Most struggling businesses will go through a period of organisational restructuring in a bid to solve ongoing challenges. While this process does not involve looking at the company finances directly, it can help to make the business more profitable by addressing inefficiencies and streamlining processes and communication chains. As a result, a successful organisational restructure can be a central part of a company rescue plan.
However, a poorly executed organisational restructuring plan can have disastrous consequences for a business. Staff may feel alienated and business growth can be hampered. Therefore, it’s important to fully understand how to restructure an organisation before implementing any changes. These five tips offer a starting point for success.
Set Clear Goals And Aims
When faced with challenges, it’s easy for businesses to rush to implement changes in a panic. However, you should always take a step back and think about what you want your restructuring measures to achieve before taking any further action. Some common organisational restructuring goals include addressing rising costs, boosting operational efficiency and bringing new ideas to the fore. The subsequent actions you may take to achieve these goals will differ significantly, so it’s important that you identify the path you want to take to make sure that your planned changes will actually have the desired effect: a path back to profitability.
Balance Small And Large Changes
With clear goals set, it will be time to implement a restructure. As you begin this process, striking the right balance between small and large changes is crucial. While significant transformations may be necessary, a sudden overhaul can be disruptive and demoralising for employees and may be a cause for concern for other key stakeholders like your creditors. If your restructuring plan contains a mixture of actions, consider a phased approach that incorporates incremental changes over time. This allows the organisation (and those with an interest in it) to adapt gradually, minimising resistance and maintaining stability in what might otherwise be a difficult time.
Communicate With Employees
When an organisation is restructured, it is usually employees who feel the scale of the changes most quickly and heavily. To alleviate the uncertainties and concerns that might arise from a sudden period of change, effective communication with employees is essential. Notify employees that restructuring processes will be taking place sooner rather than later and give the workforce regular opportunities to voice their feedback and ideas. Keeping these clear lines of two-way communication will not only help employees understand the rationale behind changes but also increase the chances of winning their support and therefore increase the chances of the restructuring efforts being successful in rescuing the business.
Consider Alternatives
Before finalising any restructuring plans, it’s essential to explore alternative business rescue measures. Though organisational restructuring can be a fantastic way of guiding a business back to success when you are experiencing the early warning signs of insolvency, it may not be a sufficient measure to take if you are experiencing immediate creditor pressure. In these circumstances, tools like a Company Voluntary Arrangement (CVA) or Company Administration may be more suitable as these measures will give you agreed breathing space in which you can come up with a suitable rescue strategy in which restructuring efforts may then form part.
Speak To An Expert
There is no denying that organisational restructuring is a complex process with many different considerations to make. With this in mind, seeking the guidance of an expert can be invaluable. Not only can a professional give you a second opinion in terms of the right steps to take, but they can also help you decide if restructuring is actually the most sensible approach for your business circumstances. This expert advice will therefore increase the chances of a smooth and successful rescue plan.
If you are currently working out how best to deal with business challenges, don’t hesitate to get in touch with the team of business recuse experts here at Ballard Business Recovery. Our friendly team can tell you about the options that may be available and help you plan the most appropriate rescue strategy.
