The Benefits of Organizational Restructuring

When a company’s leadership has been ineffective and inefficient, the owner may consider an Organizational Restructuring. This process allows the new owner to start fresh, reshuffle key personnel, and grant power to trusted lieutenants.

It may also preempt inefficiencies created by the previous owner. Despite the many benefits of reformation, there are some basic principles and strategies to remember. If you’re considering Organizational Restructuring, read on for a quick overview.

Process

The first step in any reformation effort is to clearly define the nature of the company and its current structure. Ultimately, the organizational restructuring process will be more successful if it is based on the current organizational structure and needs. This will enable you to define job roles and the scope of responsibilities for each employee.

The scope of a restructuring effort is broad. Some efforts are short-term in nature, while others may take years. One mistake is implementing a ‘one-size-fits-all’ approach. In other cases, the reformation effort involves a test phase that allows the management to gauge the results. While the aim of restructuring is to improve profitability, it also has a long-term effect.

Restructuring a business can result in headcount reduction, store closures, or other changes that have a negative impact on profitability.

Principles

Although the goals of organizational reorgs are essentially the same, the success of reorgs is very situational. Organizational cholesterol – a type of sticky routines and fiefdoms – tends to undermine growth. Organizations need periodic shakeups to adapt to the changing market. A fundamentally changing industry or a rapid change in the company’s strategy may require a new structure, a reorganization, or some combination of the two.

However, there are several ways to address employee resistance to a change and reduce employee resistance.

Employees are often resistant to change and may resist change. This can cause many problems including the loss of time, inability to adapt to the new environment, and increased sick time. If these issues are not addressed, retaliation may cause employees to leave the organization or even sue the company. In addition, resentment can lead to a negative culture where employees resist change, despite its benefits.

Costs Involved

Traditional reformation can cost a business a lot of money. It saps energy and value from an organization. A more effective approach might involve splitting up or realigning different functions. This decision depends on the strengths of the functions involved. Ideally, the reformation will increase the company’s performance and engage employees.

During a restructuring process, a company may make decisions to phase out a profitable product line. Legal costs will most likely accrue, so make sure you’re aware of the current Corporate Restructuring Laws on both the federal and state level. A reformation process may also involve cutting costs in other areas.

A new business strategy may mean cutting costs in one department, increasing productivity in another, or eliminating a product line entirely. This decision, however, will have an impact on the organization’s bottom line.

Employee Involvement

While employee involvement may have many names, it is important to know that the most effective organizations value employee involvement. Many studies show strong relationships between employee involvement and important work outcomes. Participation can be broken down into three broad categories: direct communication, representative participation, and upward problem-solving.

Employee involvement can be reinforced through leadership, culture, and environment. Here are some of the benefits of employee involvement. Adapting the culture:

Encourage employees’ input: Getting employee input is important when changing the structure or working conditions of a company.

When changes are large and affect the entire organization, it may be impossible to involve all employees. However, involving employees early in the process is important. Asking employees to participate in a change that has already been decided upon is dishonest and creates a sense of lack of trust between employees and managers.

Publicity

As a company undergoes a reformation process, it is vital to communicate with employees and announce important milestones in a transparent way. Intuit, for example, issued a press release before employees were notified. Radio Shack, on the other hand, contacted employees via phone and email.

Companies should be as transparent as possible during the reformation process, so that employees know what to expect from the new structure. This isn’t always the method employed by companies, so to learn more about other types of restructuring you can follow this link and decide what’s best for you. During a reorganization, employees may be required to adjust to a new structure and role, or use new technologies.

For this reason, it is important to provide training and resources to employees as part of the process. Likewise, showing employees that you care about their well-being can also ease the transition during a reformation process. Encourage employees to take personal days and allow them to focus on their mental health.