Facebook, the social media giant, successfully restructured itself in 2018.
In 2018, Facebook announced a change focused on three main product areas to address cybersecurity issues and improve product development, including new technologies like blockchain. This strategic decision boosted their growth.
Companies like Google, Disney, and Tesla have also often restructured themselves to drive growth, become more efficient, and revitalize their business.
This shows how important it is to understand organizational restructuring while adapting to new market conditions, technological advancements, and evolving customer expectations. Restructuring helps a large-scale organization navigate change and achieve the long-term success they’re after.
If you’re looking to amp up your business, improve client retention, and stay competitive, making changes within your company could be the way to go. Let’s see how you can restructure your organization with some proven strategies and steps.
How to Restructure an Organization the Right Way
- What Is Organizational Restructuring?
- Reasons for Organizational Restructuring
- Types of Organizational Restructuring
- How Do You Restructure an Organization?
- Post-Restructuring Strategies
- 1. Maintain diversity, equity, and inclusion (DEI)
- 2. Articulate the new value proposition for re-positioning the organization
- 3. Ensure job satisfaction throughout the workforce
- 4. Adopt models followed by corporations and limited liability companies (LLCs) for growth
- 5. Take help from consultants during and after restructuring
- The Way Forward
- Common FAQs
Summarize this article for me pleaseWhat Is Organizational Restructuring?
Organizational restructuring is the deliberate change of a company’s internal framework, including its structure, processes, job roles, reporting relationships, and culture. It involves shifts in departmental arrangements, workforce composition, legal entities, and the simultaneous development of new growth strategies.
Restructuring gives the organization a new direction. It plays a vital role in maintaining business growth and competitiveness by:
- Boosting efficiency: It helps remove redundancies, streamline workflows, and optimize resource allocation
- Enhancing agility: It lets your organization respond swiftly to changing market trends and customer demands
- Improving cost-effectiveness: It reduces waste and controls operational expenses
- Fostering innovation: Organizational restructuring creates an environment conducive to new ideas and experimentation
- Motivating employees: It helps align roles with individual strengths and aspirations
While every organization covets these benefits, they’re not the only reasons why companies undergo restructuring.
Summarize this article for me pleaseReasons for Organizational Restructuring
Here are a few significant factors that can trigger the restructuring of an organization:
1. Changing business environment
Industries are dynamic and subject to constant market change.
Structural changes are often necessary to adjust to technological advancements, evolving customer preferences, ever-changing market conditions, or new competitors.
For example, the impact of COVID-19 led many businesses to pivot strategically to ensure survival.
2. Financial restructuring necessities
The need for financial restructuring often leads to organizational change. It’s usually caused by factors such as excessive debt, cash flow issues, declining profitability, or changes in market conditions.
The process may need you to take various measures, such as debt restructuring, asset sales, cost reduction initiatives, or capital restructuring. These measures help stabilize finances and improve the organization’s financial health.
3. Improving efficiency
Enhancing business performance or exploring new opportunities can prompt restructuring initiatives. In such cases, streamlining operations, reducing redundancy, and optimizing resource allocation can be the goals of the restructuring process.
4. Cultural changes
Cultivating a new company culture that emphasizes collaboration or innovation may require structural changes.
Ownership changes, such as mergers or acquisitions, frequently trigger restructuring initiatives to align the business with the acquiring entity’s vision.
Depending on the cause, there can be various types of organizational restructuring.
Summarize this article for me pleaseTypes of Organizational Restructuring
A business can restructure in various ways, depending on the organization’s unique needs and goals. Here are some common approaches:
1. HR restructuring
HR restructuring focuses on workforce changes, such as implementing new training programs, creating new employee handbooks and organizational charts, reskilling employees, revising talent management strategies, or adjusting staffing levels and compensation structures.
2. Legal restructuring
Organizational adjustments are necessary when ownership or legal frameworks change. This may involve altering the organization’s legal structure, such as filing for bankruptcy, merging with another organization, or undergoing debt restructuring.
3. Divestment
Divestment involves selling underperforming business units to simplify operations and focus on core competencies. One of the primary objectives of the reorganization plan is to increase profitability.
Divestment can also align the organization’s portfolio with its strategic goals and improve business competitiveness.
4. Cost-reduction restructuring
Cost-reduction restructuring involves reducing administrative and operational costs through automation or downsizing. It often includes project outsourcing, contract renegotiations, and resource consolidation to cut costs.
5. Turnaround
A turnaround is a comprehensive approach to saving a struggling company, often involving financial restructuring, operational changes, buyouts, and leadership overhauls. You may also consider changing your product or service offerings to reverse a decline in performance.
Bonus: Team Charter Templates!
Summarize this article for me pleaseHow Do You Restructure an Organization?
