Restructuring Businesses

Corporate restructuring is a comprehensive process that aims to rework an existing organizational structure in order to improve performance, efficiency, and overall competitiveness. In the below article we’ll discuss the various aspects of restructuring a business, including the overarching process, planning, and measures that can be taken.

In its simplest form, restructuring concerns itself with three steps, which are detailed below.

Before anything else can be done, a corporate restructuring plan must be created. It is, in short, a strategic document which details the goals, scope, and timelines of the restructuring effort of a business. The plan can detail any number of areas of focus, be it reducing headcount, optimizing costs, reviewing the business’ product portfolio, making changes in the organizational structure, or improve operational processes. In essence, a restructuring plan sets the course in which the business will take, and acts as a guideline for the overall corporate restructuring proceedings and process.

A corporate restructuring plan should be routinely referenced during the implementation of any restructuring efforts, as it offers a step-by-step approach to each phase of the plan – from the analysis of the business’ current situation to the development and implementation of strategies and measures. Restructuring often requires close collaboration between management and employees, and in some cases the expertise of external consultants and other experts.

Restructuring measures are concrete steps and adjustments that come into play when undertaking restructuring efforts. Such measures can have implications for any number of areas of your business – be it reducing costs increasing efficiency or reducing employee headcount, realigning strategies, dropping unprofitable business- and product-lines, optimizing your supply chain, investing in research and development, or even implementing new technologies. The specific measures to be implemented are highly dependent on the individual challenges your business faces and the goals of the company.

Although the terms reorganizing and restructuring are often used interchangeably, is one major difference between the two. Typically, reorganizing concerns itself with measures meant to aid a business suffering financial stress or instability and aims to put it back on the right path to financial stability and restore solvency. This can come in the form of resolving debts, renegotiating contracts, finding new financing, and more.

Restructuring on the other hand is a more general term that concerns itself with organizational and strategic changes that go beyond financial reorganizational efforts. Restructuring can involve financial, as well as non-financial, aspects of one’s business, and aims to achieve a long-term, sustainable realignment of the company as a means of futureproofing.

Both restructuring and reorganization are terms used in a business context and refer to changes in the structure or organization of a company. Although they often sound similar, they have different meanings and applications:

Restructuring:
Restructuring refers to the reorganization or restructuring of parts of a company in order to make them more efficient, competitive or profitable. This process often involves adjusting the company’s structure to respond to current market conditions or internal challenges. Restructuring can affect various aspects of the company, such as business units, departments, processes or debt.

Reorganization:
Reorganization is a broader term and refers to the reorganization of the entire corporate structure or organization. It is often linked to strategic goals and long-term visions of the company. In contrast to restructuring, which can be more reactive, reorganization is more proactive and strategic. The main intention is to adapt the company to changing market conditions or strategic goals.

In summary, restructuring refers to targeted changes in individual areas or parts of a company, while reorganization is a more comprehensive, strategic redesign of the entire company structure in order to achieve long-term goals.

Restructuring proceedings are a legal framework intended to afford a business with the chance to readjust and eventually resume its normal commercial operations, while still providing it the opportunity to continue operations during the process. The process varies widely depending on country and legal jurisdiction, but typically involves insolvency proceedings, out-of-court settlements, creditor protection proceedings, and other legal mechanisms. In short, corporate restructuring allows for businesses to renegotiate debts and come to new agreements with creditors, undertake operational changes, and ultimately ensure their commercial viability.

A strategic restructuring refers to a restructuring that is not only aimed at short-term financial goals, but also aims to achieve a long-term strategic realignment of the company. Such a restructuring can include a review of the business strategy, the development of new business models, the development of new markets or the strengthening of the company’s competitive position. Strategic restructuring takes into account the long-term sustainability and competitiveness of the company and aims to create a solid foundation for future growth and success thanks to organizational resilience.

People analytics and organizational design software can play a pivotal role when restructuring a company – namely by providing comprehensive data analytics and insights into its people and organizational structure. Here are some ways in which software can contribute to restructuring efforts:

Identifying Bottlenecks
By analyzing employees’ skills, experience, performance, and workload, software solutions can identify bottlenecks and overall shortages within the organizational structure. This in turn helps decision-makers pick out areas where resources can be redistributed, or where new positions might need to be created, all in an effort to improve efficiency.

Talent Management and Skill Matching
Org analytics software enables companies to better understand the skills, experience and competencies of employees. This enables them to target their talent and improve the skills matching process to ensure that the right people are selected for the right roles, allowing them to reach their full potential. This is particularly important when reassigning tasks or creating new teams as part of restructuring.

Identifying Performance Problems
Innovative software solutions can evaluate performance KPIs, highlighting underperforming employees and even whole departments struggling with underperforming. This allows for businesses to undertake a variety of measures, be it training sessions, mentoring programs, or reallocation to improve productivity and effectiveness of employees.

Analysis of the Organization’s Structure
Org Design software enables the in-depth analysis of structures, and provides information on varipus aspects thereof, such as hierarchies, communication flows, and collaboration opportunities. This helps businesses to then uncover inefficiencies and overlapping structures, allowing for alternative organizational models to be developed that are more suitable for the overarching restructuring process.

Keep Employee Satisfaction in Mind
By analyzing employee questionnaires and other feedback-mechanisms, information on employee satisfaction and loyalty can be uncovered. This allows for businesses to more closely observe the ramifications of restructuring on employees and provides them with the opportunity to take the necessary measures to maintain engagement and satisfaction.

Predicting Impacts and Success
With the help of data models, forecasting algorithms, and simulation functions, software solutions like Ingentis org.manager can help anticipate the implications of various restructuring models, and how they might impact the business as a whole. This allows for decision-makers to analyze different scenarios, estimate risks, and make well-informed decisions to maximize the success of their restructuring efforts.

Corporate restructuring is a complex process, requiring careful planning, clearly defined goals, and comprehensive measures. A successful restructuring project can revitalize a business, improve competitiveness, and secure its long-term commercial viability. It’s important to understand the differences between restructuring and reorganizing, and to utilize the correct legal framework in order to properly execute an effective restructuring project. Strategic restructuring transcends financial aspects and focuses on the long-term reorientation of a business. Given ever-changing business environments, restructuring should be kept as a tool to help companies adapt, grow, and succeed. Innovative software like Ingentis org.manager can simplify a wide range of processes in this context, and provide the basis for making more informed decisions.