There’s been more change in the last few years than in the last decade (or two!). A global pandemic, rising interest rates, supply chain disruptions, the Russia-Ukraine war, a looming recession, the launch of ChatGPT and persistent talent shortages have all impacted businesses. With mixed predictions from economic experts about what the next year will bring, one thing is certain: Business leaders will have to navigate their way through another challenging market environment. The ability to evolve is critical. Companies that can adapt to changing market conditions have a competitive advantage over those that don’t. And, that’s why many companies undergo restructuring and reorganization during these times.
Why do companies undergo restructuring and reorganization?
Businesses undergo restructuring and reorganization for many reasons. For some, it’s because they’re about to go through a merger or acquisition, while for others it could be in response to a corporate spin-off, period of expansion or changing market conditions (e.g., a recession). Restructures are often carried out if a company is having financial difficulties. For example, during insolvency processes, such as when a company enters administration. Regulation can be a reason for a restructure as there may be a requirement to introduce new processes for compliance. The terms restructure and reorganization are subjective though. What one business would class as a restructure or reorganization might differ from another. The goals, however, are typically the same: to boost performance, innovation and, ultimately, the bottom line.
There are many stages involved with a restructure, but the first (and most obvious), is to think about what areas of the business need restructuring. As part of this, conduct a SWOT (strengths, weaknesses, opportunities and threats) and then create a plan of how you would correct the weakness and mitigate the threats through a restructure. Change management is a key part of the restructuring process – it’s important that everyone understands why you are undergoing a restructure and what this means for them. Transparency throughout the entire process is critical.
Let’s look at some types of reorganization and share how RPO can help:
Mergers and acquisitions (M&A): Employee retention can be challenging, and at the moment, it’s a major concern (just like it was in 2022). It’s not hard to see why when you consider 96% of workers are looking for a new job in 2023, according to a recent survey from jobs site Monster. And this is without the added pressures associated with M&A. The loss of talent is one of the main risks with mergers and acquisitions – attrition levels tend to spike, with reports suggesting up to 20% of employees will voluntarily leave a company within two years after an announcement of a merger.
So, why do employees leave? There are numerous reasons, but the most common is fear of the unknown and resistance to change. Employees wonder how their roles will change, whether the culture will be impacted and if this means they will lose some of the control they have. RPO partners can help you strengthen your employer brand strategy so that it better aligns with your employee value proposition (EVP). If it doesn’t (which is often the case as two brands and cultures come together during a merger or acquisition), RPO partners will devise a plan to update it. Losing trust in leadership is another reason why people leave following a merger or acquisition. And if layoffs are made, some feel survivor guilt when they see their colleagues leave, which can have a detrimental impact on culture and increase attrition levels. Another reason employees might decide to jump ship is because competitors often use the opportunity to target key talent. They know that times of transition can evoke feelings of uncertainty among employees and view it as an ideal opportunity to poach talent.
WilsonHCG’s 2023 Fortune 100 Employment Branding Report is out now. The annual report ranks employment brands of the Fortune 100 from the perspective of a jobseeker.
Corporate spin-off: When a company undergoes a corporate spin-off, it typically splits parts of its company from the main organization so that it becomes a standalone firm. Organizations spin off parts of their operations for many reasons, but it’s mainly to drive growth and increase value for shareholders. Spin-offs can also help companies focus on divisions that offer more potential, and some companies complete a spin-off to streamline operations. Spin-off activity increased in 2022 and is expected to continue its upward trajectory in 2023.
Talent acquisition, as a result, can be impacted heavily. Sometimes, the entire talent acquisition team stays with the parent company, so one of the first tasks would be to build a talent function. And this is where outsourcing can help. For example, RPO providers ensure you have the right people, processes and talent acquisition technology in place to attract, hire and retain the talent needed to take the new company forward. One of the main benefits of outsourcing talent is that it gives HR the opportunity to concentrate on other strategic initiatives. The impact RPO can have on improving employment branding is something that can also benefit companies that have recently completed a spin-off.
