Company restructuring: basic methods and their risks

By company restructuring various things can be meant: from optimization of business processes and organizational structure to non-core assets administration. This article clarifies objectives and methods of restructuring and describes widespread mistakes of managers.

When company restructuring is needed

The main objective of company restructuring is bringing a system in a condition responding to ambitions of owners. The difficulty is in the fact that owners hardly ever can give a distinct description of their ambitions and very often they want to find an easy, free and quick decision to all problems of a company.

As every case is unique, consequently, the number of objectives and aims which should solve problems of restructuring is big. However, there are basic objectives. For example, it is getting of a financial and economic result. Also, it can be assets bankruptcy for debt amortization and tax burden (the easiest), or enlarging of a company transparency in order to increase investment attractiveness (the most complicated tactics). Such financial and economic objectives are obvious to owners and management. And in order to achieve them, consultants and internal specialists usually offer distinct decisions which usually suppose only quite a local restructuring. And a full-scale restructuring is used only in case when simple operational solutions do not respond requirements of owners.

All methods of such type of business process optimization as restructuring can be divided into following groups:

  • Aimed at improvement of business infrastructure (assets structure, systems of ownership or administration of property);
  • Aimed at changing of management system (the structure of works, departments, responsibilities, authorities, competence, etc.).

This classification is quite relative, as results can be crossed, can complement each other and even contradict each other.

Changing of business infrastructure

Optimization of business processes of a company aimed at restructuring of infrastructure is one of the most complicated in the context of implementation. The aimed condition of business infrastructure can be reached not only by means of mergers and acquisitions or changing of the ownership structure. This aim can be also reached by making of strategic alliances and by means of outsourcing.

Changing of management system

Methods of business process optimization aimed at changing of management system reconsider management principles of a company, techniques and methods of implementation of activities. Responsibilities and authorities are newly redistributed, physical (measurable) target values and the system of gratification calculation are reconsidered. There are three kinds of methods aimed at changing of management system: indicative, organizational and technological and liberal. As distinct from methods of infrastructure changing, methods of management system changing require involvement of outside experts. It’s quite reasonable as if company employees had enough competence and skills, then a company wouldn’t need such kind of business process optimization as reengineering and specialists would make necessary changes themselves.

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