Companies are dynamic—they are constantly changing. They start off as an idea that is developed and launched, and some do not progress further. However, the majority will, with business owners spending years building upon their initial idea, diversifying their operations, and sometimes merging and re-organizing the business before it is re-launched.
This is because in the modern commercial world, businesses must quickly adapt to change or be overtaken by their competitors. And more often than not, adaptation requires a complete organizational redesign and restructure.
Org Restructures Are A Hefty Undertaking
But as you may have guessed, a successful organizational redesign and/or restructure is a very hefty undertaking. It should go without saying that restructuring an established company is likely to be very difficult, complex, and taxing. After all, it is an example of change management that involves lengthy discussions, emotionally charged meetings, and difficult decisions about what is and isn’t working and what needs to be done to make things better. In addition to this, stakeholders will be analysing and examining what’s going on, and the variety of perspectives from these people can easily throw spanners in the works. Plus, there are constraints associated with existing commitments, employees, and customers. We could go on.
Unfortunately, many business leaders fail to realize this. They dive headfirst into hastily planned restructures without conducting the necessary research and planning, of which there is a lot that must be done. And because of this, less than a quarter of organizational restructures succeed.
Why Do Companies Restructure?
There are many reasons why companies undergo a restructure. Usually, it is down to one of the following key reasons:
- A consistent failure to meet KPIs due to one or more problems.
- An impending merger with or acquisition of another company.
- An employee in a key position, usually director-level, leaving.
- A need to make way for a new opportunity such as an expansion or product launch.
- A change in your customer base or a change in customer needs.
- A change in size, either growth or downsizing.
Occasionally, companies may opt to restructure individual departments, as opposed to the whole company, for one or more of these key reasons.
4 Questions to Ask Before Attempting an Organizational Restructure
When restructuring a company, it is important that you do your research, cover all bases, and ask the right questions. By employing a gung-ho attitude and diving right in, you run the risk of being one of the three-quarters of all companies that fail to make a success of their restructures. To help you along the way, here are four key questions to ask before you embark upon the planning stage.
1. What are your company’s strengths and weaknesses?
It is important to consider where your organization’s current structure is failing to meet your company goals and KPIs. It is equally as important to consider where your organization’s current structure is contributing to the successes you have.
A big of identifying strengths and weaknesses is gathering feedback. Too many business leaders undergo reorganization without ever considering the people who are in the know—the employees on the ground—and how they will be affected. Your employees often have the most valuable insights on what is and isn’t working, and it is up to you to gather and act on these insights.
2. Are your managers and other leaders equipped to support the restructure and changes?
Leaders have an irreplaceable role in any company. They are at the core of any organizational restructure and play a multitude of imperative roles. They also play a key role in communicating the message about any changes that are being made, something which goes a long way to making the new organizational structure operational and successful.
- Do your company’s senior leaders have the right skills to support its future strategy?
- Are they good enough at communicating change and inspiring teams to act?
- Are they committed to their work? These are just a few of the things you should ask yourself.
3. How will the restructure impact the people side of things?
After clarifying your reason for the restructure and any leadership requirements to enable the change, it is time to think about the redesign and how this will impact your people. There are many ways to approach it and many models that can be used, however, merely getting to the final stages of planning a restructure does not signify the end—you need to think about how it will impact your people.
- What will the change require in terms of new talent acquisition?
- How and when will you communicate the organizational changes across internal and external stakeholders?
- Do your company’s processes, systems, and tech need to be changed, updated, or modified to work with the new structure?
4. How much time should we commit?
As you embark on a restructure, don’t underestimate just how much time it will take to not only plan and design it, but how much time and effort it will take to build an understanding among your people, build support, allow for new hiring and training as required, and deploy it. More often than not, these efforts will take more time than planning the restructure itself, and they will almost always take longer than originally anticipated.
Designing a New Structure
It may sound obvious, but the most important part of a restructure is designing the new structure, your company’s new organizational model. The best way to do this is to use an org chart to build a clear, elevated perspective on how things will look when the restructuring is complete. This org chart should clearly map out your new structure and include:
- Vertical and horizontal lines of authority
- Who the decision makers are and their remits
- Employee attributes such as skills and experience
- The relationships between departments and individuals
There are many different organizational structures you can use to achieve this, from the classic hierarchical structure to the more involved matrix. It is important to consider the pros and cons of both of these and more before settling on one to use for your own company.
As you ponder your options, we recommend creating an org chart with Organimi. Our software has a variety of org chart templates available, and you can even import your own employee data from the likes of Office 365, Excel, or a CSV table to automatically create an org chart that you can play around with.