Workforce restructuring is often presented as a financial exercise: reduce costs, remove duplicate roles and align headcount with lower demand. That view is incomplete.

A restructuring decision also changes how employees judge leadership, how candidates assess the organization and whether the people who remain believe the company has a credible plan. The employer brand is shaped less by the announcement than by the decisions made before it, the treatment of affected employees and the working conditions left behind.

Restructuring does not always mean layoffs. It may involve redeployment, retraining, role redesign, outsourcing, reduced hiring, team consolidation or changes to reporting structures. When job losses are unavoidable, the organization still has choices about how carefully it selects roles, communicates decisions and supports people through the transition.

Those choices carry lasting consequences. LHH’s 2026 study of 3,000 HR leaders and more than 8,000 employees across seven countries found that 87% of HR leaders had already conducted layoffs or expected to do so within the following 12 months. Among employees who had witnessed layoffs, reported effects included heavier workloads, lower morale, instability and reduced trust in leadership. One in four said witnessing layoffs directly reduced their trust in leaders.

A strong restructuring plan therefore needs to answer two questions at the same time:

• What workforce does the business need?
• How can the company make the change without losing essential skills, trust and future hiring strength?

Start With the Work, Not a Headcount Number

The weakest restructuring plans begin with a target such as “remove 10% of roles” or “reduce payroll by a fixed amount.”

A financial target may be necessary, but it should not determine the entire process. Cutting the same percentage from every department assumes that all teams have equal workloads, priorities and future value. They rarely do.

Leaders should begin by clarifying:

• Which products, markets and services will remain important?
• Which work is declining, growing or changing?
• Which activities directly support customers, revenue, compliance or operational continuity?
• Which work is being duplicated?
• Which tasks could be simplified, automated or stopped?
• Which capabilities will be needed over the next 12 to 24 months?
• Which roles contain knowledge that would be difficult to rebuild?

This prevents restructuring from becoming a search for inexpensive roles to remove.

A team may look oversized because revenue has declined in one market. Yet some employees in that team may understand key customers, systems or regulatory processes that another part of the organization needs. Removing the whole group can create an immediate saving followed by recruitment, training and continuity costs elsewhere.

LHH’s 2026 research found that 73% of employers tracking rehiring costs believed replacing lost talent cost more than targeted redeployment and mobility. That is a vendor-sponsored survey rather than a universal cost benchmark, but it highlights a common failure: organizations release capabilities they later have to buy back.

A useful restructuring plan separates three decisions:

1. Which work should continue?
2. Which work should change or stop?
3. Which people have skills that can move with the work?

Only after those questions are answered should leaders decide which roles are no longer required.

Decide Which Skills Must Stay, Move or Be Built

Job titles give an incomplete picture of workforce capability.

Two employees with the same title may have very different knowledge. One may understand a legacy system that supports a major customer. Another may have led automation projects, worked across several countries, or developed relationships that are difficult to transfer.

Skills-based workforce planning looks beneath the title and examines:

• Technical and professional skills
• Product and customer knowledge
• Certifications
• Project experience
• Leadership ability
• Language and regional knowledge
• Regulatory expertise
• Transferable skills
• Learning progress
• Ability to work in adjacent roles

This approach has become more important as work changes. The World Economic Forum’s Future of Jobs Report 2025, based on responses from more than 1,000 employers representing over 14 million workers, estimated that 39% of key job skills would change by 2030. Sixty-three per cent of employers identified skills gaps as a main barrier to business transformation.

These projections should not be interpreted as a precise forecast for every company. They do show why cutting solely by present job title can be short-sighted.

Leaders can group skills into four practical categories:

The process should include managers who understand the work, but it should not rely solely on managers’ preferences. Managers may undervalue employees outside their immediate priorities or try to retain people who could contribute more elsewhere.

Skills evidence should therefore be checked against project history, qualifications, performance information, employee interests and future business requirements.

Redeploy People Before Recruiting Externally

Internal mobility gives organizations an alternative to releasing employees in one area while hiring similar capabilities elsewhere.

Redeployment may include:

• Moving an employee into an open role
• Transferring someone to an adjacent function
• Assigning employees to short-term projects
• Offering training for a role with growing demand
• Moving people between locations or business units
• Creating temporary transition assignments
• Combining partial responsibilities into a redesigned position

Not every employee can or will move. The new role may require specialist qualifications, relocation or a significant change in pay. Some skill gaps are too large to close within the available time.

