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How do you design and implement a fair and transparent restructuring process?

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Restructuring is a major change that can affect your organization's performance, culture, and reputation. It can also create uncertainty, anxiety, and resistance among your employees, customers, and stakeholders. How do you design and implement a fair and transparent restructuring process that minimizes disruption, maximizes alignment, and fosters trust and engagement? Here are some key steps to follow.

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Chris Tomlinson

Managing Director @ Muuto Consulting | Architecting Complex Strategic Transformations

1 Assess the need

Before you start planning and executing a restructuring process, you need to assess the need and the rationale for it. What are the drivers and objectives of the change? How does it align with your vision, mission, and strategy? How will it impact your value proposition, competitive advantage, and customer satisfaction? How will it affect your financial, operational, and human resources? Conduct a thorough analysis of your current situation, your desired future state, and the gap between them.

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Errol Danziger

I coach business leaders - Company Directors in the Boardroom, Executives in the C-Suite, and Managers in the Management Team
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When should you prepare to restructure? When these occur – * profitability is falling – the firm isn’t doing as well as previously * revenue is decreasing – sales aren’t occurring as frequently as previously * margin is declining – costs rising due to supplier price increases, or selling prices forced down by pressure from competitors, or both * increasing inventory – products piling up unsold in a warehouse, due to falling demand as a result of changes in customer tastes or preferences * personnel are unproductive or idle – the firm is overstaffed, people have nothing to do * technology is obsolescent – the firm’s intellectual property is overtaken by competitors’ innovation, and the firm’s tech is increasingly becoming obsolete

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Chris Tomlinson

Managing Director @ Muuto Consulting | Architecting Complex Strategic Transformations
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From our experience their are generally two types of organisation, those that continually refine and optimise their organisational design and allocation of accountabilities and decision right or, those that have a more static or consistent structure where changes are less frequent. There is usually a clear trigger, or rationale, that makes restructuring the right course of action. For more static organisations restructuring is usually the very last lever to be pulled, because of the disruptive implications.

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2 Design the structure

Based on your assessment, you need to design the new structure that will support your goals and objectives. This involves defining the roles, responsibilities, and reporting relationships of each unit, function, and position. You also need to identify the skills, competencies, and behaviors required for each role, and evaluate the existing and potential talent pool. You may need to create, eliminate, or merge some roles, or redeploy or reskill some employees. You need to ensure that the new structure is clear, coherent, and consistent.

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Chris Tomlinson

Managing Director @ Muuto Consulting | Architecting Complex Strategic Transformations
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I disagree. The first step is always ‘why’. Why make the change? What is the business value at stake/targeted? With grater clarity on this, then the model for how the transformed organisation will operate can be defined. Likely this is and update to what already exists, but it is an important process. Not to be skipped. Then the next step is designing the organisation structure to support the target operating model and, to deliver the value outcomes.

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Errol Danziger

I coach business leaders - Company Directors in the Boardroom, Executives in the C-Suite, and Managers in the Management Team
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The main ways to restructure – REDUCING PERSONNEL Staff members believed to be surplus to the firm’s requirements are made redundant or retired. SHUTTING DOWN PRODUCT OR SERVICE LINES Products or services that were sold in the past that have become unprofitable, are withdrawn, and facilities used to make them are sold or scrapped. SELLING DIVISIONS OR BUSINESS UNITS Disposing of divisions or business units that don't fit the firm’s vision or strategy, to management (MBOs), to the public (IPOs or split-offs), or to competitors. ELIMINATING LAYERS OF MANAGEMENT Eliminating management levels, making management more responsive and closer to lower level employees, speeding up decision-making, and reducing remuneration costs.

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3 Communicate the change

Communication is critical for a successful restructuring process. You need to communicate the change to your employees, customers, and stakeholders in a timely, honest, and empathetic manner. You need to explain the why, what, how, and when of the change, and how it will affect them. You also need to address their concerns, questions, and feedback, and provide them with regular updates and information. You need to use multiple channels and formats, such as emails, newsletters, meetings, webinars, videos, podcasts, or social media.

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4 Implement the change

Implementation is the most challenging and complex part of the restructuring process. You need to execute the change according to your plan, schedule, and budget. You need to manage the transition of roles, tasks, and processes, and ensure that they are aligned with the new structure. You also need to monitor and measure the progress and outcomes of the change, and adjust your plan as needed. You need to provide adequate support and resources to your employees, customers, and stakeholders, such as training, coaching, mentoring, counseling, or incentives.

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5 Engage the people

Engagement is essential for a smooth and sustainable restructuring process. You need to engage your employees, customers, and stakeholders in the change process, and make them feel valued, respected, and involved. You need to solicit their input, feedback, and suggestions, and incorporate them into your decisions and actions. You also need to recognize their contributions, achievements, and efforts, and celebrate their successes and milestones. You need to foster a culture of collaboration, innovation, and learning.

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6 Evaluate the results

Evaluation is the final step of the restructuring process. You need to evaluate the results and outcomes of the change, and compare them with your goals and objectives. You need to assess the impact of the change on your performance, culture, and reputation. You also need to identify the strengths, weaknesses, opportunities, and threats of the new structure, and the best practices, lessons learned, and areas for improvement. You need to report and share your findings and recommendations with your employees, customers, and stakeholders.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How do you design and implement a fair and transparent restructuring process?

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1 Assess the need

2 Design the structure

3 Communicate the change

4 Implement the change

5 Engage the people

6 Evaluate the results

7 Here’s what else to consider

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