REASONS FOR RESTRUCTURING

We are concerned in this chapter with the dynamics of change and restructuring, less so with why the organization or part thereof is being restructured. Restructuring can occur for numerous reasons:

downsizing or rightsizing (market conditions or competitiveness);
rationalization or cost-cutting (market conditions or competitiveness);
efficiency or effectiveness (drive towards internal improvement);
decentralization or centralization (drive towards internal improvement);
flattening of the hierarchy (drive towards internal improvement);
change in strategy (strategy implementation);
merger or acquisition (strategy implementation);
new product or service (strategy implementation);
cultural change (strategy implementation);
internal market re-alignment (strategy implementation);
change of senior manager (leadership decision);
internal or external crisis (unforeseen/unplanned change).

We believe that restructuring should only take place as a result of a change in strategy. It should have a clear rationale and should be done in conjunction with other parallel changes such as process change and culture change. Of course this is not always the case. Sometimes other events kick off restructuring processes, such as a new boss arriving, a process or product failure, an argument, a dissatisfied client or an underperforming person or department. In these cases it is sometimes difficult for employees to curb their cynicism when changes in structure seem to be a knee-jerk reaction, which lacks direction, appears cosmetic and fails to lead to any real improvement.

We look at specific cases of restructuring such as mergers and acquisitions, cultural change, rebranding and IT-based change in the other application chapters.