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Peer Effect
Best way to scale? Your peers have the answers.
This is the podcast for scaleup founders looking for insightful, actionable wisdom from some of the best operators around. Each week we’ll explore one secret that other founders and experts are using right now and how to implement it.
It’s practical wisdom to build the company AND life you want. Hosted by renowned founder coach and advisor James Johnson.
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Peer Effect
How To Restructure Your Team Without Destroying Trust
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Frank's question this week: "I need to change course. How quickly can I restructure?" James and Freddie take apart the founder instinct to move fast and get it over with, and why that's usually the most dangerous part of the process.
They get into what has to happen before you announce anything, the narrative trap that quietly kills your credibility with the people staying, and the timing mistake that catches almost every founder out afterwards. Listen before you move.
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Welcome to the Pure Effect Post Bag. I'm James Johnson, joined by Freddie Burley. We ask for your questions, and Freddie and I are going to tackle them together. These aren't theoretical case studies, it's the stuff keeping you up at 2 a.m. Let's get answering. Welcome to Peer Effect Post Bag. I'm James Johnson.
SPEAKER_00I'm Freddie Burley.
SPEAKER_01So, Freddie, what have you been up to this week?
SPEAKER_00This week has been um a fun week. I spent a lot of this weekend dancing, which honestly felt so good.
SPEAKER_02Yeah.
SPEAKER_00There's something about dancing that you feel so free and it's so much fun. And it's not exercise where it's like a means to an end. It's very much it the process is so fun. And you connect with people, it can be funny. I was in Sicily and it was this incredible weekend. And yeah, it just reminded me of how much I love dancing. But my calves, I did 40,000 steps on Saturday. No. 40,000. I was like, my aura ring was like, whoa, what are you doing, you crazy woman? And my calves, I could hardly walk on Sunday. Um, it's now Tuesday. Yeah. And I'm still in pain, but it was fun. Worth it. So worth it.
SPEAKER_01So so what sort of dancing are we talking about here? Are we thinking like sort of ballroom, hip-hop? I wish it was some breakdancing going on.
SPEAKER_00I wish it was ballroom. It was more um a lot of a lot of jumping around. A lot of jumping around. Picture kind of um like a six-year-old at a birthday party, just like jump, jump, jump, jump, jump. Not a lot of style, a lot of fun. That's how I'd imagine it. Yeah.
SPEAKER_02I love it.
SPEAKER_00Yeah. So this week we have a question from Frank saying, I need to change course. How quickly can I restructure?
SPEAKER_01When founders ask this question, I think the danger is they rush into this. It's kind of the there's there's been a sense of pain probably for a while. If you get in a stage where you need to restructure that that is, that is that is a significant thing to be doing. I think it's worth acknowledging the mindset you're in when you when you hit this moment because it's probably something you've been just dating for a while. There may well be some underlying sense of either like lack of profitability or lack of cash. So it can feel like, oh, this is a very urgent thing that needs to happen now. Now that I've got clarity, it needs to happen.
SPEAKER_02Yeah.
SPEAKER_01And I think that can be quite dangerous because I think it's worth noting that, I mean, a restructure as a whole thing. You could, like many things, do it quickly, but you're gonna be paying the consequence for that for a while. So I think step one is just to go, okay, great, great, you've got that clarity. But do you have a plan? Yeah. Do you have a plan? And also who's going to help you do it? Because it it's actually quite a specialist process to go through. And if you get it wrong, it can trigger all sorts of employment or business impacts or client impacts. So I think step one I say is like, great, got clarity, but don't rush, plan it and find someone that uh can help you. So I then think the next part is like to stick to the plan because it can be tempting in the moment, particularly doing it by yourself, just to slightly wing it and kind of respond. Yeah. But actually, I think this goes back to just running, you should have someone who can help you with it. They can be there with you during the price. That might be your head of people, it might be someone external. But someone who's done it before, I think, is worth their weight in gold because it's they can just aren't they can just anticipate questions that you wouldn't even have thought of.
SPEAKER_00And also keep you grounded.
SPEAKER_01Yes.
SPEAKER_00It's just someone else who's been through the process before and can like help you frame what's normal, what's not normal, what are the things that could be happening next that you haven't even thought about. And it can be a really emotional process. And like what you said, it can take time to actually get to that just like the decision, okay, it's time to restructure. And often that means letting go of people. That means there's kind of there has to be really intentional communication around that so that the waves are rippled like upward as opposed to downward. And often people can really avoid those kinds of conversations and and kind of hope that if they just do it quickly, it will all be fine. And I think it's often one of those processes that you have to be so in reality and so front-footed and really leaning in and quite transparent so that you use it as an opportunity to build trust, to reaffirm the culture, to um reaffirm the why, to like reorientate people around the vision. To there's there's so many alongside the challenge, there are so many benefits that can be created through a restructuring that only would happen under that kind of pressure. And I've seen it really cultivate a sense of like all hands on deck. I've seen it reaffirm why people chose this company. I've seen it refocus, like leaders really grow through that and gain new respect from their team or gain a new sense of kind of deep connection and trust. So there is a lot of beauty that can come through restructuring, but it is also a brutal and emotionally exhausting process as well.
