Reorganisation and co-determination - (not) a contradiction?

Reorganisations are becoming more relevant

The term "reorganisation" covers a wide range of applications, from comprehensive restructuring to specific organisational adjustments to individual company divisions. The breadth of the term itself also varies greatly. Some define it exclusively as the adjustment of structures, while others also include processes, systems, governance and collaboration. The definitions have one thing in common: reorganisation is always about adapting the organisation to changed framework conditions. It is enough to look at many companies to realise this: More reorganisation is taking place than probably ever before, because the framework conditions are also changing ever more rapidly.

Effective cooperation with the works council

In Germany, the works council plays a central role in reorganisations. Its rights and obligations are enshrined in the Works Constitution Act. The works council has the right to be informed and consulted about planned organisational changes. In the case of more extensive personnel changes and staff reductions, the right to be consulted goes even further. This means that the role of the works council is formally and legally regulated. Nevertheless, it is important and sensible to ensure that the works council is closely involved in reorganisation projects and to seek cooperation beyond the minimum legal framework.

As different as the companies are, as different are the works councils and their familiarised role in interacting with management and employees. Therefore, the context of previous cooperation must always be considered first. This can be both an accelerator if there has been trustful cooperation in the past, but also an obstacle if this was not the case. There is then a risk that "old battles" will be continued under a new name.

So the first thing that matters is the attitude with which the management meets the works council in the course of a reorganisation and whether this is based on an "opportunity perspective". And there are certainly opportunities - here are a few examples:

• Using the works council to identify pain points in the organisation
• Content-related perspective in the design of the new organisation
• Role as an effective multiplier for change
• Additional point of contact for employees with questions and concerns

Of course, there are inherent conflicts of interest between the roles of management and works council, and such a relationship of trust will not exist everywhere. Nevertheless, it is important to at least make an attempt and take a (perhaps unexpected) leap of faith at one point or another. Then the works council can take on the role that gives it its greatest effectiveness - as a close and equally critical companion to management.

Even with the help of a consulting firm, the spectrum of cooperation ranges from complete opposition to a very constructive and solution-orientated attitude. In addition to the necessary professional aptitude, the consulting support should therefore, in our view, bring three things to the table: An authentic interest in the success of the company and the impact of the reorganisation, an equally high level of factual and people orientation and playing at eye level with the management and with the works council. In the best case scenario, a consultancy can even manage to build bridges that did not previously exist.

Determine the degree of involvement

Depending on the relationship of trust, the degree of involvement of the works council can be chosen differently in each phase of a reorganisation:

• Earlier or later involvement of the works council (during the conception phase or when initial decisions have already been made)
• Involvement in all phases or only in selected phases (e.g. information only)
• Formal information with request for comments or active request for participation
• Involvement of the works council chairperson in a small group or involvement of the entire works council (with the associated complexity)
• Regular (also informal) flow of information or formalised information at fixed times
• Involvement as part of the project team or outside the project team (e.g. via a steering committee)

Irrespective of the specific form of cooperation, it generally makes sense to use the reorganisation process as a confidence-building measure, even in a situation that is not yet optimal, in order to gradually build up more trust. Over time, this can lead to a further expansion of involvement. In our experience, this is important: A reliable personal relationship allows solutions to be sought jointly and constructively, both informally and formally - in the interests of the employees and the company.

Involving the works council in the reorganisation phases

A successful reorganisation comprises four fields of action which, although they do not address all conceivable challenges, make a successful implementation more likely. The works council can and should play a role in each of these work packages:

• Formulate the level of ambition and target image: it is not uncommon for a reorganisation to be stylised as an "egg-laying wool-milk sow". The company should be less hierarchical, faster, more efficient, more decentralised, more innovative, ... (feel free to use any other buzzwords here). As a result, the main objective is quickly lost sight of and it is up to top management to prioritise sensibly and define design principles for the redesign. This sometimes requires a little patience, as the desired strategic consensus is not always reached immediately. It is important to get off to a "good start" and involve the works council in the deliberations from the outset. For example, the works council can be involved in the development of guidelines and objectives (e.g. in a joint kick-off workshop). Early involvement also typically helps to build trust for the rest of the process. However, it is also about managing expectations, i.e. communicating clearly and honestly what the reorganisation can mean, what it cannot mean and where it is still unclear. Potential conflicts can also be identified at this stage and "rules of the game" can be established for dealing with them.
• Involve managers and employees selectively: Traditionally, there are two phases to involve both employees and managers: When analysing the current strengths, but also the pain points of the organisation through targeted interviews and focus groups, and when developing solution options within predefined guard rails. The works council can be an important source of information, particularly when analysing the organisation's pain points. However, the works council can also act as a corrective and sparring partner when it comes to shaping the new organisation within the set guidelines. Although managers and employees are often involved in this phase, there are also cases where this is less possible due to obvious conflicts of interest. Here, the works council can and must take on an important role as a "challenger" of the concepts developed, if only to compensate for possible "blind spots" of the management. In this context, the direct involvement of selected members of the works council in the project team could also be an option - with all the associated rights and obligations.
• Communicate transparently, clearly and authentically: A reorganisation always creates uncertainty. It is therefore essential to communicate a consistent "story" of the reorganisation. This is more than internal communication - it is about building trust, creating an understanding of WHY something is happening and, ultimately, minimising individual uncertainties and misunderstandings. Typically, broadband communication (e.g. intranet), personal communication (e.g. town halls) or cascaded communication (e.g. via managers or multipliers) are used for this purpose. The works council can form an important additional channel here thanks to its broad network. However, for this to be used effectively, there must be absolute agreement on the "story" and the core messages of the reorganisation.
• Iterative implementation: In the rarest of cases, an organisation is perfect - and it won't be after the reorganisation either. There are always trade-offs and compromises to be made and some things simply have to be tried out. This is why managers and employees are the first to realise what works and what doesn't in day-to-day life. Here, the members of the reorganisation project team are typically close to the pulse of the organisation and management will also receive direct feedback. But here, too, it helps to have an additional ear on the pulse of the organisation with the works council in order to understand how the changes are perceived and where the content needs to be sharpened.

Conclusion

Reorganisations require close cooperation between management and the works council. Early and transparent involvement is crucial to ensure successful implementation. This can take place in different project phases and can vary in intensity (depending on the existing relationship between management and works council). Early and transparent communication, mutual respect and a willingness to co-operate are the keys to success. Companies that take these principles into account can benefit from an effective reorganisation that does justice to both the company's goals and the interests of the employees. In the best-case scenario, joint success strengthens the relationship of trust between the works council and management.

Success factors at a glance

• Determine the level of involvement of the works council
• Early involvement for expectation management and agreement on rules of the game as part of the reorganisation
• Utilisation on three levels: Listening to the organisation, content challenger and communication channel
• If possible, direct involvement in the project team
• Regular dialogue (formal and informal)
• Honest, clear and authentic communication at eye level
• Personal and stable contacts over time with a resilient mandate