Pro tip: If you’re planning a corporate spin-off, conduct an employer branding audit on your existing brand. This will give you the opportunity to consider your positioning to consumers and employees alike and show where changes need to be made. If you don’t have the resources in-house to do this, an RPO provider can help.
Case study: WilsonHCG partnered with a global leader in heating, air-conditioning and refrigeration solutions to consult on workforce planning and develop a cohesive strategy that blended RPO and executive search solutions following a corporate spin-off. The solution helped identify, attract, hire and relocate hundreds of critical requisitions. The team also led a digital transformation program project to help the company reimagine the IT and digital infrastructure of the newly formed organization. In terms of business impact, 100% of the requisitions were filled in North America and EMEA well within the designated timeframes. The project saved the newly formed organization around $1.5 million, and it helped to contribute to a 230% rise in the company’s stock price.
Period of expansion: Whether it’s expanding into new geographical markets or growing headcount to keep up with organic growth, expansion is a natural part of business. If your company is planning to expand overseas, local market knowledge is something that’s required. You need talent intelligence to understand the areas you’re planning to move into, whether there is access to talent, the nuances of local employment laws and what candidates in the region expect from a job. Having a strong grasp of candidate expectations and cultural nuances is a must. This is something RPOs have extensive experience in. Through market research, talent intelligence and prior recruiting experience in the region, RPOs know the ins and outs of candidate expectations and what platforms they’re most likely to be active on, for example. Market-mapping can determine if there’s enough talent in a given area, while talent pipelines (which deliver qualified candidates into either talent pools or talent communities) ensure you have consistent access to a qualified stream of candidates.
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How outsourcing talent acquisition can help with restructuring or reorganization
RPO providers show their effectiveness by going beyond filling open roles. While one of the benefits of outsourcing recruitment is the reduction in time to fill, there are so many others, such as improvements in candidate quality, decrease in cost per hire, ability to scale up or down, a rise in diverse candidates and the ability to understand new markets and regional nuances (which is particularly beneficial if a company has acquired employees through M&A or plan to expand and recruit in a new region).
Some of the benefits of outsourcing recruitment during a transitional time, like a restructure or reorganization, include:
Change management: Recruitment process outsourcing (RPOs) can be a solution for managing change when it comes to talent organization. Why? Because RPOs are accustomed to leading their clients through the phases of change associated with bringing a third-party partner. RPOs know that managing the expectations of key stakeholders when starting a new outsourcing partnership is critical for successful change management.
Technology consulting: RPOs can help companies to streamline or consolidate talent acquisition technology they’ve inherited through a merger or acquisition. They can also advise on which talent acquisition technology would help to scale and/or fuel growth if supporting a corporate spin-off, for example.
Impactful reporting: Recruitment process outsourcing can help talent leaders connect HR metrics to bottom line impact. There are so many HR and recruiting metrics out there that it can be overwhelming. An RPO partner will help you define the key talent and HR metrics you should be tracking and why, especially as it relates to the goals of your newly reorganized company. In short, they’ll use metrics to not only guide future strategy, but to elevate the strategic value of your talent function.
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Continuous improvement: RPOs gather swathes of data and then analyze it to show where improvements can be made. In addition, talent outsourcings firms collect feedback from all parties regularly on what’s going well and what’s not. By telling the story of talent acquisition, they can better determine if strategies need to pivot.
Top tip: If you’re thinking about RPO, make sure you ask for details on how the talent solutions will be tailored to meet your individual needs. No business is the same, so no RPO partnership should be.
RPO covers all aspects of hiring, from the attraction phase to onboarding and uses the latest talent acquisition technology and innovative processes. RPO teams optimize the entire talent function to help your organization drive sustained business results. Unlike staffing, RPO comes with a lot of value add from employment branding; diversity, equity, inclusion and belonging (DEIB); and internal mobility, for example.
How does an RPO manage change?
RPO providers build change management protocols and communication plans to manage the reorganization. They’ll engage with all your key stakeholders so they know what will change and when, as well as the impact this will have on them and their teams. In addition, RPO providers develop training materials including email templates, sample communication material, reference guides and so on, to make it easier for their clients to manage the transition. RPOs will also arrange regular feedback sessions with key stakeholders to review the change management process and determine if any adjustments or improvements can be made.