SPEAKER_01And I think as a founder, when you do that, there can be a sense of shame, like we're in this position, it's my fault. Failure, yeah. Failure. I'm on the back foot, I'm apologetic about it. I kind of need to like almost try and sneak this through as quickly as possible, and like almost just forget about it. Yeah. I think you say, like, it's acknowledging that it can be a moment of renewal. And actually, I do think controlling the narrative is super important in these scenarios and going, okay, what like this is not a knee-jerk response to something else. This is, and yes, let's not ignore the fact we are where we are. But the purpose of this is to get us back to here. And I think telling that story and taking people along because people forget, like, people are leaving, but a lot of people are staying. And there can be survivor's guilt and survivor worries, and people will leave off the back of it often that you don't expect to or want to. That's kind of the nature of change programs. But taking people with you on that journey with the narrative, I think, is a really important part of doing this as a leader. Like, we're gonna go through this pain, but it's gonna be worth it because we're gonna be here.
SPEAKER_00And it's also the reality. So I think it also gives you an opportunity to be like, why, why are we here? Yes. And to it's not just one, it's it's you're co-we've co-created this. And so taking the learnings of like, okay, what was in our control that got us here, what was out of our control that got us here, and owning that. And I think often people can skip that part. And so then even after the restructuring, they kind of repeat the same patterns or mistakes that led to the restructuring in the first place, and just using it as an opportunity for a proper reset. And human beings, I think often we think sometimes leaders feel like they need to paint only a positive picture when they're going through restructuring. And I think often, if the more you're in reality, is like honest about why we got here and now where we want to go, the more that people trust you again. But when it's just like this is going to be great, and that's the narrative, people were like, Why are we here in the first place? And there's no accountability, and not in a shameful way, in a only like we're all here to learn and grow, and this is what we're learning through this process, and now let's grow.
SPEAKER_01And let's hopefully never do it again.
SPEAKER_00Exactly.
SPEAKER_01Because it's interesting because I think founders can sometimes go down the route of only positivity because they they're overly focused on people staying. But I think they can also go down the overly negative route because they kind of don't want to make it seem that people I'm asking people to leave, therefore, there can't be any positives because it's such an awful event. And if it was, if there's any positivity, I should be keeping everyone. Therefore, I'm just gonna really lean into how it's all rubbish to justify the fact that you're leaving. Yeah. I think that can also be really dangerous. Or they sort of swing, so it's kind of during the restructure period, it's like, oh, it's all awful. And then everyone you finish it and go, oh, actually it's all great because we're gonna do it. It's like, hang on a second, because you are actually talking to the same group of people just at a slightly different time frame. And if you've gone through telling them it's all rubbish and then it's all great, that also massively kills your credibility.
SPEAKER_00Yeah, and it's jarring, it's jarring for the team. And I also think when people sign up to work at a startup, they are aware of the risks too. And obviously, it's not the same when you actually get let go, or but I think most people that are on a startup track or they've been through, especially if they've worked at a few companies, they've often been through one redundancy or one it's happened to most people. So I think it's also part of it's part of that experience, it's part of that career decision. There's huge upsides and downsides in in that.
SPEAKER_01I think if you can be treat your employees like adults and treat them sort of as if they have agency, which they do, yeah. Like that'll help you in these times because you're not having to land messages that you've never had to land a hard message before. If you've molecoddled people from the beginning, oh, they can't deal with it. It's like when you need to deliver hard messages, you're gonna be you're gonna shock them. So I got it.
SPEAKER_00It's so true. And I I also found that often found often we think as human beings that as we if we molecoddle them from the truth, they won't realize. But actually, what happens is people in your team and company, they come up with their own truths. And so it's just like a reality of either you own the reality and you tell them the truth, and therefore actually you have more control over the narrative because it's the truth, or you kind of hoodwink them and that by telling them only one side of the story that the team are not going to realize. And actually, what they do is they just all come up with their own negative stories that you don't have as much input in or opportunity to tell them what's actually happening.
SPEAKER_01And kill your credibility because they do realize.
SPEAKER_00Yeah, exactly. Exactly, exactly. But at the time it feels quite good just talking about positive stuff. It's just like short-term thinking versus long-term impact.
SPEAKER_01I think then the final thing I would say on the restructure is allow time to embed it.
SPEAKER_00Yeah.
SPEAKER_01I think again, it's quite rushed. It can't be rushed. But then you also probably need a month to onboard everyone to their new roles at the end of it, maybe to hire some new people to deal with people that have left you haven't expected, settle in new processes, check the team are okay. Like you're probably a month, like as a founder, you probably finished it, like, oh phew, that's done. But you had probably a month's further space to prepare for it because you made the decision, you prepared for it, you did it. Everyone else emotionally is a month behind. Yeah. I think it's tempting to rush on, go, right, I've got that done, right? I can move on to the next project.
SPEAKER_00Yeah, and everyone's kind of got whiplashed. Yeah, it's true. It's so true. I'm taking lots of things away from this. Um, I feel like the first piece is what you started with of like, have a plan. The plan also contains you as a founder. It gives you something to stick to that's sort of in your control and in and helps reground you and keep you in reality. Also taking away how important communication is and owning the narrative and telling people as far as possible the truth transparently. And then that there are opportunities in every restructuring. Um, and if you can approach it like maturely and like an adult and treat your team like adults too, often you then cultivate the behaviors you want to see in the restructuring post-restructuring too. So it can be a great opportunity to just like walk the walk and also acknowledging that it's a deeply human and tough, it's a very tough process. And so, as human beings, getting the right support as a founder through that um uncertainty and through that challenge, and especially if it's the first time you've done it, if you can have a mentor or founders around you that can help you stay focused, that that can add a huge amount of value to how you execute and how you show up.
SPEAKER_01Yeah, I'd go beyond mentor and coach. I would go look, I would look for someone like a real someone, an HR professional that has been through that process. I think is so critical to that bit. Yeah. Amazing. Well, thanks for listening. This is us for another week. Hit subscribe before you go, and we'll see you next week.
