There are many times in the life of an organisation when it will need restructuring. It could be due to a decline in sales or profits, changes in the business sector or technology, new regulations, new leadership, or a variety 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 the vision and mission statements, marketing strategies, brand, and leadership may need to be adapted.

With an eye towards the various components of an organisation that deserve consideration in the restructuring process, Geary Reid provides valuable advice from his organisational experience. You’ll learn everything from strategising to revisioning and establishing goals for your restructured organisation.

Section 1. Possible Reasons for Restructuring Organisations

There are many reasons why some organisations fail or need restructuring. For organisations that are collapsing or on the verge of collapse, necessary action must be taken to resuscitate and rebuild profit margins.

The restructuring process is typically implemented to minimise any negative effects on the company or its employees. However, as strategies are developed and implemented, the need for fewer members of the workforce becomes imminent. In many instances, the restructuring of an organisation has been found to create 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 that need to be monitored regularly if success is to be achieved.

The business environment can change quickly. These changes will force some organisations to adapt rapidly or experience a decline in performance. Information systems and technology change frequently, and leaders who fail to upgrade their systems risk losing their competitive edge.

External and internal politics often affect many organisations. When a new government is installed, it may impose specific restructuring measures for government agencies. There are times when leaders in some organisations may insist on doing things their way, even to the detriment of the organisation. When regulations, policies, and procedures change, they can have a significant impact on operations. Those organisations that are unable to adapt quickly may fail or require restructuring.

If owners and leaders change, then there may also be a need for restructuring. Some new owners and leaders will have their own vision of how they want the organisation to operate after a takeover. They may reduce the number of employees and increase the use of equipment, machines, and information systems to make the organisation more productive.

Section 2. New Direction

Leaders and owners in charge of restructured organisations must be able to provide new direction. No longer can these organisations continue along the same trajectory. Once an organisation has failed, then it is time for a turnaround to avoid the pitfalls previously experienced. A new vision is often needed for this new direction. The previous vision may have been one of the reasons why the organisation failed. New mission statements must be established to give clear direction to all stakeholders. Some leaders will make the mission statements known throughout the organisation, perhaps even placing them in visible areas so that stakeholders understand the organisation’s new direction.

Leaders must plan strategically if they are to make restructured organisations successful. They must constantly evaluate their plans so that the organisations will remain competitive and become leaders in their industry.

Both the product and the market must be analysed and developed. There may be a need for new products and new markets. Sometimes, existing products are unable to penetrate the market, but new products can attract more customers and generate more revenue. A new market may be needed for existing products, especially if the current market is saturated. Adjusting the price may also be an effective method to attract more customers.

If stakeholders are to learn about restructured organisations, then rebranding may be necessary. With rebranding, some customers may enjoy the new look and feel of the organisation and be inclined to purchase its products. Prior to the restructure, an organisation’s building, environment, or public perception may not have been attractive to customers, but after restructuring, many may like what they see and be inclined to make purchases.

Having a new captain on board may be one way to spur success, but these leaders must prove they are skilled enough to make the organisation thrive. Before new captains are confirmed, they must demonstrate their worth. Some may be assertive in their leadership approach, motivating employees to deliver quality results.

If leaders have the resources, they may restructure the organisation immediately. Others may choose to do so progressively to minimise the social impact that can occur on current and former employees.

Section 3. Human Capital Management

Most leaders need people to work for them in their restructured organisations. Therefore, people must be treated with great respect.

When owners and leaders try to make an organisation successful, they may have to right-size their workforce. Some organisations might have previously employed too many people, not all of whom were productive. Unproductive employees may have to be terminated.

New job structures and descriptions will need to be designed to align with the organisation’s new direction. Sometimes, a flatter organisational hierarchy may be needed. Some organisations fail because the chain of command is too long, requiring leaders and management to perform similar functions. When job structures and descriptions change for existing employees, leaders must consider adjusting their compensation. There are times when new leaders and owners may offer lower compensation to employees. However, if there is a reduction in employees and the same functions must still be performed, existing employees may receive compensation increases.

If new employees are needed after restructuring, leaders must ensure that the recruitment process allows them to secure the best possible candidates. Organisations must set aside funds for training and development. Some organisations hope that employees will develop themselves independently and that the organisation will benefit from their increased wisdom and knowledge. However, when employees develop independently, they may feel 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 must change as well. Sometimes, a change in attitude by one employee may cause others to change, meaning the culture itself evolves. New leaders must be cautious when managing cultural change to prevent conflicts. When employees must change a culture they are comfortable with, there may be resistance—but good leaders know how to help employees transition smoothly.

For more information about Geary Reid and his books:

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• Book cover: Restructuring an Organisation