Even so, internal mobility should be tested before an exit decision is finalized.

LinkedIn’s 2025 Workplace Learning Report found that 88% of surveyed organizations were concerned about retention, with learning opportunities identified as the most common retention strategy. The report also found that 55% of organizations with mature career-development programs and 48% of other respondents considered internal mobility a higher priority for the coming year.

Redeployment can protect institutional knowledge and reduce the time needed for an external hire to understand the organization. It can also demonstrate to remaining employees that the company tried to preserve employment where a realistic alternative existed.

That does not mean placing people into unsuitable positions merely to reduce the reported number of layoffs. A transfer should have:

• A genuine business need
• Clear responsibilities
• Realistic skill requirements
• A named manager
• Defined training support
• An agreed pay and employment arrangement
• A reasonable period for the employee to decide

A poorly planned redeployment can postpone rather than prevent a later exit.

Make Internal Opportunities Easy to Find

A company may believe it has a strong mobility program while employees barely know it exists.

LHH reported a wide perception gap in its 2026 survey: 77% of HR leaders said their organizations offered targeted redeployment and mobility programs, but only 19% of employees said they recognized or experienced them.

A program hidden inside an HR policy does little for someone whose role is at risk.

Employees need clear answers:

• Which positions are available?
• Who is eligible to apply?
• Are affected employees considered before external candidates?
• Which skills are essential?
• Which skills can be learned after transfer?
• Will pay or location change?
• How long will the process take?
• Who makes the decision?
• Can an employee apply without the current manager blocking the move?
• What happens if the application is unsuccessful?

Manager talent hoarding is a practical obstacle. A manager may resist losing a strong employee even when that person’s present role is being reduced or another department has a greater need.

Internal mobility therefore needs central rules and executive support. The current manager can provide information, but should not hold an unchecked veto over the employee’s future.

The organization should also track outcomes rather than simply counting applications:

• Employees reviewed for redeployment
• Employees offered another role
• Offers accepted
• Training completed
• Retention after transfer
• Time to productivity
• Roles filled internally rather than externally

Visibility makes mobility credible. Outcomes show whether it works.

Use Contractors Without Creating a Second-Class Workforce

Some organizations respond to uncertainty by combining permanent employees with contractors, consultants, freelancers and managed service providers.

This can help when demand is seasonal, project-based or highly specialized. It can also reduce the need for repeated rounds of permanent hiring and layoffs.

The company should still decide which work belongs in each model.

Core work may include strategy, customer ownership, regulated decisions, institutional knowledge and activities that differentiate the business.

Flexible work may include seasonal demand, defined projects, temporary coverage and specialist assignments with a clear endpoint.

Buildable work includes capabilities the organization expects to need repeatedly and can develop internally.

Using contractors for long-term core work simply because the organization wants to avoid permanent headcount may create continuity, classification, security and cultural problems. The legal distinction between employees, contractors and agency workers also varies by jurisdiction and requires local review.

Managers need to know:

• Which information external workers may access
• Who owns the work and knowledge produced
• How performance will be managed
• How permanent and external workers will collaborate
• Whether the arrangement is temporary or continuing
• What will happen when the contract ends

Permanent employees may interpret widespread outsourcing immediately after layoffs as evidence that the company removed people rather than work. Leaders should be able to explain why the new workforce model is commercially and operationally different.

Use Fair Criteria and Record Every Decision

Employer brand cannot be protected by communication if the decision process itself appears arbitrary.

Selection criteria should relate to the future work and be applied consistently. Depending on the restructuring, relevant factors may include:

• Whether the role continues to exist
• Skills required for the future operating model
• Documented performance evidence
• Qualifications or licenses
• Ability to perform redesigned responsibilities
• Location or shift requirements
• Genuine role duplication
• Customer or operational continuity

Criteria such as “leadership confidence,” “attitude” or “future potential” can become subjective unless they are clearly defined and supported.

Past performance data also needs context. One employee may have received stronger projects, better training or more visible assignments than another. A manager’s rating may reflect the manager’s standards as much as the employee’s contribution.

The review process should involve HR, relevant business leaders and legal advisers where required. Depending on the country, restructuring may trigger consultation, notice, collective-bargaining, selection, severance or reporting obligations. A global policy cannot replace local legal review.

Documentation should show:

• The business reason for the restructuring
• Which work is changing
• How affected roles were identified
• Which criteria were used
• Who reviewed the decision
• Which redeployment options were considered
• How conflicts or exceptions were handled

Documentation is not only a legal safeguard. It forces leaders to test whether the decision can be explained consistently.

