There are a number of different types of organizational restructuring. These include Mergers and Acquisitions, Transfer, Repositioning, and Divestment. Choosing the best method for your business will depend on your unique situation and its goals. For more information, read on. These are just a few of the common types of restructuring.
Divestment
The practice of divesting is an excellent example of how a company can restructure its business portfolio. The funds raised from the divestiture would then be invested in more profitable divisions, leading to a higher overall rate of return.
Companies may opt to divest a division or service line when they no longer need the assets or have outgrown their business model. A divestiture may also be forced by an attractive acquisition offer from another company in the same industry, or from a private equity firm.
A major advantage of divesting an asset is that it will give the company more leverage in negotiations. Regulatory factors surrounding a particular industry or product category may also push a company to sell off a division or business unit. Click the link:https://www.irs.gov/privacy-disclosure/tax-code-regulations-and-official-guidance for more information about government taxes.
Mergers
When mergers occur, it’s common to see the resulting changes in organizational design. During the early merger planning phases, management often focuses on capturing deal value while ignoring changes needed to keep the company alive and healthy.
As a result, many companies neglect to address cultural differences until the deal is already well underway. By then, the base business may suffer, top talent may move on, and the capture of synergies becomes more difficult.
Organizational restructuring may be necessary for a number of reasons, including changing market conditions or disruptive technologies. Some companies may choose this approach to reduce costs, improve efficiency, or increase profit.
The primary goal is to implement a new strategy to increase profitability. By examining the overall strategy, an organization can improve its bottom line by increasing employee satisfaction. In turn, this results in more loyal and productive employees.
Transfer
In some cases, a transfer to another position can be requested by a worker for various reasons, including personal reasons, organizational needs, and job-related factors. While the reasons for a transfer will vary, it is often a good idea to request it when a job is no longer satisfying the employee. Transfers can increase a worker’s knowledge of the company and its various needs and can also help them advance within the company.
When developing a transfer policy, it is important to understand what constitutes a transfer and what it means for the organization. Employees may be reluctant to share their methods, as they see them as an opportunity to benefit from the knowledge that they have.
Other individuals may hold on to their own information for fear of losing their power. A common reaction to a transfer request is “not invented here” syndrome. Therefore, it is important to document a transfer process in such a way that it is easily understood by all concerned. While this is a challenge, written descriptions of a process are often helpful.
Repositioning
Repositioning is a popular tool of reorganization. Some organizational restructuring examples include closing down a department or branch location and transferring employees to a new marketing or community engagement department. This helps to retain top talent within the company.
Another type of restructuring involves mergers and acquisitions, where one person is appointed to lead many different departments. Regardless of the method chosen, it’s important to communicate the changes with employees in advance so that they can prepare for them.
Whether an employee has been with the company for a long time or has only recently joined, it’s helpful to keep communication open with them.
Repositioning can also include the creation of new teams or divisions. A new group of people in an organization needs to be trained in its new role, and this can be done by providing them with additional training or resources.
Providing employee resources and showing employees that you care can help ease the transition. Take time to provide mental-health benefits and support as well, and consider granting employees personal days. Click here for a toolkit for employee health in the workplace. A new company culture can be daunting, but it can help everyone adjust to the changes and celebrate the new.
Cost-reduction restructuring
In a time of economic uncertainty, companies that follow cost-reduction organizational restructuring may avoid layoffs and other problems that can arise in the future. However, the success of these changes depends on the success of the change initiative itself.
To succeed, an organization must have clear and comprehensive goals to guide the cost-cutting efforts. The most effective cost-reduction initiatives will include an organizational restructuring plan.
First, cost-reduction programs start with top-level executive support. But once the planning grind begins, leadership can degrade and competing interests may stall the program. These individuals must be committed to making the program a success.
