The global economic shock that was the coronavirus pandemic will have a profound impact for many years to come. Organizations around the world are already battling with an ongoing wave of resignation activity dubbed the ‘Great Resignation’, whereby employees are leaving jobs in their droves in search of better opportunities.
The amount of employee churn that some businesses have faced, particularly big players in key industries like tech, means that adjustments need to be made. When employees leave, key people are lost. It becomes more difficult to meet certain objectives. Cutbacks happen. Teams and entire departments change. Organizations need to restructure.
Not all problems currently being faced are because of resignations, however. Quite the opposite. Many of the big tech companies that boomed during the pandemic went on hiring sprees. Think Amazon, Netflix, Meta, and Peloton. But now, as growth begins to slow, these companies are also having to face the prospect of a restructuring—by making layoffs.
The ‘Great Restructuring’
Tech layoffs have been dominating the news cycles for several weeks. It began with Twitter’s new owner Elon Musk culling around 50% of the social media giant’s workforce, Mark Zuckerberg laying off around 11,000 staff at Meta, and Amazon cutting thousands of jobs in mid-November.
And here begins the so-called ‘Great Restructuring’ of 2023 which is, according to some commentators, going to be much bigger and more widespread than anything that has ever been seen before. It’s something that’s going to have an impact on organizations both large and small, and those affected will need to adapt to the challenge of building the right, robust organizational structure.
Doing so is easier said than done, though. While countless studies have highlighted the benefits of a happy and fulfilled workforce, any large-scale organizational change has the potential to demotivate and disengage otherwise happy, productive people. And it goes without saying that restructuring is possibly one of the biggest, if not the biggest, changes an organization can go through.
As such, it’s important—now more than ever, especially—for organizational leaders to keep tabs on the potential need for restructuring and understand what goes into making one a success.
What Is an Organizational Restructuring?
Organizational restructuring is a corporate management term that broadly refers to any situation where an organization changes its organizational structure. This can involve shifting direct reports to a different manager, reallocating resources elsewhere, or completely rethinking and rebuilding the entire structure from the top down.
There are many reasons why an organization might restructure itself. Something might be broken. KPIs may keep being missed. A merger might have taken place. An employee in a key position has left. Lots of employees across different departments have left. You get the idea.
When a restructuring happens, the organization has identified problems that are so severe, it’s having a detrimental impact on the organization as a whole and its ability to fulfill its objectives. And despite how drastic a top-to-bottom restructure might sound, they’re not that uncommon.
The Essential Elements of a Successful Organizational Restructuring
Regardless of the reasons why an organization might need a restructure, it’s important for leaders to ensure that they’re planning and implementing it in the right way.
Although this ‘right way’ of restructuring is a topic up for debate, the essential elements that make up a successful restructuring are not. These elements are:
- A Sound Strategy—The very first component of a restructuring is figuring out why one is needed in the first place. Without understanding this and being able to define the problem that a restructuring should resolve, there’ll be nothing to guide the process and no way to generate outcomes that can be measured in a meaningful way.
- Knowing Why Your Structure Failed—It’s also important to know what the strengths and weaknesses of the existing structure are, and why it’s failing to meet organizational objectives. Using an organizational chart can help you achieve a complete overview of your existing structure and make it easier to identify potential weak spots.
- What the New Structure Looks Like—Once you’ve figured out what’s wrong, begin putting together ideas for what your new structure might look like. Gathering feedback from stakeholders can help, as can thinking about important lines of authority, defining decision-makers, different internal functions, and the skills and experience of your employees.
- Open Communication Throughout—It’s important to be open and communicate openly once you’ve determined how the restructuring is going to go down. Avoid springing change upon employees and make communication and transparency the highest priority throughout, especially information regarding employee roles and responsibilities going forward.
- Flexibility and A Willingness to Pivot—Launching your restructure isn’t necessarily the end of the road. Change can be difficult, and employees may need time to adjust. You may also find that things don’t work as expected as time goes by. If goals aren’t being met, be flexible and prepared to make adjustments.
Using Your Org Chart to Plan Your Restructure
We mentioned earlier how using an organizational chart during the restructuring process can help leaders identify potential weaknesses in their organizational structure. That, however, is just one of the benefits among a whole host of others that can be realized when an org chart is used as the main tool for planning and implementing a large-scale restructure. Other key benefits include:
Keeping Skills and Experience Balanced
It’s easy to lose sight of skills and experience as people come and go. A common challenge faced by leaders is ensuring that teams have an equal balance of both tenured employees and new hires. This is important because more experienced employees help to educate new hires. When a team has too many new hires (or not enough tenured employees) organizational knowledge can suffer.
By including information on your organizational chart such as employee education, accreditations, certifications, skill level, and hire date, leaders can easily identify how skills and experienced are spread across the organization and among teams. This makes it easier to plan what skills and experience are needed (or lacking) during key events, such as a restructuring.
Identification of Resource Gaps
It’s not always easy to know when a team might need additional resources. A team leader, for example, might have an entirely different opinion from their direct reports, yet it’s often the case that the most senior voice is listened to despite what the majority are saying. An organizational chart, however, provides a clear, unambiguous, and unbiased representation of your resources. This kind of information is critical when planning a restructuring.
A well-built organizational chart can illustrate how teams are divided, who reports to who, where responsibilities lie, how many people a manager is in charge of, and what their skills are, among other things. As such, it can give leaders an idea of where skills are spread too thin or where there’s sufficient space to extend a resource beyond its existing scope.
Headcount Tracking
Headcount tracking isn’t simply a case of counting people across the organization. Indeed, this approach can lead to incorrect and inconsistent information because different people can have different ideas about what “headcount” means. Does it only mean full-time employees? Part-time? Contractors? What about people on leave or secondment?
At a basic level, an org chart can be used to map out all employees according to their roles and reporting relationships. However, should leaders choose to, they can add layers and labels according to employee status—full-time, part-time, contractor, consultant—to give them a more accurate picture of segmented and total headcount.
Supercharge Your Restructure with Org Charts
The modern-day org chart is far more than just a tool to map out reporting relationships. Among other critical functions such as project planning and onboarding, they help leaders to plan their restructuring better via the collection and distribution of information.
The more information leaders have, the more capable they are of making informed, data-led decisions. By being able to see how their teams are divided, where skills lie, and where resource gaps exist, leaders have the transparency they need to make their restructuring a success.
Org charts are also easy to get started with too, thanks to powerful org chart building tools like Organimi. Using our drag-and-drop interface, you can begin using Organimi to map out your organizational structure and gain critical insights in a matter of minutes—sign up for a free trial and see for yourself!