The great restructuring!

The great restructuring!

Yes, you read that correctly. I am not confused. I am not referring to the great resignation-the danger of massive employee exodus. I am referring to a different threat- one that is looming large—the need for organizations to take substantial costs out in the next few months—the prospect of a great restructuring.

Consider the following:

a) Due to a worsening chip scarcity, GM is closing most of its plants in the United States.

b) After accumulating a $ 2 billion loss over the last two decades, Ford decides to shut down its India operations completely.

c) Unilever warns of a drop in operating margins due to a surge in raw material prices to levels not seen in a decade.

d) Contrary to common belief, productivity declined while working from home during the recent shutdown, according to a study from the Becker Friedman Institute in Chicago. The study revealed an important finding: the extra time saved from not commuting to work was spent managing the lack of context and coordination rather than attaining larger goals.

e) Financial services organizations are concerned about losing competitiveness if they cannot meet their clients face to face. They are urging employees to get back to the office and face resistance to doing so from their employees.

So, the bottom line is that businesses face lower profits, out-of-whack supply chains, poorer productivity, and a need to remain competitive. Employees, on the other hand, indicate a reluctance to return to work.

Faced with mounting demands, businesses are going back to the drawing board and examining costs closely, even willing to make some difficult trade-offs. Under challenging circumstances, drastic measures must be taken. American Airlines, for example, recently changed their customer compensation guidelines, indicating that they are no longer responsible if travelers miss their connections, or if the airlines alter or cancel a flight's itinerary, or if a checked-in bag comes late, and so on.

Many firms must impose tight cost targets as they prepare towards 2022, which will eventually lead to significant restructuring. I suppose this recent employment market, in which the number of jobs offered outnumbers the number of persons available in the market, is ephemeral and, at best, temporary. Many sectors and organizations, I believe, will undergo drastic restructuring in the coming months. Plants will be closed, activities will be halted, and businesses will depart underperforming countries and products.

Organizations will evaluate the following carefully:

a) Enabling functions are likely to face the chop first- partly because of digitization and partly because any function that renders a service internally will be re-evaluated if such a service is necessary or can be traded-off.

b) Organizations will look for ways of sharing risks and costs. This means they will look for specialist skills with external partners and providers in areas that they themselves are weak at. For instance, finding a partner to handle logistics may be an intelligent thing to do- given how complex it has become now.

c) Long-term investments- R & D, Learning, etc. are likely to face a cut- the focus is on survival and living to tell the tale another day.?Basically, anything nice to do or anything that can only generate a long term ROI will be postponed in favor of short-term returns.

d) Rather than incurring long-term employee costs, firms are more inclined to embrace on-demand gig employment, in which they enter into a work agreement as and when needed, rather than keeping staff on the payroll. The development of gig-work sites such as Upwork and Fiverr is proof of this.

e) A rethinking of middle-management positions. Managers in the middle are an endangered species. The rapid pace of automation and the modularization of work puts pure management employment in jeopardy.

f) Both span-breaker employees and span-breaker organizations will be called to question. Organizations will eliminate pure management jobs/ organizations in favor of operational jobs—integrator roles, aggregator roles, and long-term roles will all be eliminated.

The bottom line is that a major restructuring is on the way. It will make things more difficult. On the one hand, employees are re-evaluating their organizations, while organizations, on the other hand, are re-evaluating their costs, resulting in a potential and unavoidable collision.

Perhaps this is what another industrial revolution will require—a completely new manner of organizing and a completely new style of working?

Is it possible that I'm overly pessimistic? What do you think?

ONE MORE THING. Many of you have already enlisted your email to support me on my doctoral dissertation research. I want to thank you for the same. I am still to reach my goal of 500 volunteers, though. I would be grateful if you could enroll in my study by volunteering at the link provided below.