RPOs typically split their approach to change management into key stages. We’ve outlined these below so you can use it as a guide to create your own change management plan:
- Define the audience and key messages for engagement and communications
- Develop change impact across all service areas
- Draft and issue proposed formal communications
- Sponsor and deploy communication strategy
- Identify a change agent network to help communicate change and report back on message adoption
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The benefits of a total talent approach for a company undergoing a restructure or reorganization
When considering all your talent options, a total talent approach might benefit a company undergoing reorganization. In simple terms, total talent programs centralize the hiring for all employees regardless of whether they are full-time, part-time, temporary or contingent. And for an organization that is merging talent programs, determining how they should all operate cohesively.
More and more companies are integrating permanent and contingent talent acquisition, so it operates as one. And given the use of contingent workers is set to rise, this trend is likely to continue. The contingent workforce is projected to grow by 53% worldwide in 2023, a report from Eightfold AI revealed. Taking a total talent approach now, which requires looking at strategic workforce planning, employment branding and DEIB, will ensure transparency and visibility across the entire workforce. This helps you, as a talent acquisition leader, to better inform strategy while improving business decisions and outcomes.
Learn more about how to integrate your contingent strategy into a total talent program in this blog post.
How do I mitigate the risk of losing talent during a reorganization?
When a company undergoes a restructuring or reorganization, employees may feel unsettled. There are some things you can do to mitigate the risk of losing talent, including a strong change management program and internal changemakers within your organization. Here are other best practices to help retain talent during a reorganization:
Over-communicate: Put simply, most people aren’t comfortable with change. You need to over-communicate to let your employees know what’s coming next. Another thing to remember is that restructures and reductions in headcount are common following an acquisition. Therefore, if your company has bought another one and is planning to reduce its headcount, communicate this. Do it early and be as transparent as possible to reduce anxiety among your workforce. Be open to questions and ready to answer the variety of them that are bound to come up. And don’t forget to tell your remaining employees why the merger or acquisition took place and why some redundancies may occur. Explain the benefits of the reorganization so they can be excited about what’s coming next.
Time it right: Employees will get jittery if they think their roles are at risk or if they haven’t heard anything about a plan yet. So be sure you’re balancing making thoughtful decisions with sharing the way forward as quickly as possible. Additionally, if you’re trying to identify additional talent you need, be just as speedy getting back to your talent pipeline.
Consider retention bonuses: Although retention bonuses impact integration costs, they can help to keep people onboard. If your company has talent with a niche skillset, it may be something you need to think about, especially if there are employees who your company simply couldn’t do without.
Provide a better work-life balance: We already know that employees who feel supported and like they belong are happier and more productive in the workplace, but there’s been an increased focus on work-life balance recently. This isn’t surprising as the pandemic gave people a chance to reflect on what’s important to them. In fact, Achievers Workforce Institute's 2021 Engagement and Retention Report found that the number one reason for staying in a role was work-life balance (at 23%), followed by recognition (at 21%). What’s the work-life balance like at your company? Most importantly, what do your employees think? It’s simple: Ask them. Conduct pulse surveys and do so regularly. If the results show your employees don’t think it’s up to scratch, start putting boundaries in place. (Providing a good work-life balance won’t just help with retention, but also attraction.)
Two-thirds (66%) of employees would be more engaged at work if employers improved company culture, while more than half (52%) would be more engaged if their employer improved its diversity and inclusion, research from the Achievers Workforce Institute revealed.
Despite growing concerns of an economic recession, online job posting data from the Claro Analytics Job Report suggests stability in the workforce at the start of 2023. January’s overall US unemployment rate of 3.4% is historically low. And a slightly inched-up 62.4% labor participation rate and 4.4% Y-o-Y average hourly earnings growth indicate a strong continued demand in the US labor market.
With a possible global recession looming, an ever-changing employment landscape and critical skills shortages, companies have a lot on their plates this year. If a reorganization is on the menu, talent outsourcing is worth considering.