A Guide to Organizational Restructuring For Small Businesses

Eric Mochnacz
February 5, 2024

Organizational restructuring is the process by which a small business makes significant change to their company structure, roles and processes.  The goal of this process is to maximize efficiency, cost-effectiveness and adapt to changing market conditions.  There are a number of activities that may result from a company’s decision to restructure – a change in the organizational design and structure, redistribution of roles and job responsibilities, staffing changes (with potential layoffs or a reduction in force), process overhaul and redesign, integration of new technology or cultural transformation.  Organizational restructuring may not always be a bad thing.  A company’s need to respond to market shifts, financial pressures, technology advancements, and new competitors can have positive outcomes.  But, it can also be a challenging and disruptive process for the company and its employees.  We’ve put together a convenient guide for small businesses in navigating organizational change.  

Assessing the Need for Restructuring

If you are going to make a significant change to how your business operates, it’s critical for you to clearly articulate the problem you are trying to solve. After you’ve identified your problem statement, consider all outcomes and their impact.  As you explore the different approaches to restructuring, keep the problem statement in the back of your mind.  Remaining focused on the need you are trying to meet prevents the change management project from getting away from you and ballooning into something that doesn’t actually address the original reason as to why you felt organizational restructuring was necessary.  Clearly articulate your problem and establish a plan aligned with solving the problem every step of the way.  Any decision you make along the way needs to be in support of reaching the end goal of the restructuring.  

Defining Objectives and Goals

Now that you’ve addressed your problem statement, it’s time to clearly define the objectives and goals of the restructuring project.  Establish timelines and schedule milestones to measure whether you are on target to meet goals throughout the course of your restructuring plan.  Clearly define criteria for success, both qualitative and quantitative for accountability.  As you evaluate your plan, keep in mind that the individual goals of these projects still align with the overall goals, values and mission of the company.  You don’t want to devote time to a project that seems to be working in opposition to your main business objectives.  You’ve successfully defined objectives and goals when every phase of the project has clear key performance indicators (KPIs) by which you measure progress.  

Identifying the Restructuring Team

Although the restructuring impacts everyone in the organization, it’s still important to identify specific people throughout the organization who are responsible for progress towards objectives and goals.  Generally, we recommend representation from any business unit that will be directly impacted by any change outcomes.  For a small business, that may not be possible, so your restructuring team tends to be leadership, HR, and identified key leaders in the organization you can trust to deliver and maintain privacy as the outcomes of organizational restructuring are often sensitive in nature.  If one of the outcomes of the organizational restructuring is changes to the workforce, or more specifically, layoffs or a reduction in force, it’s important that only trusted members of the organization be involved in the decision making process.  

Communication Strategy

The success of any organizational initiative or change program is dictated by the extent to which you are able to get organizational buy-in.  As you define objectives and goals, also define a clear communication strategy for the workforce.  They all aren’t involved in the restructuring team, but they have a right to be regularly updated on progress, as the organization’s undertaking on organizational restructuring impacts them.  This requires a certain level of transparency with the workforce, so the organization needs to commit to clear and honest communication for the duration of the project.  Any time there is disruption, it’s reasonable to assume reactions from your employees that run the gamut.  How will you respond to employee feedback and concerns?  Who should employees go to if they have any questions?  The answers to these questions are all part of an effective, comprehensive communication strategy.  

Additionally, once you reach the established outcomes, communicate success towards outcomes to your workforce.  They may not have been directly involved, but each milestone and decision had an impact on their experience as a company employee.  They deserve to know if all the efforts and potential uncertainties were worth it.  We’re not recommending you completely open the books to every employee, but be reasonably transparent as your organization undergoes critical change to remain a viable competitor in the marketplace. 

Workforce Planning and Talent Management

One component of your organizational restructuring plan is its impact on talent management and workforce planning.  Once you share with your employees that the company is undergoing organizational restructuring, some members of your organization may begin job searching in earnest, because one potential outcome of your restructuring is terminations.  Employees may see the “writing on the wall” and decide they want to guarantee themselves a certain level of job security.  You mitigate this risk through a clear communication plan, and if job loss is not the planned outcome of restructuring, clearly articulate that to avoid panicked attrition.  

Also, unrelated to changes within the company, people leave jobs for a number of reasons.  If you find yourself with vacancies, working with HR to understand your workforce plan and its role in the organizational restructuring is critical.  Do you fill a role?  Do you keep it vacant?  The only way you can answer this question is if you’ve integrated recruiting strategy and workforce planning into the organizational restructuring plan.  

Consider Legal Implications

Our guidance is always going to be to include human resources in your organizational restructuring project.  First, they have the expertise in that area.  Second, they are skilled in managing any outcomes that directly impact your workforce, employee experience and lifecycle.  But, even the most skilled HR professional needs an assist at times, and they can work directly with employment counsel to understand the legal implications associated with the goals and objectives of the organizational restructuring plan.  Just because you want to do something, doesn’t mean you can.  And that’s why partnering with HR and legal counsel is important when managing organizational change 

A Red Clover Consultant Can Help Make the Organizational Restructuring Process Run Smoothly 

Red Clover consultants have direct, practical experience in helping companies undergo change through organizational restructuring.  We partner with your company’s leaders in developing every aspect of your change management plan and serving as the point of contact for your workforce and serving as the HR subject matter expert.  Working with skilled human resources and change management consultants is an effective approach to assessing company needs, developing a change plan and the related communication strategy, and partnering where appropriate with employment counsel.  Reach out to start the restructuring process with the experts today. 

Photo Credit – Photo by CDC on Unsplash

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