Restructuring is a complex process that requires careful planning and execution. Follow these steps to create a well-defined organizational structure:
Step 1: Audit and analysis
Conduct a thorough assessment of your organization’s past and current state and identify potential challenges and areas for improvement.
Use ClickUp Dashboards to visualize key metrics and progress reports. It simplifies process mapping, resource scheduling, and project management and improves team dynamics and collaboration.
Customizable visualizations and real-time data in dashboards allow you to easily track progress, identify bottlenecks, and make data-driven decisions.
You can also increase overall productivity by keeping all project information in a centralized location, which all team members can access without wasting time in the back and forth for updates.
With ClickUp, you have a centralized platform that consolidates all assets, schedules, communication, projects, databases, and documents related to restructuring. This information helps you with in-depth audit and analysis.
Step 2: Goal setting
Once you’ve analyzed the current situation, the next step is to set goals for the transition process. The leadership team should clearly articulate the desired outcomes of the restructuring process and make sure they align with the organization’s overall strategy.
Use ClickUp Goals to set clear restructuring objectives. Track progress visually and ensure everyone on the team is aligned on the goals set for restructuring.
Brainstorm ideas and gather feedback collaboratively with ClickUp Mind Maps. You can easily create and customize mind maps, plan projects, and collaborate with your team to introduce and manage change.
This will greatly help you plan the type of restructuring and strategies required.
Step 3: Planning and implementation
With the goals in place, you can create a detailed plan outlining the changes to implement, the associated timelines, and the resources that need to be allocated to them. Change management is crucial in ensuring a smooth transition and minimizing disruption.
To effectively restructure the organization, involving stakeholders through proactive communication and addressing their concerns is important.
You can achieve buy-in from the stakeholders by clearly explaining the rationale and benefits of the restructuring.
Additionally, consider providing training and development opportunities to equip employees with the skills and knowledge needed in the new company structure. Lastly, ensure there’s strong leadership commitment to the restructuring. This can be achieved by supporting your employees and leading by example.
If you find yourself overwhelmed by the enormity and intricacies of the project, pre-built templates like ClickUp’s Change Management Plan Template or the ClickUp Change Management Plan Document Template can reduce the burden.
These templates provide a structured framework for outlining the plan, identifying tasks, and assigning responsibilities associated with the restructuring.
Break down the restructuring plan into manageable tasks with ClickUp Lists and view the details based on your preferred style, such as Gantt view, team view, or board view. Use ClickUp Custom Fields to capture specific details relevant to the restructuring. Track progress visually and identify potential bottlenecks.
You can use these templates to provide everyone clarity on the desired outcomes of a proposed change, keeping everyone focused on making the transition successful.
Step 4: Communication
Execute the restructuring plan diligently, ensuring clear communication with effective templates, employee support, and adherence to legal and ethical considerations.
Communicate the restructuring plan transparently and effectively to all stakeholders, addressing concerns and mitigating resistance.
You can use ClickUp Chat for real-time communication. Share updates, address concerns, and create transparency throughout the restructuring process. This will also help address the employees’ queries concerning the change.
Create, share, and collaborate on new policies and procedures arising from the restructuring with ClickUp Docs. Make them easily accessible to all team members. For confidential information, control access and ensure only the relevant stakeholders can view and change the documents.
Step 5: Monitoring and evaluation
Successful restructuring doesn’t happen overnight. You need to continuously monitor the progress and impact of the restructuring process and make adjustments as needed. Identify areas that need improvement and adjust your plan accordingly.
Conduct surveys or polls with ClickUp Forms to gather feedback from employees and stakeholders on the impact of restructuring. Analyze the feedback and address any concerns raised.
Then, discuss lessons learned and brainstorm continuous improvements for the newly restructured organization.
You can also take inspiration from the Nudge Theory for tackling the many challenges that will emerge during the restructuring.
The Nudge Theory
The Nudge Theory, popularized by Richard Thaler and Cass Sunstein in their book Nudge, proposes that subtle environmental cues can influence our decisions without coercion. It uses our inherent cognitive biases to “nudge” us toward behaviors perceived as more desirable.
How Nudge Theory contributes to restructuring
Organizational restructuring often encounters resistance due to uncertainty, fear of change, and inertia. Nudge theory can help leaders navigate these challenges by understanding:
- Choice architecture: Businesses can design the available choices by presenting them differently and highlighting specific options that are more appealing and likely to be chosen. This allows organizations to influence customer preferences and decision outcomes
- Behavioral biases: Leaders can use nudges to guide individuals toward preferred behaviors. These nudges are based on predictable patterns in human thinking like loss aversion, social proof, and the endowment effect
- Positive reinforcement: Organizations can use nudges as rewards, recognition, or social feedback to encourage desired actions, creating positive associations with them
Let’s say your organization is implementing a new Customer Relationship Management (CRM) system to improve efficiency and customer service, and some employees are resistant to the change, citing unfamiliarity and fear of disruption. In this case, you can architect choices in the following ways:
- During the training, focus on how the new CRM will benefit individual employees (e.g., quicker task completion, easier data access)
- Pre-populate individual dashboards to prioritize tasks and information relevant to their roles, making their initial experience smoother
You can also use gamification for positive reinforcement. Implement points or badges for completing tasks in the new CRM, nurturing a sense of achievement and friendly competition among the employees.
