BAMML Executive Insights
Your Section 189 Is a Finance Decision Disguised as an HR Process
A restructuring almost never begins in HR. It begins in a management meeting where somebody models a cost reduction, arrives at a headcount number, and gets agreement in principle.
It is then handed to HR to execute.
That handover is where most of the value leaks out — because the financial case was built before anyone tested whether the process could deliver it, and once the process starts, the process sets the timetable.
What is actually happening
The business case usually contains the salary cost of the roles to be removed, a severance estimate and an assumed effective date. Those three numbers produce a projected saving, and the projected saving is what the executive approves.
What the business case rarely contains is the cost of the process itself. Consultation takes time, and the length of that time is not entirely within the employer's control. Notice periods run. Accrued leave is paid out. Where the process is disputed, the timeline extends further and legal costs attach to it.
Then there is the part almost never modelled: what happens after. Skills leave with the people who held them. Work does not disappear when a role does — it redistributes to people who now have more to do, often at overtime rates. In some cases the organisation re-hires within a year for capability it has just paid to remove.
The saving that was approved and the saving that materialises are frequently different numbers, and the gap is rarely revisited once the process has closed.
Why it matters
There are two distinct tests a retrenchment has to pass. The first is whether there was a genuine operational reason for it. The second is whether the process followed to get there was fair — meaningful consultation, proper disclosure, genuine consideration of alternatives, and selection criteria that are fair and objectively applied.
An employer can be entirely right about the commercial need and still lose, expensively, on the second test. And the second test is largely determined by conduct in the first few weeks — what was disclosed, when consultation genuinely began, whether alternatives were considered before the decision hardened.
By the time a dispute arrives, that conduct is history. It cannot be improved retrospectively. It can only be evidenced, or not.
This is why treating a restructuring as an HR execution task is a financial error rather than merely a procedural one. The decisions that determine the financial outcome are made in the first fortnight, mostly by people who are thinking about the commercial case rather than the record they are creating.
The Integrated View
| Discipline | What it contributes | What goes wrong when it is absent |
|---|---|---|
| Financial Governance | The true cost model — severance, notice, leave, process time, post-event overtime, re-hiring | The approved saving is a gross salary figure, not a net outcome |
| Workforce Governance | Consultation, disclosure, alternatives, selection criteria, IR management | Process defects that cannot be corrected later |
| Operational Performance | Which capability the business actually needs to retain | Capability removed because it was expensive, not because it was surplus |
| Risk & Compliance | Evidence that the process was fair and properly recorded | Exposure that only becomes visible at dispute |
| Executive Decision Intelligence | Re-testing the business case as the process unfolds | Nobody asks whether the original case still holds |
What good looks like
The organisations that come through a restructuring well tend to do three things that the others do not.
They model the full cost before approving anything — including the cost of the process, the productivity dip and the realistic possibility of re-hiring. The number that goes to the executive is a net figure over a stated period, not a gross salary saving.
They treat the consultation record as a financial asset. Every meeting minuted, every alternative genuinely considered and recorded, every selection criterion documented and consistently applied. Not because it is bureaucratically satisfying, but because it is the only defence that exists later.
And they re-test the case at the halfway point. If consultation has surfaced an alternative that delivers most of the saving with less disruption, they take it — rather than continuing because the decision was already announced.
What to do on Monday
Before the next restructuring is approved, require the business case to answer these:
- What is the net saving, over what period, after process cost, notice, leave, severance and expected post-event overtime?
- Which capability are we removing, and are we confident we will not need to buy it back within twelve months?
- What alternatives have we genuinely considered, and can we evidence that consideration?
- Who is keeping the consultation record, and to what standard?
- At what point will we re-test this case, and who has authority to stop it?
If the business case cannot answer these, it is not yet a business case. It is a headcount number with a rand value attached.
