Organizational Restructuring Process

At various points in a company’s life cycle, an organizational restructuring will be necessary for growth, to accommodate a shift in company strategy, or to become more competitive. In the case of a merger or acquisition, for example, the company may restructure to focus on new lines of business. During a spin-off of one or more business lines, there will be restructuring implications for a range of front-line and support roles. Other kinds of restructuring strategies can include divestments, cost restructuring, or reorganization of the company’s legal structure. No matter the type of restructuring activity, there will be important implications for the company’s culture, processes, and employees.
There is no shortage of news about organizational restructuring, as it is part of the life cycle of any organization and can impact companies in any industry. Restructuring can be as simple as changing reporting relationships across departments, and it can also include tweaking internal departmental structures or eliminating certain positions. Despite the reality that corporate restructuring is fairly commonplace, no organization is assured success. Research by McKinsey found that among surveyed business executives, 82 percent had recently undergone a significant change in organizational structure at either the corporate, functional, or business-unit level, but only 21 percent said their restructuring efforts had been successful.
When done right, a corporate restructuring can help unlock the potential of the organization and position it for greater growth. To get started on the path to success, here are some helpful tips to guide you through your next restructuring effort:

The Restructuring Process

The decision to undergo an organizational restructuring should not be taken lightly, nor is it a process that happens overnight. Whether you’re restructuring the entire company or a single division, there are some key steps you can take to support the successful planning and execution of the restructuring strategy:

Developing a Restructuring Plan and Timeline

A restructuring is likely to impact many parts of the business, and therefore, you need a plan that includes key considerations, such as:
  • Possible organizational structure scenarios that will position the company for future growth, such as two or more teams being combined to form a new one, a single team being divided to align with a matrix structure, or the expansion of a product group to include a new product development team
  • New or existing legal restrictions, or required financial investments that must be made before the restructuring takes place
  • Implementation timelines
  • Key hires or the creation of new roles

Frequent and Consistent Communication

A restructuring can be neither thrust on the organization nor implemented without the full support of important company leaders and stakeholders. Restructuring activities should be clearly communicated among the leadership team, as well as with employees, prior to the restructuring, during it, and even after the restructuring has taken place. Some of the specific times when the company should communicate on the progress of a restructuring initiative include:
  • Before restructuring: The company should communicate restructuring plans to employees so that they hear about them from company leaders first, rather than in the media or through the rumor mill.
  • During restructuring: As the implementation gets underway, it’s important to make key announcements about new hires, changes on the management team, and key milestones.
  • After restructuring: After a merger, acquisition, or other type of reorganization has taken place, there are likely to be lingering issues to be resolved. At this stage, company leaders need to regularly share information and provide as much transparency to the restructuring process as possible.

Employee Feedback and Involvement

The many steps of the restructuring process are likely to go smoother when employees understand how their roles will be impacted by the restructuring. Companies can encourage employee feedback and healthy involvement in the restructuring process by:
  • Providing employees with ongoing access to the company org chart as it begins to change
  • Creating opportunities for employees to ask questions, provide feedback, and get updates on how the restructuring efforts are progressing
  • Encouraging employees to explore new career paths and open positions that may arise as a result of the restructuring

Regular Follow-Up

Just as a merger is not fully complete immediately after legal entities have changed names or new teams have been formed, an organizational restructuring can have many follow-on issues and implications that will require regular follow-up. Whether there are teams that need new leadership or processes that need to be re-engineered after a key team has been reorganized, each restructuring effort will require that employees and managers tie up any loose ends created by the organizational changes that have taken place.

Elements of a Sample Company Restructuring Plan

Whether the restructuring plan is for a merger, spin-off, or firmwide downsizing, each plan should possess some key elements. For example, a sample restructuring plan should include the elements below to ensure all bases are covered.
  • Restructuring Objective
  • Projected Timeline
  • Budget
  • Communication Plan
  • Key Contacts/Project Manager
  • Key Measures Against Objectives

Using the Company Org Chart to Plan for a Restructuring

The company org chart doesn’t just help you visualize the existing company structure. It can also help with planning and implementing a restructuring in a number of ways:
  • Frames the roles and accountabilities for teams within the company, including those that will overlap or experience a staff shortage
  • Identifies key roles and the individuals required to fill them
  • Pinpoints the talent shortages that will need to be addressed before the restructuring takes place
  • Ensures teams are optimally aligned in the post-restructuring environment
There are many different kinds of organizational structures, and utilizing the company org chart to plan for a restructuring is a good way to ensure key positions and people are included in the process. Whether the organization is structured by geography, product, customer group, or function, the org chart is an essential tool for planning how the new organization will look post-restructuring.
With a live org chart that is integrated with other HR systems and is always up to date, company leaders can share collaborative versions of the org chart and exchange feedback on different staffing scenarios. Then, when the new structure is finalized, it can be published for all employees to see and understand how the new organization will be structured.

Conclusion

Corporate restructuring is a natural part of business life, but it doesn’t have to slow business productivity or create havoc on the company’s structure. Restructuring activities must be carefully planned, taking into account key positions, people, and processes that will be eliminated, added, or re-engineered. With the right tools, including a company org chart that helps you plan your workforce structure of the future, your organizational restructuring strategy will be a success.

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