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Restructuring a Company - When (and How) to Do it!

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June 16, 2021
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5 minutes
Experienced copywriter who spends a lot of money at restaurants and regrets it later.

Restructuring a company can seem like a daunting task. Well, that’s because it is. But not if you know what you’re doing.

Whether you’re an employee or a business owner, it’s likely that you have experienced corporate restructuring or know someone who has been through this process. Generally, restructuring evokes uneasiness in people regardless of their rank in the company.

However, if you familiarize yourself with the process and do it the right way, it may be the best decision you’ll ever make for your company.

In this article, we’ll discuss when to go for restructuring and how to do it correctly.

1. The wrong reasons for restructuring a company

Restructuring a company is a complicated task. Whether you are restructuring a department or the whole organization, the whole process will require a lot of planning, time, and energy. But just because restructuring the organization takes so much effort doesn’t mean it is always the right thing to do. There’s a difference between being busy and being productive, and not all restructures turn out to be productive.

You see, there are right reasons for restructuring a company, and then, there are some wrong reasons. Let’s discuss the latter first. Here’s how to tell if restructuring may not be the right decision:

  • A newly appointed senior is pressuring others for a restructure: We all know what happens when a new CEO comes in—some old employees disappear within a few weeks, and new ones, often chosen by the CEO, join the company. Letting trusted old employees go is not the right way of restructuring a company.
  • Thinking that restructuring will solve all your problems: Even though restructuring a department can shake things up and offer better results, things may still not be perfect. Restructuring is not the only process that you should focus on. You may also want to try other things to obtain better results, such as a new marketing strategy, 4-day work week, allowing employees to work from home sometimes to boost job satisfaction, etc.
  • There have been multiple failed restructures before: This is self-explanatory. If restructuring the organization hasn’t worked before, then it may not be wise to try it again.
“Even a good decision if made for the wrong reasons can be a wrong decision.” Jonathan Pryce

2. The right reasons for restructuring a company

Now that you know the wrong reasons for restructuring a company, let’s discuss the right ones. These are the most common scenarios in which restructuring the organization may be the best thing to do:

  • Operational efficiency: Do you have multiple people doing the same job when only one person is enough to handle it? Do you have some staff members who are always overworked and others who don’t have enough work? The ‘that’s how we have always done it’ attitude can lead to inefficient daily operations and reduce productivity. A restructure may help optimize the true potential of staff and increase productivity.
  • Financial burden: Even though this is an unpleasant situation, a lack of funding and/or declining revenue means that you are going to have to restructure your business to cut costs.
  • Merger: Mergers and acquisitions can be a great way to combine forces and emerge as a more powerful business. However, with mergers come changes—changes in processes, organizational structures, personnel, as well as products and services.
  • Digital transformation: The pandemic has taught us the importance of digitalizing businesses. But with great digital transformation, comes great restructuring needs. You may have to hire new staff, such as digital transformation consultants, to train your old staff on how to use modern technology.

3. Switch from Waterfall to Agile

The need to restructure a department or the entire organization can arrive at any time. If you incorporate the Agile methodology in your organization, you may be able to handle frequent restructures and reorganizations with ease. Let’s quickly compare Agile and Waterfall.

Waterfall, or the traditional project management method, is a very linear way of managing a project. There is almost no room for change, and if a change occurs unexpectedly, which is exactly what happens when you restructure a company, things may get very overwhelming.

The Agile methodology on the other hand embraces and expects frequent changes. It leaves room for making amendments in the strategy, operational processes, as well as the final product. An Agile workforce is capable of handling restructures way better than the traditional workforce because employees are used to a fast-paced environment where things are not always certain.

An Agile workforce is built of permanent employees as well as temporary contractors who work on a short-term basis. This makes restructuring way simpler for the most part. If you want to switch to Agile, it’s highly recommended that you hire an Agile coach.

4. Seek help from the right consultants

As mentioned several times above, restructuring a company is a complicated process and mistakes can prove to be costly. If you are not sure about the process or you need an external perspective on your company’s situation, you should hire consultants who are experts in restructuring. Fortunately, in this day and age, there is an expert available for every type of restructuring.

Financial restructuring consultants: They can help you create cost-cutting strategies, prioritize cost allocations, and offer guidance on consolidating and reconfiguring loans. Besides this, they can also analyze financial risks that your company may face. This will give you the opportunity to prepare for the worst-case scenario beforehand.

Business restructuring consultants: Sometimes, a company needs to reconsider keeping certain job positions that may be unimportant or obsolete. This is not very pleasant for some employees, but unfortunately, it has to be done in certain situations. A business restructuring consultant can help you determine which positions are relevant and which are not. They can also assist you in stabilizing operations and optimizing workflow.

Interim chief restructuring officer (CRO): They can offer immediate help when your company is in crisis and needs a highly experienced and senior restructuring expert to come on board as quickly as possible.

Debt restructuring consultants: These are the professionals who are experts at negotiating with creditors when a company is in financial distress and needs some extra time to get back to normal.

Here at Consultport, we have over 3,500 experts and consultants in our talent pool. We only choose the best—the ones who have worked for Fortune 500 or blue-chip companies.

We know you don’t like to wait. That’s why, in most cases, we are able to connect our clients with top freelance consultants within 48 hours.

If that sounds interesting to you, get in touch now.