PART 1- An Employers guide 

Devan Moonsamy

The year is 2020. Companies are battling to make the decision on whether they should stick to age old methods of having people do the job or to accept that machines and applications have taken over.

Today, scores of people are facing the chopping block because companies are being forced to implement the latest technology to keep up with their competitors and of course to ensure they are meeting their client’s needs. As much as this is the way forward it is also a ‘dig deeper’ situation into company’s finances often resulting in the businesses needing to take on a decision of restructuring.

What is restructuring?

Restructuring is a choice taken by a company to modify the financial and operational aspects of the company and it usually occurs when the company experiences financial pressure. Many companies in South Africa had to opt for restructuring due to the financial pressure.  

Just last year a report in the Business Insider showed how many jobs were lost when companies closed doors or embarked on restructuring in SA.

Dunkin Donuts & Baskin Robbins left 120 people without jobs when the company closed its doors in South Africa last year. The company said it had unsuccessfully tried to sell the businesses since September 2018.

Standard Bank – South Africa’s largest bank in terms of total assets – announced last year that it will close dozens of its branches as the bank focused on digital banking.  Standard Bank said the closures will affect an anticipated 1,200 jobs. In the banking front Absa also said it was restructuring its South African retail and business banking unit, which will affect 827 employees last year. 

Tongaat Hulett – Our largest sugar producer last year said it issued Section 189 letters to 5,000 permanent and temporary workers as the company battles with lower sugar prices and the impact from the new sugar tax.

Multichoice, said last year  it would retrench 2,000 employees at its call centres and walk-in services. 

Now as much as we think maybe 2019 was the year of bad news, companies in 2020 have already announced thousands of job cuts. Almost 6,000 jobs are at risk as companies including Telkom SA SOC Ltd, the country’s largest fixed-line operator, and Walmart Inc’s local unit Massmart Holdings Ltd plan to reduce their employees after slumps in earnings, according to Business tech.

But as a small business how do you know when it’s time to administer restructuring?

The first step is to reflect on the financial year. Has my business made a significant profit? Another red flag is cash flow shortage. If you see cash flow shortages are a regular occurrence then it is time to consider a restructuring. And another reason why restructuring should be administered is if you try to expand your business and you start finding it impossible to achieve growth.

Now while restructuring seems like a scary concept it will also give your business the best chance to stay afloat and trade while working on your steps to get back to a healthy balance sheet.

But how do we have this conversation with staff?

  • When having the conversation with employees start by being honest and realistic. This will prevent them from being spooked when talks start spreading through the office.
  • In order to prevent the office gossip, have meetings and engage with staff on the way forward. Put up an article on your intranet showcasing information on the restructure. This will eliminate any rumours about what they can expect.
  • As much as it is important to have the information on the intranet it is just as important to speak individually to employees. By doing this it will show the employees will be able to see their position in the restructure and also work on what they need to do going forward.
  • Managers also need to be trained on how they handle the conversation. We should not be telling people not to worry. Restructuring is a cause for concern especially if as an employee you are not sure what your position will be after the restructure. Sit down with your team and give them updates as and when they are available. But also explain to them why this needs to be done.

Now while restructuring will have its causalities there will also be those employees that will survive and still remain on board. Steps must be taken to reassure them of their value to your business and how important it is for the team to work together in order to achieve the organisations goals.

Changes are inevitable and as much all work places undergo change they all react to this differently. However, with planning and necessary communication we can still use this as an advantage to make our business successful.

In Part 2, out next week we focus on how employees need to prepare for a company restructure.  

Devan Moonsamy is the CEO of ICHAF Training Institute. ICHAF offers SETA-approved training in business skills, computer use, and soft skills. Devan specialises in conflict and diversity management, and regularly conducts seminars on these issues for corporates. To book a seminar with Devan or for other training courses, please use the contact details below.

Tel: 011 262 2461 | Email: | Website: |