How to manage staff through restructuring without destroying what remains

HouGarden New Zealand, 22 October — New Zealand's economic recovery remains uneven. GDP grew just 0.2% in the June quarter, and despite years of cost-cutting and sinking lids that have constrained workforce growth, restructuring has continued across a wide range of industries.

The scale is documented. In a February 2025 survey of 806 New Zealand-based employees conducted by Scitex Recruitment, 43% said their employer had restructured in the previous year. Six in 10 reported a restructure within the previous two years.

The psychological damage shows up in separate data. A 2024 survey of 1,229 workers by EMA — the Employers and Manufacturers Association — and health insurer nib found 39% said job insecurity or restructuring had affected their wellbeing. Concern about job security had risen from 33% in 2022 to 44%.

For employees living under the threat of another round of cuts, the economic indicators matter less than immediate personal consequences. Clinical psychologist Sean Versteegh, co-chief executive of workplace psychology firm 3 Big Things, says prolonged uncertainty reaches well beyond the office. 'This affects our ability to feed ourselves, our family,' he says.

Versteegh observes anxiety, disengagement and fear across public, private and non-profit organisations. In the public sector, which faces restructuring that could result in up to 9,000 job losses by 2029, he says feeling underappreciated can compound the threat of redundancy itself.

He does not believe a painless restructure is achievable. 'I don't think there's any good way to restructure,' he says. But he argues there are less damaging approaches, and that psychological support belongs inside the change process rather than in wellbeing programmes offered after decisions have been made and damage done.

The financial case for cutting roles appears straightforward, but Versteegh argues the psychological consequences can undermine the savings. 'Of course, you save a whole bunch of money, but if you don't do that change well, you lose motivation, you lose engagement, and I think you lose that commitment from people that hits your bottom line,' he says.

The harm is not confined to those made redundant. A 2016 review of 39 longitudinal studies found that restructuring generally damaged wellbeing even when it involved no job losses at all. Employees who keep their roles may absorb the work of those who have left, along with the anxiety that the next round of cuts could reach them.

That makes the treatment of remaining staff central to whether a restructure succeeds. Versteegh says leaders devote considerable time to planning what will change, but not enough to thinking through how employees will experience it. Explaining why a decision has been made matters as much as announcing what it is.

'You communicate as honestly as possible, right at the beginning,' he advises. That does not mean disclosing confidential details or claiming certainty about decisions that have not yet been made. It means acknowledging uncertainty directly rather than dressing it up in corporate euphemisms.

Consultation also requires substance. Employment New Zealand's official guidance states that employers must give affected employees adequate time to respond, including the opportunity to suggest alternatives, and must genuinely consider that feedback before reaching a final decision. Asking for input after everything has been settled makes consultation feel hollow, Versteegh says, and good intentions alone will not rebuild trust once it has gone.

Middle managers carry a particular burden. They sit between decisions made above them and the people affected below, often uncertain about their own futures while absorbing their team's distress. 'They've got one of the toughest jobs,' Versteegh says. 'But they're also the ones having to front up to people and actually communicate that.' He says coaching and psychological support can help managers handle difficult questions, recognise signs of distress and communicate clearly without retreating into a script or adding to the fear.

Once redundancies take effect and colleagues depart, support must become practical. If the same volume of work remains, managers need honest conversations about priorities rather than instructions to do more with less. 'Okay, you're doing more. Let's have a conversation about how we can make that manageable,' is the approach Versteegh recommends. He advises identifying what matters most and setting less important work aside.

WorkSafe New Zealand identifies prolonged change without proper consultation or adequate practical support as a workplace risk, reinforcing that the problem can lie in how work itself is organised rather than solely in how people feel about it.

Employee assistance programmes and counselling can help individuals cope, but Versteegh warns against treating extra support as the primary response. 'That's a band-aid solution. It's not going to create a whole lot of change,' he says. An overloaded role, unclear expectations or leadership that employees no longer trust cannot be fixed by counselling alone.

He also says organisations need to make room for anger and disappointment before attempting to move people into the next phase. Difficult conversations may need to happen privately rather than dominating every team meeting. The test of any support measure, he argues, is whether it changes employees' daily experience, not simply whether it exists.

His central question for any organisation preparing to restructure is this: 'How do we support people through this whole process in a more systemic way?'

Disclosure: Southern Cross Health Insurance is a sponsor of the Working Well series in which this article appears. The insurer does not necessarily endorse the editorial content and the views expressed are not its own.