Tell People Clearly What Is Changing

Employees do not expect restructuring news to be positive. They do expect it to be understandable.

Vague phrases such as “optimizing our footprint,” “creating synergies” or “realigning for future growth” may avoid uncomfortable language, but they often leave people unsure about what happened.

Communication should explain:

• What business conditions changed
• Which part of the organization is affected
• Whether the change is financial, strategic, technological or a combination
• When affected employees will be informed
• What support is available
• Whether further decisions are expected
• How remaining work will be organized
• When employees will receive another update

Leaders should not promise there will be no further layoffs unless they can back that promise. False reassurance may briefly reduce anxiety but causes greater damage if another announcement follows.

Timing also matters. Affected employees should hear the decision directly and privately before broad internal or public communication wherever practical. Managers need accurate briefing materials, but they should not deliver a memorized script without being able to answer basic questions.

Public visibility is difficult to control. LHH found that 46% of surveyed employees would consider recording their layoff experience, while 63% of HR leaders were concerned that layoff conversations could be shared publicly.

Glassdoor reported in June 2026 that mentions of job insecurity by current employees on its platform rose 63% year over year in May, while explicit mentions of layoffs increased 29%. It also reported that the negative cultural effect associated with layoffs can persist for several years. These figures reflect activity on Glassdoor rather than the entire workforce, but they show that restructuring becomes part of the information candidates use to judge employers.

The practical response is not to design a message that looks good if recorded. It is to run a process the organization can defend if people describe it publicly.

Support People Who Are Leaving

Respectful treatment requires more than a carefully worded termination meeting.

Support may include:

• Severance where available
• Continuation of benefits for a defined period
• Outplacement or career-transition services
• Résumé and interview assistance
• Access to internal vacancies
• References or employment confirmation
• Time to collect personal belongings and information
• Clear payroll and benefit documentation
• Access to employee-assistance services
• Immigration or visa guidance where employment affects status
• A named contact for later questions

The organization should avoid announcing support that affected employees cannot easily access. If outplacement is offered, employees need to know how to enrol, how long it is available and what it includes.

Practical dignity also matters. System and building access may need to be restricted quickly for security reasons, but the process should not automatically treat every departing employee as a threat.

Managers delivering the news also need support. They should understand the business decision, the boundaries of what they can say and where to direct questions about pay, benefits, legal matters and redeployment.

LHH’s 2026 survey found that 64% of HR leaders said ongoing restructuring affected their mental wellbeing. While this is self-reported vendor research, it reinforces the need to prepare and support the people responsible for repeated workforce conversations.

Rebuild Workloads and Trust After the Announcement

A restructuring is not complete when affected employees leave.

Remaining employees inherit the operating model. They may experience relief, guilt, anger, fear or uncertainty. Some will take on extra duties while still trying to understand whether their own roles are secure.

Leaders should review:

• Which work has stopped
• Which responsibilities have moved
• Whether remaining teams have enough capacity
• Who now owns each decision
• Which targets need to change
• Where knowledge has been lost
• Which customers or projects are at risk
• Whether managers have too many direct reports
• Which vacancies still need to be filled

A common mistake is removing roles while leaving all previous goals in place. Employees are then expected to deliver the same workload with fewer people, and the restructuring becomes a continuing source of overtime, errors, and resignations.

Managers are especially important during this period, yet they may also be under pressure. Gallup’s 2026 global study found that employee engagement fell to 20% in 2025, while manager engagement dropped from 27% to 22% in one year. Gallup’s findings were based on 141,444 employed respondents across more than 140 countries and territories for the 2025 data.

The figures do not measure the effect of one company’s restructuring. They show that many managers already enter organizational change with limited energy and confidence.

Post-restructuring support should include:

• Clear team priorities
• Workload discussions
• Updated performance expectations
• Regular leadership updates
• Manager coaching
• Opportunities for employees to raise concerns
• Recognition of additional responsibilities
• Decisions on delayed or essential hiring
• Follow-up checks on wellbeing and attrition risk

Trust returns when employees repeatedly see that leadership statements align with subsequent decisions.

Use Workforce Data Without Hiding Behind an Algorithm

Workforce data can reveal skill gaps, duplicate work, changing demand, and operational pressure. It can improve restructuring decisions when leaders understand its limits.

