L&G's Cuts: The Hidden Costs of a Slow Restructure

Legal & General’s three-year redundancy plan highlights a critical risk for leaders: protracted change can damage culture and talent far more than the initia…

Insurance and pensions group Legal & General is set to reduce its workforce by around 1,000 roles by mid-2027, a move aimed at creating what its chief executive has called a “leaner organisation”. The cuts, representing approximately one-tenth of the company’s largely UK-based staff, signal a significant restructure designed to simplify the business and focus on core growth areas.

The process will begin by inviting applications for voluntary redundancy from its UK employees. However, the company has not ruled out compulsory job losses if the voluntary programme does not achieve the required headcount reduction. The group's £1.2 trillion asset management division is not included in the current programme, as it is undergoing its own separate restructuring. This move is part of a wider strategic shift under CEO António Simões, who is reorganising the firm around three key divisions: asset management, institutional retirement, and retail.

A Long Goodbye: The Practitioner View

A timeline stretching to mid-2027 creates a period of prolonged uncertainty that goes far beyond the initial announcement. For HR and business leaders, this is not a single event but a multi-year change management challenge. The immediate focus on voluntary redundancy is a common and often sensible first step, but it carries its own risks. It gives employees, rather than the business, the initial control over who leaves. There is a significant danger that an organisation can lose critical skills and experience as highly marketable individuals, who are less concerned about finding their next role, opt to take a package and leave.

Furthermore, a phased approach that holds the prospect of compulsory cuts in reserve can create a damaging atmosphere of ambiguity. Those not immediately at risk may feel their roles are safe, but the lingering uncertainty affects everyone, impacting morale, collaboration, and productivity. This is often referred to as ‘survivor sickness’, but in a protracted process, the sickness starts long before the survivors are known. Every project, team and decision can become paralysed by the question of who will still be here next year. Managing this requires a level of communication and leadership support that few organisations are naturally equipped to deliver over such a long period.

The Commercial Read: Managing a Marathon, Not a Sprint

The L&G story is a lesson for any organisation contemplating a major restructure. The true cost is rarely confined to the redundancy payments. The real financial and cultural impact lies in the months and years of transition. When change is a marathon, not a sprint, leaders must budget for more than just the exit packages; they must invest in the journey. This means providing robust restructure support for the line managers who will be having difficult conversations, not just once, but potentially over several years.

A sensible leadership team facing a similar scenario must shift its perspective from cost-cutting to strategic realignment. The primary objective is not simply to reduce headcount, but to reshape the workforce for the future while maintaining business momentum. This requires a proactive approach to talent management throughout the process. As seen in other large scale outplacement programmes, a failure to properly support people on their way out sends a powerful and damaging message to those who remain. They see how their colleagues are treated and draw their own conclusions about their employer’s values, which directly impacts their own engagement and loyalty. The risk, as demonstrated in scenarios like JLR's £1.7bn reset, is that the business spends years recovering not from the restructure itself, but from the way it was handled.

The success of a long-term restructure is measured not by who leaves, but by the engagement and capability of those who stay.

This makes professional employee support during redundancy a commercial imperative, not a discretionary spend. It mitigates legal risk, protects the employer brand in the talent market, and provides a degree of stability in a period of flux. By giving departing employees the tools and confidence to find their next role quickly, it allows the organisation and its remaining staff to focus on the future. The alternative is a slow decline in morale and productivity, creating a far greater long-term cost than any upfront investment in support.

Investing in a Humane and Effective Transition

Ultimately, every organisation is judged by how it acts during its most difficult moments. A large-scale restructuring is one of the most visible tests of a company's culture and leadership. Providing high-quality career transition services is a crucial part of navigating this test successfully. At ImaginativeHR, we believe that supporting people well is the cornerstone of any successful workforce change. It demonstrates respect for the departing individuals and reassures remaining employees that they work for a responsible and humane organisation.

Effective support goes beyond a traditional outplacement model. It means providing personalised, expert coaching and the modern digital resources people need to navigate today's job market. For businesses managing complex, multi-year programmes, a platform like Launchpad can provide the scalable, consistent and high-quality experience that protects people, preserves the brand, and enables the business to move forward with confidence.