Restructuring Your Company: 5 Key Decisions

How to Restructure an Organization

If you’ve ever been part of restructuring of an organization, you know that the very mention of it can induce a sense of worry.  Restructuring a company is tough and takes a great deal of careful planning.  Moreover, business renewal is never easy nor is it fun because big decisions need to be made that affect the firm, its employees, and their families.  But as we’ve mentioned here at MRH, businesses need to remain nimble and adaptable to the ever-changing environment.  So unfortunately, when there are external forces and headwinds that impact the organization, we have no choice but to realign, restructure and reorganize to maintain competitiveness.

Restructuring is a Form of Change Management

It goes without saying that reorganizing a well-established company is likely to be difficult, emotional and complex.  After all, restructuring is a classic example of change management.  It involves lengthy, often emotionally charged, discussions on what’s working, what is not working, and what needs to work better.  Additionally, restructuring a business demands thorough cross-examination from a variety of perspectives and stakeholders. Plus, there are constraints and existing commitments that limit what you can do.  Employees will be impacted, some of whom may no longer have a job following the restructure.  And ideally, any changes that are made should have minimal impact on customers.

However, reorganization is about more than just the end result and implementing new, fresh and shiny business processes.  How the business actually goes about making the changes is just as important as the changes themselves.

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Because restructuring is an infrequent occurrence, many managers are not experienced in the process of business renewal.  Consequently, many managers are simply not prepared when they embark on a restructuring campaign.

RELATED: How to Conduct a Layoff (4-Part Series)

5 Tips for Implementing a Corporate Restructure

Identifying what the changes are is only part of the process.  Often times, the bigger challenge for managers and executives is actually the detailed planning aspects of the changes as well as communicating a new vision and reasons why change is needed in the first place.  Managers must remember that changing an organization is like riding a roller coaster – the people in front can see what’s coming.  However, the people in the back will typically experience more sudden change with little warning because they have limited visibility to what is coming.

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:

1. Communication

Communication is easily the most important piece of restructuring and organizational change.  Change is difficult and can leave the organization uneasy.  For many employees, ambiguity leads to fear and uncertainty. When it’s time to announce the changes, take great care in talking to your staff and answer questions.  Make yourself available to answer concerns.  Moreover, throughout the process, make regular announcements to the entire organization that identify key decisions and notable progress.

According to an MRH survey, 50% of people say that effective communication is the most important aspect of being a good boss.

Even if there is little to report, communication to this effect is also beneficial. Silence results in concern.  Remember that it is equally as important to communicate why the changes are needed as it is to explain 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.

2. When Restructuring, Plan Ahead

Implementation of change requires careful planning ahead of time.  Before introducing anything to the organization, look at each change you plan to make, and evaluate the impacts to your business.  Here are 7 questions you should ask yourself make.

7 Questions On Restructuring You Must Ask Before Doing Anything:

 

  1. How will the changes impact the organization?
  2. Are other groups impacted by what you plan to change?
  3. Does your financial reporting structure need to change?
  4. How will your customers be affected?
  5. How will your people be impacted?
  6. What are the alternatives?
  7. How did you get here, and how can you avoid it again?

Unfortunately, many business leaders get trapped in thinking just about the benefits the renewal will bring, but forget to conduct thorough impact assessments of core processes, and do not map out timelines for implementation.  Failing to do these fundamental things may reduce some of the efficiency improvements offered by the new structure.

“How the business actually goes about making the changes is just as important as the changes themselves.”

Establishing contingency plans 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 out is bad practice, and is likely lead to 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.

RELATED: How Well Does Your Organization Communicate?

Talk to your people to see what input they may have on the situation.  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 have the merits.  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

Once you make the formal announcement that a restructure is coming, 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.

5 Questions to Ask Employees After a Restructure is Announced:

  1. Do you understand why change is needed?
  2. Do you understand the changes that are coming?
  3. What concerns do you have?
  4. Is there something that needs clarification?
  5. How do we minimize this affect these changes will have on customers?

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, so communicate regularly through out the process of change.  Doing so keeps people working hard and reduces distracting rumors.

RELATED: What to Tell Your Team After Someone Was Fired

Take Away Points on Business Renewal

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 a 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 real change agents. Let your employees be part of building the future you seek.

 

Looking For More on Restructuring?  You Might Like…

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