Companies With Shrinking Growth Should Consider Organizational Restructuring

organizational restructuring, restructuring

Organizational restructuring may be the right solution for your business.

Every firm encounters operational and financial difficulties once in a while. No company – from its inception to maturity – will escape the need to adapt and restructure its processes, systems, and teams. It is an inevitable reality, unfortunately.

One way a company can avoid a total shutdown is by initiating a restructuring process to reduce any further financial losses.

Luckily, those that quickly identify a restructuring need at the appropriate time often continue along their growth trajectory.

Companies and firms that fail to perceive that need, struggle and end up failing.

Top Reasons for Restructuring

  • loss of revenue, clients
  • make better use of talent
  • operational costs too high
  • mergers
  • want to improve advantage
  • decrease debt
  • concentrate on certain products
  • introduce new technology

Corporate restructuring can be driven by a company’s need for change in its organizational structure, business model, or even adjustments in its assets and liabilities.

A company may restructure so that it can make better use of talent, incorporate new technology, reduce operational costs, merge with another company, improve competitive advantage, decrease a consolidated debt, or even concentrate on key products.

Organizational Restructuring

There are several forms of restructuring, including:

  • financial
  • organizational
  • portfolio
  • and more

All these endeavor to provide a peaceful resolution to whatever problem is causing the company stress.

However, it is organizational restructuring strategy that will redesign operations and management reporting. The primary purpose of this approach is to identify and correct the operational problems that led to the current issue.

Restructuring provides a peaceful solution to whatever problem is causing the company stress.

A company that contemplates organizational restructuring may use downsizing as a way of cutting down overhead costs and spearhead it back to profitability. The process of redesign, layoffs of non-essential personnel, the negotiation of existing contracts and location closures are outcomes of this strategy.

Restructuring of compensations and benefits packages may be considered among the remaining staff to reduce costs even further. It all depends on your company’s needs.

Signs your company needs organizational restructuring:

organizational restructuring, restructuringHigh turnover

You need to watch both client and employee turnover. If you notice customers are leaving and trying other companies, it simply means they are dissatisfied with your products and services. In this case, several external and internal factors will come into play.

Similarly, if your company suddenly turns into a revolving door where employees come and go, there is a problem.

Problems with employee retention could be associated with morale issues, the management itself, or even compensation disparities within the industry.

restructuring, organizational restructuringLow morale among employees

There a ton of different things that can cause low morale, such as:

  • Favoritism
  • Poor management
  • Ignored constructive feedback
  • Keeping toxic team members

If management realizes there’s a problem within the corporation, it is likely that employees have been clamoring for change.

If management keeps ignoring employees in its decision-making process, that will lead to frustration.

Frustration is infectious; soon you’ll notice hiking turnover rates. It’s important to act quickly and listen to your employees.

Inefficiencies are rife

A company that has outgrown processes that initially worked is likely to face inefficiencies.

Most businesses resolve in hiring more staff which also translates to higher payroll and shrank profit.

Hiring more people isn’t always the right option.

However, hiring more staff is not always the leading solution. A company may choose to streamline internal operations with software or improve the existing systems to attain organizational efficiency. Hiring the right employee for the right role is critical.

restructuring, organizational restructuringOverworked and under-utilized team members

If your company has a group of overworked employees, it doesn’t necessarily require more employees. It might mean your employees are utilizing too much time on the wrong things.

Furthermore, you may notice under-utilized employees within your work structure.

You need to do an audit, collect sufficient data, and let that help you make subsequent decisions, otherwise the problem may snowball and increase turnover.

Your employees may be utilizing too much time on the wrong things.

Choosing the right approach

Restructuring initiatives provide a wide array of options. However, it’s the company’s leaders who should do a thorough internal analysis to highlight the business’s strengths and weaknesses before choosing the best approach.

More prominent corporations will conduct restructuring more frequently and at a higher volume in the next few years than smaller companies.

Bigger companies typically restructure more often than smaller companies.

Choosing the right restructuring approach often makes the difference between a successful turnaround and one whose corporate time, value, and resources get lost.

While tailoring your organizational strategy, it’s important to gauge sentiments about the market conditions and current trends since different regions present their own issues.

restructuring, organizational restructuringWhat are the biggest challenges?

The major challenge most companies face is not taking a proactive approach despite early signs of widespread hurdles within the business.

Consequently, restructuring an organization amidst financial pressures only leaves the company with few options on the table. Most companies would respond with a restructuring strategy only after facing the initial signs of distress.

The biggest challenge most companies face is not being proactive. Don’t wait!

Before starting an organizational restructure, consider appointing strong project leadership based on expertise, reputation, and status. Ensure that they also understand the purpose of the restructure and the vision for success. This also includes engagement and consultation with employees.

This type of open communication builds trust, collaboration, and an atmosphere for thriving relationship-driven management.

If you use behavioral-based interviews, The Predictive Index®, and other validated tools, it can help you focus on hiring the best fit for the role and improving engagement with your employees.

Feeling overwhelmed? Contact Kinsey Management for Expert Assistance Today!

Frequent changes in the economy may force companies into difficulties, and organizational restructuring may be a short and long-term solution for keeping your business afloat.

If this strategy is part of your human resource agenda and you feel overwhelmed by it, contact Kinsey Management for more information.

Companies With Shrinking Growth Should Consider Organizational Restructuring | Kinsey Management – Houston, TX