5 Steps To A Successful Organizational Restructuring

Jennifer L'Estrange
February 25, 2021

2020 certainly brought it’s share of organizational restructuring work, including Reductions in Force (RIF) and layoffs for many of our clients. As we look back at some of the work we did and the key outcomes of those projects, we wanted to take some time to highlight the 5 key elements that are part of every restructuring project we take on.

1. Align with your business strategy.

It sounds obvious, right? You’d be surprised how often a restructuring project is kicked off without a holistic look at the business strategy and objectives – beyond this quarter’s results. One of the first things we ask when starting an organizational transformation project is to ask ‘what are you trying to achieve?’ And, we keep asking that question until we’re really sure of what it is we’re hoping to achieve. Too often, organizational design projects are led by one side of a business without considering the impact on another. Part of our job as consultants (and really any HR practitioner involved in a project like this) is to make sure there is a business case for the change. This use case is part financial, meaning there has to be a return on investment, and part strategic or operational, meaning the change has to support an overall business process change. Start here and make sure your restructuring project aligns with your business model and strategy before you do anything else.

2. Identify Current Strengths and Weaknesses

A current status assessment of your business processes, organizational structures, impacted individuals, and supporting technology and infrastructure is critical to determining what change you will need to make – and in what order – as you design the future organization. Involve people from outside of the project team for this as much as you can; different perspectives on the quality of say, a supporting system, can have a significant impact on the to-be organization design you put in place. One of the more successful transformation projects we worked on included an advisory board of business leaders across functions to provide informal, candid feedback on what was working and not working in the existing business processes and organizations. Their input resulted in changes in both scope and timing for some of our work plans, allowing us to move forward more effectively with the project. If your organization is already using the SWOT analysis format in other parts of the business, this will do nicely. If you’re using another format – do whatever is generally acceptable in your company. Keep it simple where possible.

3. Design an Optimal Organization Structure

Once you’ve completed a current status assessment and you know where the process and organizational gaps lie, you’re now ready to design the organizational structure that meets the needs of the business strategy that you described in step 1. This will start with an overall organizational purpose followed by several iterations and possibly several alternatives for the organization that will meet those needs. You have to keep the business goals and organizational purpose in mind when designing the structure, and later the individual job descriptions, or you risk designing an organization that cannot meet the needs of the business. If this sounds like an exaggeration, it isn’t. Just as the organization and job design of the online retailer is wildly different from that of the multi-site brick and mortar department store, the organization you build needs to have a purpose. That purpose will drive the goals of the departments, teams and individuals and the division or labor.  Reporting lines have to support the overall logic and objective set by the business strategy. 

4. Communicate with Transparency

Once you have the optimal organization structure defined top to bottom, next is to begin the process of communicating and implementing the change. Careful planning is critical at this stage. Chances are there have been a few iterations of the people transition plan and now that it’s finalized, communications planning is the next major step in the transformation. We generally start with the highest relevant level in the leadership team, communicating the why, how and who/what of the project in cascading waves. We already have our stakeholder management plan developed and work through it to make sure that key parties understand the strategic business goals and how the organizational restructuring supports them. Here’s the tricky part: you have to be 100% clear on what’s happening, when, to who and how. There is no room to gloss over the details here. For our projects, we have detailed organizational and people transition plans, notification timelines for redundancies and retained individuals, and financial budget estimates and projections where relevant. At the end of the day, it’s all about communication and the success or failure of your project will come down to how well you’re able to communicate what it is that you’re doing. Transparency builds trust and the only way your organizational transformation  will be successful is if the people you are working with and who are impacted by the change trust you and the process.

2. Implement and Tweak

Once you’ve begun implementation, you may see opportunities to tweak things a little here and there – or you may need to make adjustments to the organizational design to reflect unplanned changes. This can happen when someone who was expected to take a different role in the new organization decides to leave the company or when you see an opportunity to leverage people in a slightly different way than you had originally planned. If you were successful in building trust through your communications, you should have the latitude to make small adjustments if needed as you implement. Steer clear of dramatic changes if at all possible, but small, well communicated adjustments that improve the overall outcome are generally accepted. They are even welcome if the organization has had the opportunity to participate in those small changes and feel ownership for the design outcome and accountable for its success.

Organizational Restructuring Experts in NJ

Red Clover offers large-scale, corporate Human Resources expertise for clients across New Jersey and Manhattan. We specialize in organizational restructuring and will roll up our sleeves and guide your business through every step of the restructuring process – from initial development, through communication planning and into implementation.  When it comes to strategic workforce planning and organizational design, Red Clover is your trusted human resources partner.   We are also experts in people transition and HR process transformation and are recognized for our unique talent base, our values-based approach and unparalleled agility when working to solve your most complex organizational issues.

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