Sep 07 Restructuring, and the Rare Window to Do Right by Your People
When a workforce reduction happens, Finance opens a door that most CHROs don’t realize is only open for a moment.
Restructuring is different from every other workforce decision your company makes. It isn’t routine, and Finance doesn’t treat it like routine. That difference matters more than most CHROs realize, because for a brief window, it gives you room to do right by the people you’re letting go — room you won’t have again until the next restructuring.
KEY TAKEAWAYS
- Restructuring costs are classified as nonrecurring charges, giving CFOs more investment flexibility than at any other time.
- Analysts typically exclude nonrecurring charges from normalized earnings, reducing the margin pressure on HR’s budget request.
- These moments set lasting cultural and employer brand precedent that outlives the financial event by years.
- The best CHROs engage their outplacement partner before the announcement, not after — while the plan is still being drafted.
- How departing employees are treated is the message your retained workforce receives about what the company actually values.
Why This Moment Is Financially Different — and Why That Matters for HR
Under U.S. GAAP, employee termination benefits — including severance and outplacement — can qualify as restructuring charges under ASC 420 and ASC 712 if the plan meets specific criteria. When those conditions are met, the costs typically land in a separate, nonrecurring line item.
Analysts and investors routinely exclude nonrecurring charges when modeling a company’s ongoing performance. They ‘back out’ these costs when evaluating normalized earnings. The practical result is that restructuring costs carry less margin pressure than ordinary operating expenses. A dollar spent on a well-run transition during a restructuring doesn’t carry the same scrutiny as a dollar added to next year’s permanent operating budget.
That’s the accounting reality that works in HR’s favor — and most CHROs don’t know it’s available to them.
“During a restructuring, there’s a strong incentive to fill the restructuring bucket — operating metrics look cleaner afterward.”
— Fortune 500 CFO, interviewed by Challenger, Gray & Christmas
Why the Window Closes Faster Than Most HR Teams Expect
To qualify for nonrecurring treatment, the plan has to already be specific — the affected population, the benefits included, the timeline — before it’s finalized. Once leadership has committed to the plan as written, adding scope later is far harder than building it in from the start.
The best time to make the case for a higher tier of outplacement support isn’t after the reduction is announced. It’s while the plan is still being drafted, when what’s included is still a live question.
What to Bring Into the Room With Finance
When you engage Finance during the planning phase:
- Clarity and specificity: exactly who is affected, what benefits are included, and when implementation occurs.
- Early alignment on accounting treatment: confirm that outplacement qualifies for the restructuring line item.
- A case for a higher-tier program: when price sensitivity is lower because the charge is nonrecurring, advocate for the level of support your people actually need.
Why Employee Experience During This Moment Matters Beyond HR
The quality of the transition experience sends a signal no internal communication can fully replace. When a departing employee is handed a pamphlet and a phone number, the message to the retained team is clear: this is how the company treats people when it matters most. That message echoes. Research on employer brand and workforce transitions consistently finds that employees who receive meaningful outplacement support are significantly less likely to form negative views about their former employer.
Why This Decision Lives Longer Than the Charge
The employee experience during a workforce reduction creates lasting organizational memory. The stories that spread internally after a restructuring — about who was treated well, who was left adrift, what support was offered — outlast the restructuring charge itself by years. This is why CHROs who lead well through a restructuring often describe it as one of the defining moments of their tenure.
Build the Partner Relationship Before the Plan Is Final
A partner who’s involved while the plan is still taking shape can flag issues that are far harder to solve after the announcement: overlapping notice periods, inconsistent messaging across locations, or a tier structure that doesn’t match the affected population.
What you build during a restructuring often becomes the standard for every transition that follows.
The bottom line
Restructuring gives HR a rare kind of leverage: a moment when Finance is primed to invest in doing this well, if the case is built before the plan is locked. Bring clarity, bring your outplacement partner, and bring the ask early enough to matter. The window doesn’t stay open long.