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Restructuring


Restructuring

OVERVIEW

We trained hard. But is seemed that every time we were beginning to form into teams, we would be reorganised. I was to learn later in life that we tend to meet any new situation by reorganising. And what a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralisation.

Gaius Petronius Arbiter, The Satyricon, 1st century AD

These words spoken two millennia ago might be very familiar to some of you. They certainly are to us, and we believe they are as insightful now as they were then. However, even though these words have been much quoted, organizations do not necessarily take any notice of them!

Although some managers are now getting this process right, most people’s experience of restructuring is negative. People often roll their eyes and say ‘Not again’, ‘It failed’, ‘Why didn’t they manage it better?’, and ‘Why can’t they leave us to just get on with the job?’

Restructuring as a theme for change might seem a little strange because restructuring as a key strategic objective is not particularly meaningful. Surely we should be looking at the reasons behind the change. There are a number of important points here:

  • It seems that restructuring becomes the solution to a variety of organizational issues, and in that sense we need to look at the restructuring process itself as it impacts on so many people’s lives.

  • Given that managers and staff are restructured so often, it is important to understand the dynamics of restructuring, what typically goes wrong and what a good process looks like.

  • In our view restructuring should be the last option considered by management rather than the first option. It is often a method for not addressing the organizational issues that it seeks to resolve.

This chapter looks at:

  • the reasons for restructuring;

  • the restructuring processes:

    • strategic review and reasons for change;

    • critical success factors, design options and risk assessment;

    • learnings from previous projects and best practice;

    • project planning and project implementation;

    • monitoring and review;

  • restructuring from an individual change perspective – the special case of redundancy;

  • enabling teams to address organizational change.

In the UK the Chartered Institute of Personnel and Development (CIPD) is running an ongoing research project ‘Organising for Success in the 21st century’ (www.cipd.org.uk) looking at current and future themes of restructuring in organizations today. It stresses the importance to companies of this process:

[W]hen DuPont announced its reorganisation in February 2002, its stock price rose 12%, putting a valuation on the new organisation design of $7 billion (4.5 billion). Less fortunate was the reception of Proctor and Gamble’s launched in 1999 by the company’s new chief executive, Durk Jager, this reorganisation had a $1.9 billion (1.2 billion) budget over six years. Within 18 months, the perceived difficulties had cost Jager his job.

On a macro level, the survey found that during the 1990s the top 50 UK companies moved from having on average one major reorganization every five years to having one every three years. On a micro level, individual managers had personally experienced seven reorganizations within their organizations. Not all of the seven were major organization-wide change, some were more local. Nonetheless managers encountered various challenges as a result: managing the changes within themselves, managing the changes within their staff, ensuring that both large-scale and minor changes were aligned to the wider organizational strategies, and last but by no means least, delivering on business as usual and ensuring staff were motivated to deliver on business as usual.


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