THERE are many times in the life of an organisation when it will need restructuring. This could be due to declining sales or profits, changes in the business sector or technology, new regulations, new leadership, or a whole host of other scenarios.
The key is knowing when an organisation needs restructuring and then finding the best way to proceed. Once an organisation is restructured, other components, such as its vision and mission statements, marketing strategies, brand and leadership, may need to be adapted.
Section 1. Possible Reasons for Restructuring Organisations
Many reasons can cause organisations to fail or need restructuring. The restructuring process is usually not intended to affect the company or its employees negatively. However, as strategies are developed and implemented, the need for fewer employees becomes imminent. In many instances, restructuring an organisation has created numerous growth opportunities for existing employees. Poor decisions made by leaders have caused some organisations to experience a decline in performance. Sales and profits are two key areas in any organisation which need to be monitored regularly if organisations are to be successful.
The business environment can change quickly. These changes in the business environment will force some organisations to adapt quickly or experience a decline in performance. Information systems and technology change quite frequently, and leaders who fail to upgrade their systems lose that competitive edge.
External and internal politics often affect many organisations. When a new government takes office, it may impose specific restructuring measures on government agencies. Sometimes leaders in some organisations insist that things be done their way, even to the organisation’s detriment. When regulations, policies, and procedures change, they can affect organisations, and those unable to adapt quickly may fail or need restructuring.
If owners and leaders change, restructuring may be needed. New owners and leaders will have their own vision for how they want the organisation to operate after the takeover. These owners and leaders may reduce the number of employees and increase the use of equipment, machines and information systems to make the organisation more productive. If these moves are made, it is important to consider the relevant labour laws beforehand to ensure ethical procedures are followed.
Section 2. New Direction
Leaders and owners in restructured organisations must provide new direction. These organisations can no longer continue along the same trajectory. Once an organisation has failed, it is time to turn around to avoid the pitfalls it previously experienced. A new vision is often needed to set a new direction. The previous vision may have been one reason the organisation failed. New mission statements must be established to give clear directions to all stakeholders. Some leaders will share the mission statements throughout the organisation, perhaps even placing them in locations where stakeholders will learn about the organisation’s new direction.
Leaders must plan strategically to make restructured organisations successful. They must constantly evaluate their plans so the organisation remains competitive and becomes a leading organisation in the industry.
Leaders must analyse and develop both the product and the market. There may be a need for new products and new markets. Sometimes, existing products cannot penetrate the market, but new products can attract more customers and generate more revenue. Existing products may also need new markets, especially if the current market is saturated. Adjusting the price may be another effective way to attract more customers.
If stakeholders learn about restructured organisations, they may need to rebrand. With rebranding, some customers may enjoy the organisation’s new look and feel and want to buy its products. Before the restructuring, the organisation’s buildings, environment, or public image may not have been attractive to customers, but after restructuring, many customers may like what they see and be inclined to make purchases.
Having a new captain on board may be one way to help restructured organisations succeed, but these leaders must prove they are skilled enough to do so. Before these new captains are confirmed, they must prove their worth. Some new captains may be assertive in their leadership approach, which may prompt employees to deliver quality results.
If leaders have the resources, they may restructure the organisation immediately. Other leaders will restructure the organisation progressively to minimise the social impact on current and former employees.
Section 3. Human Capital Management
Most leaders need people to work for them in their restructured organisations. Therefore, leaders must treat people with great respect.
When owners and leaders try to make an organisation successful, they may have to right-size their employee complement. These organisations might formerly have had many people working there. However, not all of these employees were productive. Unproductive employees may have to be terminated.
New job structures and job descriptions must align with the organisation’s new direction. Sometimes, restructured organisations need a flatter organisational hierarchy. Some organisations failed because the chain of command was too long, requiring leaders and management to perform similar functions. When job structures and descriptions change for existing employees, leaders have to consider adjustments to employees’ compensation. Sometimes, new leaders and owners may offer lower compensation to employees. However, if the number of employees is reduced and the same functions must be performed, existing employees may be offered higher compensation.
If new employees are needed after restructuring, leaders must ensure the recruitment process helps them find the best possible candidates. Organisations must set aside some money for training and development. Some organisations hope employees will develop independently and that the organisation will benefit from their increased wisdom and knowledge. However, when employees develop independently, they may see themselves as less committed to the organisation and leave of their own volition.
If employees were wasting time during working hours, that bad culture has to change. If employees were looking out only for their own interests, that culture also has to change. Sometimes, one employee’s change in attitude can prompt others to change as well, shifting the culture itself. New leaders need to be careful when managing cultural change to avoid conflicts. When employees have to change the culture they were comfortable with, they may resist, but good leaders know how to help them transition smoothly.
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