As businesses enter new life cycles, they often need restructuring or reorganization for a number of reasons. An organizational chart may need to undergo a periodic overhaul in order to: address a critical performance problem, unlock an opportunity to increase revenue for shareholders, expand, downsize, or due to a merger and acquisition. Whether you’re a growing startup or an established company, you will require an organizational restructure sometime down the road.
Deciding on strategies to help you achieve your organizational goals is not a clear cut process to be taken lightly. Below are some key strategies to help navigate this inevitable process, that all companies face at some point, when changing their organizational structure to meet strategic demands of the future.
Map out the Destination, Where Are You Going and Who is Coming With You?
Take an inventory of where the business is now, and where it needs to be, to improve your org performance. Does one business unit need to be dismantled or adjusted? Will you incorporate outsourcing or telecommuting for growth down the road? Duplicate your org chart and create “what if” versions in order to help you plan.
Before the leadership undergoes any major changes, they need to communicate the vision of where the business is heading and anticipate delays in employees adapting to the new changes being presented. This step is critical in retaining key talent and preventing damage to moral. Offering transparency to staff throughout the process allows trust to form in the process, which is key to the success of the restructure. Distributing an org chart will help ease your employees into the transition and ensure that they have a thorough understanding of their new role in the organization.
Identify the Existing Roles and Responsibilities of Business Units
In order to optimize organizational performance, taking inventory of the existing framework, business units and tasks performed by each employee needs to be carefully analyzed. This will require knowing what tasks staff are doing in their roles in detail before the restructure can be planned effectively to prevent any loss of value in the process. Analyze your org chart to make sure that you aren’t leaving any gaps in your new organizational design.
Organizations need to be flexible and careful to not overload employees with too much additional workload during the transition if staffing headcount goes down and there is lack of clarity for who is accountable for what. Restructuring a company can improve efficiency, keep technology up to date, or implement strategic or governance changes made by, or mandated to, company owners.
Restructuring to Increase Competitiveness
Differentiate and leverage strengths against the competition. The continual search for new organizational forms is driven by basic changes in the nature of competition and the economy. If your industry is moving fast or faces disruption, adapting to the conditions of the market will be critical to winning market share. When there are external forces and headwinds at work, businesses have no choice but to realign, restructure and reorganize to become more competitive or to retain their position in the market.
Growth Through Acquisition
For a company struggling for growth, an acquisition can provide opportunities to access new customers and markets otherwise out of reach. Designing, implementing and change management will be critical for the successful merger of two organizations. Introducing significant changes into a well-establish organization is likely to be difficult, emotional and complex. It is important to maintain the key talent from both organizations in the process and make efforts to create an open and transparent culture throughout the transition.
Cut Costs Through Evolving with Today’s Modern Workforce and Launching a Virtual Business Unit
Perhaps it is time it evaluate what is happening in your industry and decide if it is time to launch a virtual unit within your organization. Though this may challenge an existing traditional organizational design, it may afford efficiencies in terms of cost cutting office space and in terms of overhead labour costs. Could you outsource a business function or set up a temporary business unit to achieve an organizational goal? This transition will require a new management framework more centered around results and telecommuting resources.
Establish a New Structure to Support Strategic Goals
After taking an inventory of where you are, where you want to go and who is coming with you, it is time to design the new org structure. Most companies usually organize around function, business line, customer segment, technology platform, geography, or a matrixed combination of these. Accountability parameters need to be defined for both vertical and horizontal authorities.
While there is no exact formula for success, retaining your key talent and communicating the why of the changes throughout the company with transparency, will build trust and support for the process internally. A restructure will take time to roll out and adopt, but if done correctly, can result in improved decision making from an empowered organization and enhanced organizational performance. Organimi can help map out your restructuring plan & update employees on new organizational structures.