27 Sep Corporate Restructuring: A Delicate Balance
When an organization is looking for ways to improve profitability and service while decreasing costs, leaders traditionally focus on cutting on labor costs, the largest segment of most companies’ budgets.
Often the first option most senior executives consider is corporate restructuring (aka, downsizing), which produces immediate budgetary savings but seldom achieves the desired, long-term goals of increased profitability, efficiency and productivity. Research suggests that corporate restructuring is popular not because it is the most effective method over the long term, but because it is the easiest to do administratively.
In this drive to cut costs, companies often lay off employees without giving sufficient attention to the human talents their organizations will need to survive. Unfortunately, statistics reveal that most organizations fail to recognize just how much of an impact their management staff can have on the organization’s productivity, efficiency, quality and overall morale. That’s why it’s not surprising that after restructuring, those same organizations often fail to achieve the desired results.
Some of the more common problems associated with corporate restructuring include:
- The organizations require their survivors or remaining employees to do even more work than before.
- The selection practices for determining who stays and goes are poorly planned and typically prove to be ineffective.
- Undesirable side-effects of re-engineering and corporate restructuring can include diminished employee morale, increased cynicism, and shattered loyalty.
Companies that choose to restructure must allocate resources to those employees who stay with the company as well as those to be let go; the impact that remaining employees will have on the company’s future cannot be underestimated. Further, to ensure a successful transition, an organization must closely examine workforce utilization and employ well-conceived human resource strategies.
A Restructuring Success Story
The approach taken by one health system demonstrates their understanding that the best way to maximize success was to ensure that each leader is well-suited to their new role. The CEO recognized that with fewer people in the management ranks, each of their new leaders would be required to do even more that they had before and possibly with less resources. The Synergy Organization was invited to assist in the development and implementation of their selection processes.
To identify the unique requirements for success in each senior team member and middle management position, we interviewed the CEO and the redesign team members to identify what challenges people would face in each of the new roles. We talked about what they would be expected to do, and through a series of questions and standardized behavioral profiles, determined what leadership style would offer the best chance for success.
Our interview questions were then tailored to assess how internal prospective candidates experience related to what the position required, how they accomplished their goals and what was most important to them in their work. We also developed essay questions for the prospective new leaders that helped identify how well they understood some of the important issues, how well they communicated their thoughts and illustrated their related experiences. Each candidate was also required to interview with the senior team members as part of the selection process.
To supplement the comprehensive personal interviews, each prospective candidate completed a standardized behavioral profile that assessed their career values, personal style and interpersonal motives. When systematically compared with the profiled requirements for each position, the profile helped the restructuring team to decide which person would best “fit” each new role. We then facilitated the selection team meetings in which we compared and discussed our ratings for all the candidates for each position.
The restructuring team demonstrated great commitment and confidence in the selection processes. It proved to be well thought-out, thorough, fair to all parties concerned, and effective in achieving the desired results. The process helped satisfy the long-term needs of the organization while also ensuring that those selected were “custom fit” to their new roles and given the unique opportunity to demonstrate and maximize their strengths.