Technological alterations, changing market conditions, fluctuating demand and supply, increased competition, and transforming consumer trends are all indicators that force a company to restructure. Other factors, including organizational problems, the exit of a critical board member, and the growth or slowdown of a company, are also some of the main reasons behind restructuring. They can leave a significant impact on your company’s environment, cause several constraints, and hence, make restructuring mandatory.
Many experts claim that company restructuring can be immensely beneficial for small businesses. It can considerably reduce costs, make better use of talent, and help incorporate new technology. Not only that, but when companies restructure, they can also identify and concentrate more on critical products or processes. The restructuring also makes mergers much less complicated, strengthens competitive advantage, and improves decision-making.
Now that we know why restructuring is crucial, let’s talk about ways to restructure a company.
1. Set your business strategy straight
Every step in a corporate environment requires a strategy to prevent things from going haywire. Strategizing is essential, and it allows an organization to be proactive rather than reactive. Furthermore, it increases operational efficiency and sets up a sense of direction. It also plays a crucial role in making a business more stable and increasing profitability.
Therefore, setting a strategy before restructuring your company is necessary. Begin by figuring out why the management wants the changes and what direction they plan to pursue. For instance, if you have an import-export business in Australia (a central trading hub), a potential reason could be changes in the delivery mechanisms. So, you must set your strategy following the best possible delivery options such as sea freight Australia, air cargo, and others.
2. Know the difference between restructuring and reconfiguring
Often, people confuse company restructures with reconfiguring while the two are pretty distinct. Restructuring is for businesses that require sweeping changes across all entities. On the other hand, reconfiguring is for companies that need minimal changes in a few units.
In other words, restructuring includes fundamental alterations to business activities, while reconfiguring involves minor changes without affecting the business structure. The level of turbulence in your industry and the urgency of a strategic shift are two critical factors that decide whether your company requires a simple reconfiguration or a significant restructure.
No business decision can pursue successfully if all company members are not on the same page. Effective communication is highly essential across all business domains, including restructuring companies. It’s always better to be sincere about your plan and intent with your employees. It improves company morale and functionality. A sense of trust also grows within workers, further increasing their productivity. Moreover, the better you communicate your plans, the more chances of receiving varied opinions and ideas. All of which can lead to an effective outcome.
Communication leads to more significant innovation, increased customer satisfaction, and clarity of direction. It also helps prevent and resolve problems, enhances loyalty to customers, and opens windows to newer opportunities. Effective organizational communication also promotes team building, increases engagement rates, and creates better relationships.
4. Hire a transition management team
Hiring a productive, competent, and organized team is also crucial during your restructuring process. You must consider hiring experienced and qualified individuals for different roles that will help plan, own, and execute the entire process. An effective team can do wonders for your business.
Teamwork fuels ideas, facilitate creativity, and encourages taking healthy risks. It relieves stress, ensures productivity, and boosts employee morale and motivation.
Moreover, qualified employees generally have better and faster learning abilities, expertise, and management skills. They are also likely to bring in better energy and handle job pressure efficiently.
5. Perform a strength and weakness assessment
It is vital to perform a skill assessment before making significant changes to a business’s structure. A skill assessment will help identify a company’s areas of strengths and weakness and will give a clearer idea of where a business needs to work hard the most.
Getting feedback is an essential part of this entire evaluation process. Feedback can give you valuable insights regarding the restructuring process. Your employees often know better about what is working and what is not. Hence, hearing their opinions and ideas is always a good idea.
6. Try to reduce complexity
Common reasons for increasing business complexity include globalization, technological revolutions, high-speed telecommunications, and regulatory requirements.
While each of the factors mentioned above carries its fair share of advantages, complexity can make it challenging to see effective or desired outcomes. It can create hurdles and hinder performance, and it considerably reduces collaborations and sharing information across different business entities. Furthermore, complexity can sometimes lead to a lack of self-discipline and hamper innovation.
Complexity affects HR, supply chain, marketing, and even finance. It makes it challenging to market products, find new opportunities, and gain a competitive edge over others.
7. Remain flexible
Flexibility is highly imperative for businesses, especially small businesses. The more flexible you become, the better results you can achieve. However, there must still be certain conditions.
If you avoid building a flawless organization, you will achieve a satisfying result. Flexibility will also lower stress levels, improve productivity, and build trust. You might even be able to discover a cost-effective route to your company’s restructuring process. Your employees will remain happy, and engagement and retention rates will shoot up. You will focus more on the output rather than the hours.
8. Execute the plan
If you have been thoroughly following the steps mentioned above, this step won’t be challenging. Remember, you know your organization better than anyone else. You know how your team works, how processes occur in your company, and how long it usually takes.
Be mindful of your plan, review, and reflect, and you will be good to go.
Restructuring is crucial under certain circumstances, and there is no denying the fact. However, procrastination or denial would not do you or your organization any good. Therefore, you must begin your restructuring process now. Waiting for the right time is just a myth, and one indicator should be enough of a hint for you to start planning for the transition.
As a leader, you must remember that your attributions and ambitions matter the most when making significant changes in your company. Your attitude sets the tone and hints at what you expect of your employees.