Monday, September 24, 2012

The seven principles of a successful restructuring

Chances are, you’ve had to make some changes to your company’s internal structure in response to the economic downturn (and in preparation for the slow recovery). As with everything in business, restructures can be done well and they can be done poorly. Here are seven principles to help you avoid unnecessary complications.

Even as the economic outlook appears to brighten, the fact remains that many organisations can no longer operate as they had been. A key feature of this changing landscape is the need for organisations to restructure.

Here are seven broad restructuring principles to help make any restructure a successful one.

1. Align structure to strategy

All restructures must align to strategy. This may seem self-evident, yet a significant number of organisations fail to do so. For example, if local conditions are a predominant factor, then stress local sales and marketing functions rather than a centralized behemoth that then tries to matrix with local elements.

2. Reduce complexity

Simply put, complexity costs. Whether it is a complex organisational structure, a complex product offering or complex transactional processes, the added cost of complexity can be a drag on performance.

To mitigate complexity, there are three considerations that help with organisational design:

    Design structure for strategy before you design for specific personnel. Organisational redesigns which are a compromise between strategic intent and line management preferences inevitably add complexity. So, while internal political intrigue is unavoidable, at least start with a clean and clear design that matches to strategy.
    Avoid making leadership roles too complex (see principle #5).
    Minimise the use of matrices. They introduce measurement overhead and a lack of clear direction to the staff.

3. Focus on core activity