Jun 21, Organizational Design. Last updated January 31, As businesses enter new life cycles, they often need restructuring or reorganizing for a number of reasons. In general, companies restructure in response to market conditions, falling profits, economic forces and trends, changes in ownership, changes in strategy, or to boost cash flow.
Organizational Restructuring Process & Templates to Help Plan
This skeptical reaction is, unfortunately, often well-deserved because reorganization is frequently the result of an organizational design process that started and ended with an organizational chart , not thoughtful leadership. There are many reasons department or company leaders decide to restructure. Some of the most common include:. While these are all good reasons, reorganizing should be considered as just one possible option. If you do find that restructuring is necessary, however, it's important to handle the process carefully. On the other hand, if the entire company is included, the transformation can be too sluggish, and self-serving interests may get in the way.
How to Develop a Strategic Plan for Restructuring a Department
Between and , only about one-fifth of new small businesses survived more than one year. About half of those businesses continued on for up to five years, while only about one-third made it to 10 years. Bankruptcy is a process a business goes through in federal court.
Restructuring is a strategy through which business leaders change the direction of their organization in order to remain competitive. Many cases of restructuring involve downsizing. The company may dismiss employees, eliminate departments, or close some of its retail locations.