To restructure or not restructure is a question we are often asked by clients? “Talent is so hard to find”, they say; “We are worried about the possible negative impacts on the rest of the company and importantly on our employment brand”. “Should we just tough it out?”
These are relevant and tough questions particularly in an uncertain market. The reality is there is no easy answer, nor a ‘one size fits all’ approach. The answers, indeed, depend on a number of factors. These include the competitive nature of your industry, the long term growth prospects, the flexibility of your work force to adapt to changing markets, the speed, time frame and quantum of returns required by investors, to name a few.
What we do know is that if we stand still we get run over. We must adapt or perish. The current challenges faced by the retail sector are a good example of where market forces are driving huge structural industry change. Some have moved with the times; while others have been slow to adapt and have ‘withered on the vine’. The print and the music industries are two further examples of where massive structural change is forcing a complete rethink of conventional strategies not to mentions the gyrations of the broad manufacturing sector. Let’s not be scared of change but rather harness its energy and use it to drive us forward toward our goals.
The organisations that will thrive in the new reality are those with employees who have the option to leave but choose to stay.
The good thing about tough times is that it forces organisations to review ‘everything’ not just costs. Ask yourself, if you were starting your business from scratch, would you have the costs you are now carrying today. I am sure most would say no. Costs just seem to accumulate and compound. Moreover this seems increasingly evident in halcyon times. However, we should be counter intuitive with regard to costs and cost cutting. That is to say, in good times we should be very hard on costs; while in tough times we should be prepared to spend wisely to stimulate demand. This is easy to say but can be hard to do!
For many organisations their single greatest cost is labour. Not surprisingly then, people costs are the first P&L line item that is often the first cost to be scrutinised. But as David Noer, a notable US psychologist so rightly said, “The organisations that will thrive in the new reality are those with employees who have the option to leave but choose to stay. Those that fail will be populated by employees who are there only because they are afraid to go elsewhere” Wouldn’t you love to have an organisation full of people who had the option to leave but chose to stay!
Restructuring can really mess with your culture but that doesn’t mean you shouldn’t do it. What it does mean is that you need to get it right; the cost of getting it wrong is incalculable – the research is compelling on this point. Most restructures fail to deliver often because of poor people planning and execution.
If you are re-structuring the answer is to plan, plan, plan and then plan some more. Make sure you have done a thorough risk analysis and make sure you can live with the worst case scenario – it might happen! There are some simple dos and don’ts – if you follow these you will greatly enhance the likelihood of achieving your restructuring objectives.
deliberatepractice are experts in restructuring, change, outplacement and transition management. For more information about our services please contact us on 1300 deliberate (1300 335 423) or info@deliberatepractice.com.au