recognize their achievements without overwhelming them.
Strategies for managers: turning the crisis into an opportunity
The challenges of restructuring are undeniable, but they are not insurmountable. Managers can mitigate the negative impact by adopting proactive, human-centered strategies:
1. prioritize psychological safety and offer support
The emotional toll that restructuring takes requires the formation of a supportive narrative and systematic support:
- Proactively manage the narrative, even if it’s bad news.
- Hold regular town hall meetings to share up-to-date information, even if the details are still incomplete.
- Provide clear timelines for decision-making to avoid guesswork
2. make top managers your most important allies in this process.
Ambiguity breeds fear. Coordination between top managers is crucial. During the restructuring of a bank (Makau, 2024), employees cited non-transparent communication as the main cause of mistrust. To counteract this:
- Hold the management team accountable for the restructuring and take the lead
- Resolve conflicts between career goals and company interests
- Train managers to recognize signs of burnout and intervene at an early stage.
3. involve employees in the process
In a restructuring (Aregawi & Vijaya, 2023), employee involvement in decision-making improved efficiency, satisfaction, and adoption. Strategies include:
- Forming cross-functional teams of experts to remove obstacles.
- Conducting in-depth analyses to identify further potential.
- Empowering middle managers as a link between management and personnel.
4. tailoring support to employee groups
A blanket approach is not successful with different workforces. Remember:
- Entry-level professionals: Provide mentorship and clarity on development opportunities.
- Experienced workers: Offer retraining opportunities to adapt them to the new goals.
- High-performing employees: Rotate responsibilities to prevent burnout.
- Vulnerable groups (e.g. women, part-time workers): creation of retention guarantees.
5. use proven HRM practices
As Patia J. McGrath (2024) points out, strategic HRM is a lifeline during restructuring:
- Promote a merit-based culture to restore morale.
- Redesign of roles and governance to adapt to the new organizational structures.
- Introducing retention bonuses or stock options for key talent
- Promote flexible working arrangements to facilitate transition periods.
Systematically implement strategies, use tools
In times of far-reaching restructuring, the focus is on people. For change to succeed, it is crucial to create psychological safety in the team. This is best achieved through integrated communication programs that promote transparency, reduce fears and ensure respectful interaction with each other. Only when all employees feel safe and heard can real commitment to the change process emerge.
In order to consolidate this basis, it is worthwhile to strengthen top leadership in a targeted manner. With the help of executive coaching, managers are supported in clearly defining their role in the transformation and in presenting themselves in a communicatively confident manner. They learn to communicate strategic goals transparently, to create trust and to serve as role models in terms of willingness to change. This sets in motion a cultural change that positively influences the entire company.
In addition, it is essential to involve experts in the process. Co-development hubs bring together experts from different fields to work out solutions together. This interdisciplinary exchange helps to ensure that important competencies are bundled and directly incorporated into new concepts. In this way, employees are more closely involved and take personal responsibility for the restructuring process.
At the same time, the program was to be tailored to different groups of employees. Through a target-group-specific coaching experience, all employees – from career starters to experienced specialists – receive tailor-made support. Individual learning paths, flexible formats and digital learning ensure that all participants gain the necessary skills and insights to actively shape the change process.
Finally, it is advisable to integrate other HR best practices: These include, among other things, the use of transfer companies to requalify employees according to their needs and accompany them into new roles. The adaptation of job profiles or the introduction of intensive competence development programs also ensures that talents are specifically promoted and that the company benefits from changed structures in the long term. This makes the restructuring a sustainable success – for all parties involved.
Conclusion: Restructuring is not only an organizational task, but above all a human challenge. With CoachHub’s executive coaching, co-development hubs and comprehensive coaching experience, the individual strengths of employees can be promoted in a targeted manner and the entire company can be led into a successful future. In this way, an often dreaded change process becomes a sustainable development and growth opportunity for all parties involved.
AutomotiveLearners is CoachHub’s scaling partner for the automotive industry.