Remember that nudges are not meant to be manipulative. They should be transparent, ethical, and respectful of individual choices. You can ensure that by following a few simple steps:
- Understand your employees’ concerns and design nudges that resonate with them
- Combine nudges with other change management strategies like clear communication, training, and support
- Showcase how the changes will improve individual and organizational well-being
- Emphasize the advantages of adopting the new company structure over persisting with the old one
- Allow some flexibility for individuals to adapt at their own pace
Summarize this article for me pleasePost-Restructuring Strategies
After restructuring an organization, you need to ensure a smooth transition and maintain employee morale. Here are some strategies that will help you achieve the same across departments:
1. Maintain diversity, equity, and inclusion (DEI)
DEI goes beyond legal compliance. It cultivates a sense of belonging, improves decision-making, and enhances innovation.
What you can do:
- Ensure the post-restructure leadership reflects the diversity of your workforce
- Train managers and employees to recognize and mitigate unconscious bias
- Track DEI metrics throughout the reorganization process and beyond
- Provide safe spaces for employees to connect and advocate for diverse perspectives
- Use inclusive language
2. Articulate the new value proposition for re-positioning the organization
Employees need to understand the ‘why’ behind the organization’s cultural changes and how they contribute to its future success.
What you can do:
- Explain the rationale for restructuring in simple, jargon-free terms
- Emphasize how the new change will create value for employees, customers, and stakeholders
- Share the organization’s vision and growth plans to generate excitement and buy-in
- Keep employees informed through multiple channels throughout the transition
3. Ensure job satisfaction throughout the workforce
Satisfied employees are more productive, engaged, and less likely to leave.
What you can do:
- Implement an appraisal and performance management system aligned with the successful restructuring and goals. Appraisals can help you assess skills for new roles, identify training needs, and address job security concerns. Use them to tailor training and track progress in individual and organizational performance
- Equip employees with the skills needed to succeed in their new roles
- Support employees in navigating their career options within the new organizational structure
4. Adopt models followed by corporations and limited liability companies (LLCs) for growth
Post-restructuring, large-scale organizations can optimize resource allocation, streamline operations, and potentially achieve cost savings through economies of scale. This frees up resources for growth initiatives.
The new organizational structure further allows companies to shed non-essential functions and focus on core competencies, increasing efficiency and competitiveness in their core markets. A successful restructuring strategy can improve brand perception, increasing customer loyalty and market share.
LLCs can adapt their structures more readily than corporations, allowing them to respond quickly to fast-moving markets and pursue growth opportunities. Moreover, LLCs do not face double taxation, which is a significant benefit for growing businesses as it permits them to maximize their profits and reinvest them for further growth.
A simpler organizational structure can lead to lower administrative and operational costs, freeing up resources for growth.
5. Take help from consultants during and after restructuring
Consultants can provide expert analysis and recommendations on restructuring options, ensuring alignment with growth goals. They can assist in executing the restructuring plan, managing logistics, and overcoming challenges.
Additionally, they bring specialized knowledge and best practices to the process. It helps them provide an unbiased perspective, avoid internal politics, and minimize disruption.
Summarize this article for me pleaseThe Way Forward
The future of organizational restructuring will focus on agility, data-driven decision-making, and employee engagement.
Businesses that embrace continual improvement and adaptability will find themselves well-positioned to navigate the change and achieve sustained success.
Remember, restructuring is not just downsizing or cost-cutting; it’s about strategic transformation and unlocking the organization’s full potential. Organizations can steer growth by understanding the various facets of restructuring, following a systematic approach, and implementing post-restructuring strategies effectively.
To meet these needs, ClickUp can become your go-to tool. With multiple templates for change management and useful features tailored for project management and communication, it’s a valuable tool throughout the restructuring process.
Sign up with ClickUp today for free.
Summarize this article for me pleaseCommon FAQs
1. What does it mean to restructure an organization?
Restructuring refers to changing an organization’s structure, systems, and processes to achieve its goals more effectively.
2. What are the steps to restructure an organization?
The steps in an organizational restructuring process include analysis, planning, communication, implementation, and evaluation.
3. What is restructuring in a company?
Organizational restructuring involves changing a company’s structure, systems, processes, and personnel. By understanding the different aspects of organizational restructuring, businesses can approach this process strategically and achieve favorable outcomes for their company and employees.
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