Operational restructuring is the re-organization of a company with the sole aim of increasing business efficiency progressively. Generally, operational restructuring does not address the company’s funding or capital structures. Instead, it focuses on assessing the reasons for operational underperformance and creating a plan to improve the profitability of operations.
At times, an operational restructuring plan could cover matching costs to revenues and cutting costs where necessary, a review of the markets and products to determine how they contribute to profit, letting go of non-core and unproductive enterprises, identifying the management team’s skill and resource deficiencies, or even rationalization of processes and infrastructure to boost effectiveness and increase cashflow.
Procedure for Operational Restructuring
Identifying the reason for the operational restructuring
Discovering the primary motivations behind top management’s desire to restructure is the first step in operational restructuring.
This is because there is no way to direct the re-organization process and assess its effectiveness without a clear knowledge of the problem the company is attempting to solve and why the company wants to undergo restructuring in the first place. Thus, in doing this, identify strengths and weaknesses in the current organizational structure.
Design a business strategy
Making a strategy can assist you in comprehending the future direction your firm is taking and specify the approach you will take to achieve the objectives of the operational restructuring. In designing a structure, it is necessary to employ the service of professionals to ensure the business strategy provides the company with clear objectives or standards the plan must satisfy to succeed.
Communicate the re-organization
You should make a re-organization announcement to the rest of the company once you have carefully considered your options and chosen the best course of action. Refrain from surprising your employees with the change.
Make communication and transparency your top priorities while reorganizing your company. In this situation, an organizational chart helps clarify things, especially when combined with information on the duties of each job role. To ensure that managers, supervisors, and anyone with a direct report can respond to queries and assist with execution, you may need to speak with them separately.
Launch your company restructure and make amendments where necessary
Finally, the time has come to carry out the restructuring. Give the employees time to acclimate to the re-organization so you can appropriately assess its effects on the company. Remember that change can be challenging; hence, if the new organizational structure is not meeting your ultimate objectives, reflect on your business strategy and make changes.
In conclusion, operational restructuring may be a fresh start for everyone; it can revive a company, reenergize employees, and enable higher career advancement. However, preparation and communication are essential for a successful restructuring. Hence, begin your company’s re-organization process early, involve everyone, and remain on task by developing an organizational chart to help your business achieve a larger, more effective organizational structure for effective operation.