Restructuring and 5 studies on employee performance

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 that once the decision has been made to do a general spring clean and scrub the decks, it is too often forgotten to wake up the team. And to explain the need for the tasks at hand and to inspire them to take responsibility and complete them.

This picture is so clear that there are even research findings. Here they come.

Two sides to 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 commitment. Employees affected by redundancies 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 wellbeing, including increased stress and burnout.

But why does restructuring take such a toll? The answer lies in the impairment of three pillars of workplace performance: 

1. Psychological security: uncertainty about job security or role change undermines trust in leadership.

2. Workload balance: Employees who "survive" the restructuring often have to take on additional tasks and responsibilities, which can lead to overwork and burnout.

3. Cultural cohesion: Mergers as a result of restructuring or reorganization of departments can tear teams apart and cause existing workplace norms to clash, leading to massive friction.

Consequences of restructuring

Not all employees are equally affected by restructuring. The effects vary greatly depending on function, gender, career level and performance level:

1. management vs. employees

Even though managers have more control over restructuring outcomes, they are under particular pressure. A study of German companies (Hassel, 2014) found that managers in Western contexts are often under stress of responsibility as they have to implement unpopular decisions while maintaining team morale. Conversely, employees who are not managers - particularly in hierarchical cultures such as the Ethiopian government sector (Aregawi & Vijaya, 2023) - report feeling excluded from decision-making, which fuels resentment and disengagement.

Conclusion: Managers need to find a balance between strategic goals and empathy and be aware of their dual role as implementer and caregiver.

2. men vs. women

Restructuring often exacerbates existing gender inequalities. In Japan, women in part-time employment are at higher risk of losing their jobs in downsizing (Nemoto, 2013), while in Western contexts such as the US, women in leadership positions face the "glass cliff" scenario - being promoted in times of crisis only to be blamed for failures (Ryan & Haslam, 2005).

Conclusion: Special support measures, monitoring of social plans by stakeholders and coaching programs for more fairness are essential.

3. new entrants vs. experienced staff

New entrants, who often have fixed-term contracts, are disproportionately affected by redundancies. In Spain and Italy, youth unemployment rises after restructuring (OECD, 2020), while experienced workers in Nigeria face incentives to retire early (Adeyemi, 2016). Meanwhile, mid-career workers may refuse to retrain as they hold on to outdated skills.

Bottom line: avoid cutting training budgets too radically. Invest in retraining programs and prioritize the transfer of knowledge between generations.

4. high-performing vs. low-performing employees

High-performing employees are usually kept on during restructuring, but run the risk of burning out due to the increased workload. A study on Chinese state-owned enterprises (Chen et al., 2019) found that top talent often leave after restructuring to find stable opportunities, while low performers in the South African mining sector face rapid layoffs (Mbeki, 2018).

Conclusion: Focus measures on high performers and recognize their achievements without overburdening 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 effects by applying proactive, people-centered strategies:

1. prioritizing psychological safety and offering support

The emotional toll of restructuring requires the formation of a supportive narrative and systematic support:

• Manage the narrative proactively, even if it is bad news.
• Hold regular townhall meetings to share up-to-date information, even if the details are still incomplete.
• Provideclear timelines for decision making to avoid speculation.

2. make top managers your most important allies in this process.

Ambiguity breeds fear. Coordination between top managers is crucial. During the restructuring of one bank (Makau, 2024), employees cited opaque communication as the main cause of mistrust. To counteract this:

• Hold the management team accountable for the restructure and take the lead
• Resolve conflicts between career goals and company interests.
• Train managers to recognize signs of burnout and intervene early.

3. involve employees in the process

In one restructuring (Aregawi & Vijaya, 2023), employee involvement in decision making improved efficiency, satisfaction and acceptance. Strategies include:

• Forming cross-functional teams of experts to remove obstacles.
• Conducting in-depth analysis to identify further potential.
• Empowering middle managers to act as a link between leadership and staff.

4. tailoring support to employee groups

A blanket approach is not successful with diverse workforces. Think about:

• Entry-level workers: provide mentoring and clarity on development opportunities.
• Experienced employees: Offer retraining opportunities to align them with new goals.
• High performers: Rotate responsibilities to prevent burnout.
• Vulnerable groups (e.g. women, part-time workers): Create retention guarantees.

5. utilize proven HRM practices

As Patia J. McGrath (2024) points out, strategic HRM is a lifeline during restructuring:

• Promote a merit-based (recognition) culture to restore morale.
• Redesign roles and governance to align with the new organizational structures.
• Introduce retention bonuses or stock options for key talent.
• Encourage flexible working arrangements to ease transition periods.

Implement strategies systematically, use tools

In times of far-reaching restructuring, the focus is on people. In order for change to succeed, it is crucial to create psychological security within the team. This is best achieved through integrated communication programs that promote transparency, reduce fears and ensure respectful interaction. Genuine commitment to the change process can only arise if all employees feel safe and heard.

In order to consolidate this basis, it is worth strengthening top leadership in a targeted manner. With the help of executive coaching, managers are supported in clearly defining their role in the transformation and communicating confidently. They learn to communicate strategic goals transparently, create trust and serve as role models with regard to willingness to change. This sets in motion a cultural change that has a positive impact on the entire company.

It is also essential to involve experts in the process. In co-development hubs , experts from different areas come together to develop solutions together. This interdisciplinary exchange helps to ensure that important expertise is pooled and directly incorporated into new concepts. In this way, employees become more involved and take ownership of the restructuring process.

At the same time, the program should be tailored to different employee groups. Through a target group-specific coaching experience, all employees - from career starters to experienced specialists - receive tailored support. Individual learning paths, flexible formats and digital learning ensure that everyone involved gains the necessary skills and insights to actively shape the change process.

Finally, it is advisable to integrate further HR best practices: These include the use of transfer companies to retrain employees as required and support them in new roles. The adaptation of job profiles or the introduction of intensive skills development programs also ensures that talent is promoted in a targeted manner and that the company benefits from changed structures in the long term. This makes restructuring a sustainable success - for everyone involved.

Conclusion: Restructuring is not only an organizational task, but above all a human challenge. With executive coaching, co-development hubs and CoachHub's comprehensive coaching experience, the individual strengths of employees can be promoted in a targeted manner and the entire company can be guided towards a successful future. This turns an often dreaded change process into a sustainable development and growth opportunity for everyone involved.

AutomotiveLearners is CoachHub's scaling partner for the automotive industry.