Company restructuring is about changing the internal setup of an organization. We’re talking about the organizational structure: who reports to whom, who does what, and what is the internal hierarchy. You’re changing how the company works on the inside. The end game can be to make it more efficient, grow (faster), or create a better place to work. Maybe it’s meant for growth, or maybe your organization needs to adapt to a changing market. Whatever the reason, the goal is to make the company stronger and more successful.
In the end, company restructuring is all about change. It brings along the opportunity to do things better, to grow, and to succeed. In two-thirds of the cases, reorganizations result in at least some level of improvement. So how do you make sure you’re in with that two-thirds that succeed?
It’s time for a different company structure
In the ever-evolving world of business, restructuring is a common practice. There are several reasons why. One of the primary reasons is to adapt to changing market conditions. The market is like a wave, constantly moving and changing direction. Companies need to adjust their structures to ride these waves effectively.
Another significant factor prompting restructuring is the role of innovation and technology. You need to keep up, after all.
But we’d like to look at restructuring the organizational structure. The hierarchy, or org chart. Because that is where the real magic happens.
The best reason for company restructuring (according to us)
As we’ve seen, organizational restructuring can be about improving financial performance or adapting to market changes. But there is a better reason to adopt a new structure: to create a better place to work. A place where employees are valued and autonomous, where hierarchy isn’t in the way of growth. Both on a personal level and on a company level. This also helps with employee retention or battle high levels of turnover.
Restructuring can clear the way for a more democratic workplace, where decisions are made collectively. Where every voice matters. It can also lead to more flexible work arrangements, allowing employees to work in ways that best suit their needs and lifestyles. And let’s not forget about fun — who says work can’t be enjoyable? Restructuring can help create a engaging work environment where people find more purpose in what they do.
Company reorganization can be a great way to build a culture of trust, responsibility, and freedom. By breaking down traditional hierarchies and promoting transparency, it empowers employees and gives them ownership over their work. This kind of culture not only boosts morale and job satisfaction but also drives performance and productivity.
Company restructuring:
how it works
It happens a lot in the corporate landscape, but restructuring a company is not easy. In fact, 80% of them fail. A good strategy is key.
In essence, the restructuring process is a journey of transformation. It’s about navigating change with a clear plan, open communication, and regular reviews.
Why is it important to find the right structure
Finding the right organizational structure is crucial for a company’s success. Here’s why:
- Efficient decision-making. A well-designed structure helps businesses set up an efficient decision-making processes.
- Clear communication. A good structure promotes clear and effective communication. It defines who reports to whom, and eliminates confusion.
- Growth. Sometimes old structures are not ready to scale up. A new company structure can facilitate expansion better.
- Employee engagement. A structure that values employees and promotes autonomy can create a better workplace.
In essence, the right structure can enhance efficiency, improve communication, and foster a positive work environment. Cheesily, it really isn’t just about the bottom line. It’s about creating a place where people like to work.
Here’s where it often goes wrong
As you can see, when we look at company restructuring, we’re looking at changing the organizational structure. Often, especially when restructuring is done solely to improve efficiency and margins, the organization is considered a system. But aren’t they more like micro-societies? Or in the least, they’re dynamic.
When you look at the organization from a distance, it is easy to forget what drives it. Not the departments. They don’t actually exist, not physically anyway. They’re a concept.
It’s the people that work there.
So if you change the structure, what changes for the people? How will it affect their jobs? Who do they report to? What happens to the workload?
Too often, these questions are an afterthought. Some problems to overcome right before or during the execution phase. The teams are considered a form of the system (the organization).
Restructuring is not necessarily bad, but there are often downsides. Sometimes staff needs to be let go. Managers lose their ‘power’. Jobs change.
It helps if the strategy focuses on this more. When the consequences are clear, it is much easier to get everyone on board. It makes the process smoother. This builds trust, which is essential to make the transformation more successful.
You don’t have to be a corporate Don Quixote, we can help. Not in the restructuring itself, but in building a strong, autonomous team. Through our courses, you can learn how transform your organization or how to handle conflict better. You can also learn from organizations with innovative organizational structures, like Buurtzorg or Haier. You can build a well-founded strategy with this knowledge. And end up with the two-thirds that comes out on the other end better.