Useful information may include:

• Skills inventories
• Role demand forecasts
• Project assignments
• Performance history
• Training and certifications
• Internal applications
• Time to productivity
• Attrition patterns
• Manager spans of control
• Customer dependency
• Cost and workload data

Data can also repeat past inequality.

An employee who received fewer visible assignments may appear to have contributed less. Someone working part-time may show lower output even when productivity per hour is strong. A rating model may favor employees who worked under generous managers or in departments with clearer goals.

Automated ranking should therefore not be treated as neutral simply because it produces a score.

The EU AI Act classifies certain AI systems used to make decisions affecting employment terms, promotion or termination as high-risk. The regulation notes that such systems can affect livelihoods and may reproduce historical patterns of discrimination.

In the United States, the Equal Employment Opportunity Commission has also stated that existing federal discrimination laws apply when employers use AI in employment decisions.

Responsible use requires:

• Clear and job-related criteria
• Testing for uneven outcomes
• Human review by people who understand the work
• Documentation of data sources
• A process for correcting inaccurate information
• Appropriate privacy controls
• Legal review for relevant jurisdictions
• A way for decision-makers to challenge the system’s recommendation

Human review should be real. Approving a ranking without understanding how it was created does not provide meaningful oversight.

Measure Whether the Restructuring Worked

Headcount reduction and payroll savings are immediate measures. They are not enough to show whether the organization made the right change.

A restructuring can meet its savings target while creating expensive problems elsewhere.

Leaders should monitor:

Financial results

• Payroll and operating-cost reduction
• Severance and transition cost
• Contractor and outsourcing spend
• Cost of rehiring
• Overtime
• Revenue affected by delayed work

Workforce results

• Employees redeployed
• Retention after redeployment
• Voluntary turnover among remaining staff
• Critical-skill losses
• Internal applications
• Manager workload
• Absence and wellbeing indicators

Operational results

• Customer complaints
• Delivery delays
• Quality or error rates
• Productivity
• Project completion
• Compliance issues
• Decision and approval times

Employer-brand results

• Candidate acceptance and withdrawal rates
• Application volume for critical roles
• Employee-review themes
• Alumni feedback
• Referral activity
• Time needed to fill vacancies
• Candidate questions about job security

Measures should be reviewed over several periods. Immediate productivity may rise because employees work harder during uncertainty, only to fall later as workload and turnover increase.

Leaders should also distinguish between expected disruption and evidence that the operating model is failing. A temporary delay during handover is different from continued service decline six months later.

A Practical Workforce Restructuring Plan

A disciplined process can be organized into eight stages.

1. Confirm the business need

Define the financial, market, technological or operating reason for change. Identify the outcomes required over the next 12 to 24 months.

2. Map the work and skills

Review tasks, capabilities, customer dependencies and future skill needs. Do not rely only on department names and job titles.

3. Test alternatives

Consider hiring controls, reduced external spending, voluntary options, redeployment, reskilling, natural attrition, project reassignment and process redesign before compulsory exits.

4. Design the future organization

Clarify roles, reporting lines, decision rights, team sizes and the balance between permanent and flexible workers.

5. Apply fair criteria

Use defined, job-related measures. Review data quality, bias risks, legal obligations and individual circumstances.

6. Prepare communication and support

Brief managers, prepare employee information, confirm transition services and plan the order and timing of announcements.

7. Reset the work

After the change, remove discontinued tasks, redistribute responsibilities, update targets and support managers and teams.

8. Track the outcome

Review cost, productivity, retention, redeployment, customer impact and employer-brand signals. Correct problems rather than declaring success after the headcount target is reached.

Employer Brand Depends on the Process, Not the Slogan

A company cannot communicate its way out of a poorly designed restructuring.

Employees and candidates will judge whether leaders examined alternatives, used fair criteria, explained the decision honestly and treated departing colleagues with dignity. They will also watch what happens afterward: whether workloads remain realistic, whether external hiring immediately replaces dismissed employees and whether leadership keeps its promises.

The term “right-sizing” can be useful when it describes a genuine effort to match work, skills and capacity. It becomes an empty euphemism when it is used to avoid saying that people are losing their jobs.

Strategic workforce restructuring is not about protecting reputation at the expense of transparency. It is about making commercially necessary decisions in a way that remains credible when employees, candidates and customers examine what the company actually did.

The strongest plan will not remove every difficult consequence. It will show that the organization understood both sides of the decision: the need to change the workforce and the responsibility to protect the people, knowledge and trust the business will still need afterward.