Reorganizing a company is as easy as reforming a tiny nation (but with more concern about the lack of snacks). It should come as no surprise that a firm restructuring may go horribly wrong if it is not properly planned. In fact, it’s not unusual for upper management to reorganize the entire business on paper with little to no input from HR, announce the reorganization in a meeting or via email to the entire company, and then, when panic and confusion set in, act perplexed and offended at how their employees reacted.

A corporate restructuring process has to be carried out with tact, planning, and forethought. Planning and communication are essential for success if you want to overhaul the working conditions and business procedures for the whole organization.

Why do businesses restructure?

There are just as many causes for corporate restructuring. The following are some of the main causes of restructuring:

• There is a problem. It could be time to think about a corporate reorganization if your firm isn’t fulfilling its KPIs, if your staff or procedures have grown inefficient, or if there are crucial activities that aren’t covered by any positions.
• Your business has either merged with or been purchased by another firm.
• As a result of the departure of a person in a crucial position, the organizational structure might now be called into question.
• You want to clear the way for a fresh opportunity, like the release of a new product or the exploitation of a fresh market.
• Your consumer base’s requirements have evolved.
• The company has expanded or is cutting staff.
• There are too many direct reports for managers.

Sometimes, businesses decide to solely reorganize their departments, in which case only that department will be impacted by the reorganization.

When that occurs, the business has pinpointed issues or inefficiencies in only one division, but because a firm is highly linked, what affects one division often impacts another. Although reorganizing a department is undoubtedly simpler, it is not unheard of for businesses to make major changes to their whole organizational structure at once.

Incorporate these 5 phases in the process of reorganizing the company.

1. Begin with your business plan.

Discovering the primary motivations behind top management’s desire to restructure is the first step in developing a firm reorganization plan. There is no way to steer the reorganization process and no way to assess its effectiveness without a clear knowledge of the new direction the firm is taking or describing the issue the company is attempting to address.

The business strategy will provide you the objectives or standards you must satisfy with this firm reorganization plan, assuming that such a plan is even feasible.

If your organization hasn’t yet established a clear business strategy, stand back and start by going through the strategic planning process.

2. List the existing organizational structure’s advantages and disadvantages.

You should think about where your existing organizational structure is falling short of corporate objectives and where it is succeeding while keeping the strategy in mind. If you haven’t done so before, make an organizational chart to get a higher-level understanding of how your business is now structured.

The process of evaluating the org structure should include gathering input. Too many businesses design their reorganizations without considering the individuals who will be impacted by both departmental and corporate restructuring strategies. It is your responsibility to acquire these ideas and include them in your company’s restructuring process. Your workers often have insightful opinions on what isn’t working and what you should keep doing.

Yet it’s simpler said than done. Your workers won’t be willing to provide any input on a business restructuring if they don’t believe that their worries and ideas are taken seriously and are really anonymous. It’s your responsibility to provide a secure atmosphere where workers feel respected. To find out what they would alter and how they would handle a firm restructuring, consider sending out an anonymous survey.

Also, it’s critical to consult with HR often and pay close attention to key stakeholders while planning a reorganization. If you work in human resources, don’t forget to explain any specifics about corporate restructuring that need further permission and thought. All relevant parties will need to provide feedback on union agreements, employment contracts, work accommodations, etc.

A possible restructuring’s benefits or potential profits should be weighed against the risk, which includes the possibility of people quitting due to organizational change. Reorganization should not be attempted if it cannot fix the issue. It’s a waste of time and might cost your business money.

3. Go over your possibilities and create a brand-new framework.

It’s time to develop a new organizational model after identifying the issue with the present corporate organizational structure, getting input from staff and important stakeholders, and taking into account all the current job duties.

Remember that this newly reorganized model is simply a first draft and will alter before being put into practice. Included in this new organizational design ought to be the following:

• Both the horizontal and vertical lines of authority
• A list of those who will have official decision-making authority inside departments
• Characteristics of personnel, such as their abilities and experience
• The description, placement, and connections between all of the functions inside the organization

Think about the advantages and disadvantages of various organizational structure types, such as matrix, hierarchical, and horizontal.

Making an org chart is the greatest approach to seeing the layout and interdependencies of your new structure as you consider your alternatives for corporate reform.

Avoid attempting a corporate reorganization without a visual to help workers understand your plan of action and maintain consensus among all stakeholders.

4. Explain the restructuring.

It’s time to present the rest of the firm with a restructuring announcement after you’ve carefully considered all of your alternatives and chosen your best course of action.

Don’t surprise your staff with the change. Make communication and openness your top priorities when reorganizing your firm; in this case, an organizational chart may assist in clarifying things, particularly when combined with information on the duties of each function. To make sure that supervisors or anybody with a direct report will be able to respond to inquiries and assist with execution, you may need to speak with them individually.

Your staff now has the opportunity to comment on the suggested corporate restructuring. Now is the opportunity, as an HR specialist or manager, to praise the careful thought that went into the reorganization plan and the advantages it will bring to everyone. Welcome inquiries; after all, it needs everyone’s collaboration to successfully complete a corporate restructuring process from beginning to end.

5. Start up your business; reorganize as needed.

Finally, the time has come to implement the department or business reorganization. Give staff some time to acclimatize to the reorganization so you can appropriately assess its impact. Keep in mind that change may be challenging. If your ultimate objectives aren’t being met by the new organizational structure, reflect on your company strategy and make changes.

Your leadership style will determine how your team members and employees feel about the company’s restructuring plan. If you’re enthusiastic about the restructuring, everyone participating in the process will also be enthusiastic. If you’re depressed, others may be wary of you and even become aggressive.

The bottom line is that corporate restructuring may be a fresh start for everyone; it can breathe new life into a business, reenergize personnel, and open up more career opportunities. But preparation and communication are essential. Begin your company’s reorganization process early, include everyone, and keep organized by developing an organizational chart that will help your business achieve a larger, more effective organizational structure.