What a restructuring means for your job, and how to prepare for it

THE job market is not exactly sunshine and rainbows these days. Headlines hint at a potential economic slowdown, and we hear stories of hiring freezes and layoffs across industries.

In this climate of financial uncertainty, job security has become a concern for many. Even those in seemingly stable positions cannot help but feel helpless.

The good news is that employees can proactively navigate this by gathering clues about their company’s potential direction. By understanding the different scenarios that might unfold, employees can make informed decisions about their careers and finances.

Start by paying close attention to your company’s internal communication, both formal and informal. Are there mentions of streamlining operations, reducing costs or exploring strategic partnerships? These can be early indicators of a need to become more efficient which could involve eliminating redundancies, consolidating departments or automating tasks.

By examining these seemingly innocuous phrases and announcements, you can better understand and prepare yourself for your company’s potential restructuring plans.

What does restructuring entail? Restructuring could take the form of a merger, acquisition, dissolution or even liquidation, and it is crucial to understand the implications of each.

Mergers involve two companies joining forces, often leading to consolidation. While this can create new opportunities within the combined entity, it can also cut jobs in departments with overlapping functions.

Be prepared for a period of uncertainty as the new organisation integrates its systems and personnel.

On the flip side, if your company is being eyed by a larger competitor for acquisition, the outcome varies based on the acquirer’s strategy.

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Employees with equity in their companies may receive shares of the acquiring company in place of their existing shares, which may not be of the same value.

The acquiring company might choose to retain employee expertise or deem certain roles redundant.

The same may apply in the case of an initial public offering (IPO), where employees may also be laid off as part of the restructuring process.

For those who keep their jobs, they may face the potential of a change in role or redefined job description.

It is hence important to stay alert about how such changes might impact your position.

In the event of a dissolution or liquidation, however, the outcome for employees may be drastically different. Financial difficulties, coupled with a decline in company morale, could hint at liquidation. This involves the company selling off its assets to pay off creditors, leading to complete closure and employee layoffs. Employee equity, such as stocks or stock options, also essentially become worthless in this scenario.

It is advisable to start exploring new opportunities proactively if this looms on the horizon. This becomes even more important in the case of a dissolution. As the most disruptive of the four outcomes, it involves the company shutting down entirely, often resulting in job losses and limited severance packages. It is always important to have a backup career plan in the event of such sudden changes.

With a clearer picture of your company’s potential trajectory, assessing if there are opportunities for growth within the new structure, or if your skill set will remain underutilised, becomes easier. You will need to know if your long-term career goals mesh with the company’s evolving needs.

While you conduct this personal assessment, it is also important to seek information to help yourself navigate this period of uncertainty.

Do not shy away from asking questions of relevant stakeholders such as human resources (HR) or senior management. Clarify the purpose and scope of the restructuring, what the company’s long-term plans are and how this restructuring fits into that vision. Find out if there will be opportunities for retraining to help employees adapt to the changing landscape or if there is already a growing disconnect.

While the focus should be on securing your future, sometimes redundancy can happen to you. Then, it becomes crucial to understand your rights and explore options to negotiate a fair severance package.

Here is where knowledge becomes your greatest asset. Familiarise yourself with the company’s severance policy, if there is one. This will give you a baseline understanding of what you are entitled to receive.

With this information, consider scheduling a meeting with HR to discuss your situation and express your interest in exploring all options for growth and exit – including a potential severance package.

Here, negotiation is key. Come prepared to present evidence of your contributions to the company, highlighting your accomplishments and value.

Depending on the company’s financial situation and the circumstances, you might be able to negotiate for a more generous severance package. This could even include outplacement services to assist with your job search, or a continuation of your salary for a set period.

In some cases, particularly during mergers and acquisitions, companies might even offer equity in the new entity as part of the severance package. This can be an asset, but it is important to seek advice to understand the implications before accepting an offer.

The merged company might be in a completely different financial situation than your previous employer. The value of the offered equity could therefore be highly speculative, especially if the merger is relatively new.

Equity in a private company is also typically illiquid. This means you cannot easily sell your shares and convert them into cash. You might have to wait for an IPO or a potential acquisition for the equity to become truly valuable.

Ultimately, by being proactive and informed, you can increase your chances of securing a fair severance package that will help you weather any transition and land your next opportunity.

While restructuring is a loaded term as it can signify positive changes and potential expansion, its undercurrent is often one of uncertainty for employees. By doing your due diligence, you can take charge in these uncharted waters in a knowledgeable manner and rewrite your professional narrative.

The writer is managing director of private market software platform Carta