Most companies need reorganizing or restructuring for different reasons. In fact, they do this to respond to changes in strategies, changes in ownership, economic trends and forces, falling profits, or market conditions. In contrast, others decide to reorganize to boost their income. Nearly all companies want to maximize potential growth, eliminate inefficiency, and reduce costs.
Regardless of the products you’re selling, the industry you’re in, or your company’s size, you might eventually have to restructure your company. But attaining success is tedious and complex, so you shouldn’t use a light approach or take things lightly. Here’s a guide that will teach you about the right way to reorganize or restructure your company.
What’s Company Restructuring?
Both reorganizing and restructuring are corporate terms that point out a situation where a company changes either its primary organizational structure or financial structure. Making changes to the organizational structure might entail shifting reporting relationships, disassembling business units, creating additional departments, or reallocating the company’s resources.
On the other hand, changing the financial structure might entail merging with another company, refinancing debt, or selling assets. Both can also signify that the company faces shortcomings or problems across different teams or the organization.
Because it’s time-consuming and tedious, only a few companies reorganize the whole organization. Despite that, it’s still common to hear numerous companies reorganizing their team in a short period. Your company’s resources are the determining factors for this change.
During the pandemic, most companies forcibly restructured their teams. Most have changed their company’s rules. For example, they require their employees to undergo COVID-19 testing before going back to work.
Why Does a Company Need This?
Most companies reorganizing or restructuring their company do these for different reasons, including:
- Inefficiency: It might be time to consider reorganizing your company if a specific department isn’t doing its jobs, employees or guidelines become inefficient, or the organization isn’t meeting its goals.
- Merger: Your company has recently acquired or merged with another.
- New opportunities: You want to give your team new opportunities, including venturing into a new market or launching a new product.
Other companies also undergo restructuring to improve their existing departments, which the entire ordeal will only affect a specific unit.
4 Tips on Restructuring the Team
Regardless of your reasons for reorganizing the company, you should consider following these tips for your success.
Develop Your Business Plan
Firstly, determine the reasons you’re restructuring the company. Not identifying the problems you should address or determining the company’s new direction will make the ordeal more challenging. Your plans should include your new criteria or goals to meet.
Think About Existing Options
If you’ve already identified the problems you should address, gathering feedback from the stakeholders and employees will help you create a new organizational structure. Keep in mind that this newly structured model isn’t final. It can still change before the management implements it. It should include:
- The duties of each department and how they’re connected
- Attributes of employees, including experience, skills, and background
- The indication of who will be leading the departments to make decisions
- The horizontal and vertical lines of authority
Don’t reorganize a company without visuals to clarify your plans to employees and keep them on the same page.
Disseminate the Information
Once you’ve considered your options and determined the best strategies, it’s time to inform the rest of the company about the restructuring. Don’t hastily implement the changes. Be transparent and clear with your plans. Making an organizational chart will clarify the situation, especially if you pair it with the details about each role’s duties.
You’ll also need a different discussion with each department’s managers to ensure they can execute the plans correctly and clarify questions.
Examine the Current Structure
One of the essential parts of reorganizing the company is determining which aspects benefit everyone and which aren’t. If you don’t have an organizational chart, make one to get a deeper insight into where you stand. It should also include gathering comments from employees. Many companies undergo restructuring without thinking about the people affected by the company and departmental reorganizing plans.
Your employees will always have valuable insights on what you should be doing and what isn’t working. Find the time to gather those insights and include them in your company’s restructuring process. Make sure to weigh the advantages and disadvantages of changing your company’s organizational structure, including employees leaving due to that venture.
If you can’t address a problem through organizational changes, you should stop. It’ll be a potential loss and wasted effort.
Making changes will allow the company to start anew. It can also allow greater career growth, refresh employees, and revitalize the company. However, communication and planning are necessary. Have the discussions early, get everyone involved, and stay organized by creating a plan to guide your company to a more efficient future.