Five Common Mistakes Leaders Make During Restructures
Most organisations approach restructures as legal and structural exercises. They focus on meeting all the necessary compliance requirements like staff consultation processes, rewriting position descriptions, and managing redundancy processes. But the psychological part of change gets treated as secondary, if it's addressed at all.
Even leaders who make efforts to reduce anxiety and uncertainty often trigger the exact things they intended to avoid.
Here are five common mistakes, and what to do instead.
1. Waiting to communicate until all the changes are clear
Leaders decided to keep the restructure quiet until the full proposal is ready, believing this protects employees from unnecessary worry. Meanwhile, rumors are spreading and managers are fielding anxious questions they can't answer.
Why this doesn't work
Silence amplifies uncertainty. When employees sense something is coming but receive no official communication, their brains fill the void with worst-case scenarios because uncertainty activates the brain's threat response system, regardless of actual risk level. Employees whose jobs might be completely safe experience the same anxiety as those genuinely at risk, simply because they don't know.
What to do instead
Communicate early with what you know, acknowledge what you don't know, and commit to a timeline for more information. McKinsey research demonstrates the importance of communication during organisational change, citing that organisations with effective communication are 3.5 times more likely to succeed in their change efforts.
The first communication could sound like: "We're exploring options to reduce costs by 15% and this will likely involve changes to our organisational structure. We don't know what this will look like yet, first we need to conduct some reviews, develop a proposal, and consult with you before we can make any decisions. Here's our indicative timeline: proposal ready by [date], consultation period [dates], final decisions by [date]. We'll update you weekly, even if the update is 'nothing new to share yet.'"
2. Managers aren't having one-on-one conversations about personal impacts
Town halls have been held and company-wide emails explaining have been sent, and even still, employees are whispering to each other, asking "what have you heard?" rather than talking to their own managers. You probably don't even need to see the pulse survey results to know engagement scores are dropping.
Why this doesn't work
Organisational level messaging about vision doesn’t address the main question employees really care about. They want to know "What does this mean for me?"
When managers avoid these conversations (often because they're anxious and uncertain themselves) employees interpret silence as confirmation of their worst fears.
What to do instead
Managers need to be equipped to have individual conversations within 48 hours of any restructure announcement. Provide a conversation guide that includes: what is certain about their team member's situation, what is still being decided, the timeline for more information, what support is available now, and permission to say "I don't know, but I'll find out."
A common failure pattern is expecting managers to be change agents while they've become change recipients themselves. Before asking managers to support their teams, ensure they've processed their own reactions and have access to their own support. Give managers relevant information about the restructure 24-48 hours before the wider announcement. Provide them with access to confidential support (EAP, HR one-on-ones, peer manager sessions) and check in with them individually.
3. Treating consultation as a compliance exercise rather than genuine engagement
Union meetings are done, staff consultation meetings have been scheduled, and proposal documents have been prepared. Leaders are going through the motions, but quietly the outcome has already been decided. Employees will sense this disconnect and either disengage or respond with anger (and potentially legal action).
Why this doesn't work
New Zealand case law, particularly NZ Steel v Haddad (2023), established that courts should apply intense scrutiny to consultation processes. The Employment Court found that consultations are "flawed and fail to meet good faith obligations" when employers predetermine outcomes. Regardless of compliance requirements, employees often sense disconnect (sometimes even when there isn’t any).
Beyond legal risk, anxiety decreases when people feel heard - even if the final decision isn't what they wanted. On the other hand, when they feel ignored, it escalates into anger and resistance. This has a domino effect on engagement, culture, productivity, and all the good things you need for a smooth-running business.
What to do instead
Approach consultation as an opportunity to improve the organisational design proposal. Create clear mechanisms for feedback: written submissions with response timelines, one-on-one meetings for all affected employees, anonymous feedback channels, and visible documentation of how feedback influenced decisions.
After consultation, communicate explicitly: "Here's what we heard. Here's what we changed as a result. Here's what we couldn't change and why."
4. Leaders disappear just when people need visible leadership most
Senior leaders are in back-to-back meetings planning the restructure. They're working harder than ever but are rarely visible to employees. The leadership team's stress has the power to be palpable, cascading anxiety throughout the organisation.
Why this doesn't work
When there’s low visibility of senior leaders during organisational change, employees have a hole to fill with their own interpretations. Maybe leaders don't care, or maybe things are so bad that leaders are hiding.
What to do instead
Senior leaders must increase visibility during restructures: regular presence in team meetings, direct communication rather than delegating, physical presence in workplaces, acknowledging difficulty honestly, while expressing confidence, and sharing some vulnerability. Try "this is hard for me too” and give examples as to why.
Leaders should also block time in their calendars specifically for "walking the floor" conversations. Informal check-ins like this surface concerns that never make it to formal feedback channels.
Yes, this takes time. But it helps avoid time-intensive efforts down the line - managing resistance, fixing broken trust, replacing people who leave, and recovering from productivity crashes. It’s worth front-loading.
5. Focusing only on leavers
All the effort has gone into implementing the new structure. Meanwhile, remaining employees are quiet, heads down, seemingly getting on with work. Six months later, engagement scores are still not back to pre-change levels, and several high performers have resigned.
Why this doesn't work
Employees who remain after redundancies experience anger, guilt, depression, and decreased productivity. It's that "survivor's guilt" people talk about. They watch colleagues lose jobs. They wonder if they're next. Research shows that employees experiencing restructuring perceive increased job insecurity and stress, and significant negative effects on commitment and trust. These effects can last for years.
What to do instead
Focus more attention on employees. Acknowledge the loss explicitly. Create space to recognise departing colleagues. Communicate clearly about workload redistribution. Include timelines. Be transparent about constraints. Continue promoting wellbeing support. Create forums for honest conversation about what happened. And invest in development to signal confidence in the future, not just absorb more work.
Restructures don't have to shatter trust and productivity
Managing employee anxiety during restructures isn't just about ‘soft skills’. Leaders have enormous power to reduce the consequences of uncertainty through communication, visibility, and genuine consultation.
The five mistakes I've outlined here aren't necessarily signs of bad leadership, they're signs of a lack of prioritisation and missing frameworks for managing psychological complexity. All five are fixable with time, intention, and structure.
Avoiding these common outcomes requires acknowledgment that managing psychological transition is as important as managing structural change. Employees remember how you treat people. Make sure that what they remember helps to build on the objectives of your organisational change, rather than burning it down.
