11. Navigating Staff Cuts and Restructures With Humanity

Ethical and compassionate approaches to tough decisions around teams

1. Introduction

When finances tighten and demand drops, one of the hardest realities a business owner may face is the need to restructure or reduce staff. It’s a decision that carries emotional, financial and cultural weight. While sometimes unavoidable, it can be handled with care, clarity and compassion.

This article belongs to Pillar 3 - Leadership in Uncertainty. It focuses on how to approach team changes ethically - from process to communication, in a way that maintains dignity, trust and the long-term health of your business.

2. Representative Narrative

Jo runs a small events company in Christchurch. After a strong summer, bookings dropped sharply through autumn as corporate clients cut back. Despite reducing hours, pausing marketing and drawing on reserves, Jo realised she couldn’t carry the wage bill through winter.

The thought of laying off staff made her feel sick. These were people she had trained, celebrated wins with and leaned on through COVID. She didn’t want to cause harm, but avoiding the decision would risk the business itself.

She contacted John Luxton at RegenerationHQ, someone she trusted to speak practically and with heart. “You don’t need to be cold to be clear,” John said. “But you do need a process and people need to understand where they stand.”

3. Recommended Actions

• Start with clarity, not assumptions
  Confirm your financial position, forecast and what changes are needed to restore viability. Make sure any staffing decision is grounded in data, not emotion.

• Know your legal obligations
  Follow New Zealand’s employment law closely. Restructures must follow fair process -

• Clear proposal

• Genuine consultation

• Time for feedback

• Consideration of alternatives

• Final decision and communication

• Be transparent but thoughtful
  Avoid vague language. People cope better when they understand the why, the process and the timeframe.

• Support those affected
  Offer references, introductions to recruiters and emotional support. A small gesture goes a long way.

• Care for those who remain
  Survivors often carry guilt, anxiety or extra load. Speak openly about what’s changed, what’s stabilised and what comes next.

4. Expected Outcomes as Narrative

With John’s support, Jo created a formal restructure plan, including financial context and proposed changes. She spoke to each team member one-on-one and gave space for honest feedback. One staff member proposed a job-share alternative that saved another role.

When two redundancies were confirmed, Jo provided written references, offered flexible exit timelines and connected both individuals to others in her network.

The team felt the loss, but not confusion or resentment. Jo’s honesty and empathy helped keep trust intact. Those who remained said they felt respected and motivated to help the business rebuild.

5. Red Flags & Mitigating Strategies

Red Flag 1 - Making informal or rushed cuts without process
Mitigation - Always follow legal consultation steps, no matter how small your team

Red Flag 2 - Overloading remaining staff without support
Mitigation - Adjust expectations and offer flexibility where needed

Red Flag 3 - Going silent or vague to avoid difficult conversations
Mitigation - Plan your communication carefully — honesty brings calm

6. HR Best Practice

• Use written proposals - even in small teams

• Document everything - notes, feedback, decisions

• Offer wellbeing resources - external or internal

• Preserve culture through action - people watch how you lead through loss

As John often reminds owners, “You’re not just laying off staff, you’re setting a precedent for how your business handles hardship.”

7. Psychological Perspective

Laying off staff can trigger deep emotional distress - guilt, grief, self-doubt. These are human responses, not signs of weakness. It’s okay to feel it. But it’s also important to lead with intention.

Processing your own emotions with a trusted advisor like John can help you show up better for those you’re leading through change.

Remember, people will rarely forget what happened, but they will always remember how it was handled.

8. Recommended Owner's Mindset

Lead with compassionate strength. Recognise the weight of your decision, but don’t carry it alone. Be brave enough to be kind and clear enough to be fair.

9. Reflective Questions for the Owner

• Have I truly explored every reasonable alternative?

• Do I understand the legal steps I need to follow?

• Am I prepared to have open, respectful conversations with those affected?

• What support can I offer - even if small, to ease the transition?

• How can I protect the wellbeing of those who remain?

10. Suggested Ongoing Actions

• Keep written guidelines for restructure steps in your HR files

• Build a small advisory group. including someone like John, for sensitive decisions

• Have regular check-ins with your team during and after changes

• Create documentation for future transparency and reflection

• Acknowledge transitions in a human way - even a handwritten note matters

Critical Takeaway - Restructures are hard - but with care, clarity and courage, they can be done with dignity.

If you’d like a confidential, free of charge, free of obligation conversation about your business, here’s how to get me.

📞 Phone +64 275 665 682
✉️ Email john.luxton@regenerationhq.co.nz
🌐 Contact Form www.regenerationhq.co.nz/contact

If you’d like to read more RegenerationHQ thinking on SME business and other things, go here – www.regenerationhq.co.nz/articlesoverview

🔹 RegenerationHQ Ltd - Business Problems Solved Sensibly.
Supporting NZ SME Owners to Exit Well, Lead Better and Build Business Value.