Restructuring Your Company: 5 Key Decisions

How to Restructure an Organization

If you’ve ever been part of restructuring an organization, you know that the very mention of it is likely to turn your stomach. Restructuring a company is tough and takes a great deal of careful planning. Moreover, it is never easy and it is never fun because big decisions need to be made. But as we’ve mentioned here at MRH, businesses need to remain nimble and adaptable to the ever-changing environment. So sometimes, when there are external forces and headwinds at work, businesses have no choice but to realign, restructure and reorganize to become more competitive or to retain their position in the market.

It goes without saying that introducing significant changes into a well-establish organization is likely to be difficult, emotional and complex.  It involves lengthy discussions on what’s not working, what is working and what need to work better. It requires thorough cross-examination from a variety of perspectives and stakeholders. There are constraints. Any changes that are made must minimally impact the customer during the transition. While restructuring can be viewed as an investment back into the company, funds are never unlimited. And of course, employees will be impacted, some of whom may no longer have a job following the restructure.

But the difficulties associated with a reorganization extend beyond the obvious layers of teams and subunits and consist of more than just the uprooting of old processes and habits. Reorganization is not just getting rid of the old way of doing things in favor of the new, fresh and shiny business processes. HOW the business goes about making the changes is just as important as the changes themselves.

MRH Poll: Please Answer This Question in Support of our Management Research!

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Which of the following best describes your resource contraints?
  • It's simply about people, and I just do not have enough of them.
  • I have enough people, but I personally do not have enough time to be everywhere at once.
  • Mostly financial. I cannot get funds for new software, supplies, training, etc.
  • We take on too much, and do not have the discipline to say 'NO' to anything.
  • It's hard to predict what resources we need until it is too late.
  • Not many. I generally get the resources whenever I need them.

Because restructuring is not a daily occurrence, and may only occur every few years or perhaps just once a decade, many managers are not very well experienced in the process of restructuring. In some cases, the decision makers who lived through the last restructure may have moved on leaving the organization ill-prepared. Consequently, many managers embark on a restructuring campaign essentially as beginners.

Identifying what the changes are is only the first step. Perhaps the bigger challenge for managers and executives is actually the communication of the vision and the detailed planning aspects of the changes, not to mention maintaining alignment and support throughout the transition phase. Managers need to remember that changing an organization is like riding a roller coaster – the people in front can see what’s coming, but the people in the back will typically experience more sudden change with little warning because they have limited visibility.

If you are planning to restructure your company or make organizational changes in the near future, here are five things to consider before you begin to help you overcome some common challenges:

1. Communication

Communication is easily the most important piece of restructuring and organizational change. Remember that change is difficult and can leave the organization uneasy. For most of your employees, ambiguity left by managers will lead to fear and uncertainty. Make regular announcements to the entire organization to identify any key decisions and notable progress. Even if there is little report, communication to this effect is also beneficial. Further, it is equally as important to communicate why the changes are needed as it is what the changes are. Explain the needs, explain the goals. Being open and clear will help you achieve buy in and support for what you’re trying to do. Gaining employee support will help build a positive momentum towards the future state. By contrast, instituting change without support is far more difficult.

2. Plan Ahead

In order to best implement the changes, plan ahead. Look at the various impacts to your business. Are other groups impacted by what you plan to change? Does your financial reporting structure need to change? How will your customers be affected? How will your people be impacted? Unfortunately, many business leaders get trapped in the benefits the new organization will offer, but forget to actually map out a timeline and means of implementation. Many times, impact assessments of core processes are overlooked, reducing some of the efficiency improvements offered by the new structure. Additionally, establishing some level of contingency is also wise, as unforeseen challenges will likely emerge. Do your homework before you make the decision to restructure public knowledge. How smoothly you implement the changes will impact how quickly and efficiently it goes. Announcing changes before figuring it is likely to leave your organization on the edge and lead to easily avoidable problems down the line.

3. Meet in the Middle

When you are simply realigning teams and people to make your business more effective, don’t forget to talk to your employees. The higher up you are in the organization the less in touch you are with the working level. It’s a fact that many upper level managers choose to ignore. Talk to your people to see if they have any ideas.  Seek out a small focus group of key talent or knowledge holders to battle test your ideas. Gain feedback. Actively seek your employees’ suggestions in terms of gaps. And listen to them. Often times, your vision combined with their ideas will lead to the best solution. The employees will live in the new structure every day and will easily be able to identify challenges you may have overlooked.

4. Structure for Success

Keep in mind a virtue in the world of organizational management: your structure must bring you success.  If you’re struggling with technology growth, separate a team to focus only on technology.  If your customers feel neglected, create a team dedicated to taking care of customers.  There are many ways to create an organizational structure, and all are valid.  Examples include product based teams, process based teams, regionally based teams and functional teams. The key is to find the sources of pain and weakness and center your efforts around addressing them.

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5. Follow Up

When you make the formal announcement, you’re not likely to get a great deal of feedback in the public setting.  Remedy: talk to your employees on an individual basis after you announce the changes.  Again, seek out a focus group. At the individual level, understand what parts made sense to them and those that didn’t make sense to them.  Do they understand why?  Are there any concerns?  You’ll probably find a couple of trends or areas where your communication was not clear. Following up will help you address concerns and gain support. Further, major restructuring is likely to take time. Once again, communication comes into play. Follow up by telling people as a regular practice. Doing so keeps people working hard and reduces distracting rumors.

Restructuring a company or organization will always have its challenges. There is no perfect play book – every change is different just like each company is unique. However, by closely planning out your implementation strategy and communicating effectively to your organization, you can pave the way to the future far more effectively. Remember that while the few managers and executives at the top may have a vision for what the future structure may look like, it’s the people within the organization who are the change agents. It is therefore vital that your employees be part of building the future you seek.


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