My dissertation is on what leader behaviors and contextual factors affect employee engagement for those working remotely. The 15- 20 minutes survey will be launched later in September 2021. If you are a US-based remote working employee of any organization (any sector, any industry) and would like to volunteer on a completely confidential survey that will help me validate my survey instrument, please open the enclosed Qualtrics link and submit your email address. I need about 500 US-based volunteers. If you can also share this link with others you may think are potential participants, may I request you share this newsletter with them?


Please help.


Raghu Krishnamoorthy reading your article resonates with the book "Legacy," though, on a much larger scale. I'm undecided whether you're pessimistic or realistic. I tend to lean towards the realistic label. Unknown variables complicate future projections. A known variable is that people likely do not have similar goals outside of taking care of their own needs first. It really makes it a sticky situation. Lastly, in my opinion, for a slightly smoother transition, restructuring beliefs, perceptions, and approaches give us a foot in the door. So, how many people are ready for some change?

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Siddhartha Bhattacharjee

Coach CEO's/Business Heads/Senior Professionals/Founders/Nextgen Leaders

3 年

Raghu Lot of restructuring seems to have an undertone of cost and management efficiency. Past few weeks I have been listening to a podcast by Guy Raz on How I built This. Most businesses have shared the jolt of the pandemic. Big and Small alike. What was interesting was the external challenge brought into forefront a hidden opportunity. These were emergent trends that could have gone unnoticed. The organisations decided to respond with an outside in approach rather than inside out. The organisations geared to test and adapt based on new requirements. Lyft decided to introduce subscription model providing a choice of options for riding a bike, car. Ola cabs in India got into Ola Electric to manufacture 2 wheelers. In a span of 9 months from idea to product launch.

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I did not found the link Happily to participate if needed

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Jennifer Richmond-Ananbeh

Lover of all things History, Art and upcoming adhesives. Dork.

3 年

Julia Gourley Donahue… ?

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Shubho Chatterjee, Ph.D, P. E.

COO, CIO, Partner| Transformer. Change Agent, Technology Evangelist, Digital Leader, Turnaround, Growth, Performance, Customer Care| Healthcare, Luxury, Manufacturing, Technology, Supply Chain|

3 年

Thanks for sharing Raghu. The first five points you raise have always been prevalent in business: loss of production due to material or resource shortages, operation shut down due to sustained losses (Ford India), supply chain disruptions, and workforce availability. Covid has exposed these factors and weaknesses much faster. As a result there is a possibility of a reduction in force. However, the supply chains will be alive again in too distant a future with enhanced demand. Organizations that do react to this phenomena with only a cost restructuring focus, will be fleshed out when demand returns. Indiscriminate cost cutting doesn't make for a great organization: "Chainsaw Al" (Al Dunlap) comes to mind. This is the time for organizations to really focus on organizational and supply chain resilience frameworks and practices and build the bulwarks of a strong resilient organization. Regarding the next six (a-f) points, I think, digital growth will impact every part of the organization. There will be no preferences as the scope and power of an effective digital play comes into practice. The whole notion of core competency in practice for the last two-three decades encourages shedding of non-core functions to those who do it better. The problem with gig economy work and workers, is that there is no ownership or accountability of work per se. A contractor, be it a software developer or a contracted CEO, will not have the same investment as a regular worker. Also, when the contract job is done how will it be maintained? As is clear, job roles are migrating in cloud operations. Skills are moving from a specific role to that of an integrator roles, as you correctly note. However, the risk of moving to a gig economy en masse, is accountability loss. You are correct in stating that digital revolution will require organizations and leadership to develop new working models. We are well underway in the fourth industrial revolution, that of digital. The new way of working is characterized by location free work, serving the customer, managing results, shared knowledge, and employment flexibility. This will require organizational re-balancing to produce beneficial impacts. While, there may be a focus and evidence of short-term restructuring, it behooves senior leadership to address workforce skills and rebalancing from a higher perspective and for a larger time period. worxpertise group Sonia Thawani Shivani Roshan??Sumit Bhattacharya?Rajiv Manalal Gupta S A. CHARI

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