Really, no matter which way you cut it – business is about money. Sure there are lots of other “trimmings”, but at the end of the day a company that isn’t making a profit doesn’t last very long in the corporate jungle. With that being said, I can understand why companies and businesses feel compelled to go to great lengths to ensure that a buck is made. And there are a variety of ways to make said buck. An increasingly popular option for many large corporates is the “restructure”.
A pc way of trimming the fat out of your organisation. Most of us nod our heads sagely as we are a society were â€štrimâ€› is â€šinâ€› and â€šfatâ€› is â€šoutâ€›. So letâ€™s do things faster and cheaper! (Like microwave meals!) Letâ€™s take this bulky business and remove a layer of management, consolidate the team structures, re-align the capabilities and re-focus on core operations. Do these buzz words ring a bell? But, in the same way that microwave meals donâ€™t always taste better than the real McCoy, the â€šfaster and cheaperâ€› business plan doesnâ€™t always make the business â€šbetterâ€›. In fact, sometimes it even makes it worse.
At first I thought the multi-layer management structure was a left-over fad of the 80â€™s, but as it turns out this phenomenon is a re-occurring theme â€Œ which still prevails today. The more a business grows, the more the organisation grows with it. (This would seem a logical correlation.) Suddenly, with all these new resources on board, more managers are required and so the multi-layering beings. A few years (or months, as the case may be) down the track and business takes a dip. (The degree of panic is, in this case, directly related to the depth of the â€šdipâ€›.) This is where the cost-cutting exercises usually kick-in and the finance department goes into over-drive. Usually the first to go: business class flights are down graded to economy. Cell-phones become a â€šperkâ€› and bills are scrutinised for any personal calls. Then the fresh filter coffee is down graded to instant. (Far more concerning for a caffeine addict such as myself than any of the other measures being taken!) If the â€šdipâ€› turns out to be a â€šglitchâ€›, then it usually ends here. These cost-cutting exercises are in reality, reactionary. And thereâ€™s nothing wrong with enjoying the spoils of victory â€Œ while in lasts. But I canâ€™t help but wonder if a more moderate approach would provide consistency. And consistency would instil confidence, not only in the employees but also in the shareholders. I remember joining a company in the UK and on arrival I was issued with a laptop, cell phone and corporate credit card (and a host of other non-essential items) â€? and I had a desk job. About 6 months later, there was a dip in business. Needless to say, I was asked to hand over the credit card and the cell phone.
Some companies can ride out the â€šglitchâ€› and get by with some minor cost-cutting initiatives. Sometimes the dip turns into a canyon and more often then not, some one hands an envelope to the CEO and says in a serious voice: â€šItâ€™s time Maâ€™amâ€›. A team of â€šhighly-skilled professionalsâ€› are usually brought in and are locked in a secret room with a white board and left to their strategic devises. Two weeks later, they emerge, triumphant. They have a plan. With a series of blocks and lines they attempt to re-organise the organisation. A little â€šnip and tuckâ€› and suddenly the â€šfatâ€› is gone. The CEO is dazzled by the savings. (And who wouldnâ€™t be?)
A re-structure can come in many shapes and forms â€? like a merger or a buy-out, outsourcing and off-shoring. Off-shoring is another popular trend at the moment. Setting up a centralised procurement team/helpdesk/IT shop in India/Malaysia/Pakistan sounds like a brilliant strategy and a great way to â€šleverageâ€› resources and ultimately save some money. A new procurement team gets set up in India and now supports the entire Asia Pacific organisation as well as parts of EMEA. But there are some huge pitfalls to be aware of. Time zones, language barriers and processes, to name a few key issues. Iâ€™ve recently come across a similar real-life example. The procurement team donâ€™t work shift hours, so they are working a standard 9am- 5pm (local time) day, which means that anyone in Australia/New Zealand/China/Europe only has a very small window of opportunity during their business day to communicate with the Procurement team. Further more, the resources donâ€™t have a good command of the English language, in a company where all business is done in English. Even more frightening, is the lack of training and co-ordination of process across all the regions.
Iâ€™m not saying that re-structuring doesnâ€™t have benefits and isnâ€™t a useful tool. Iâ€™m suggesting that why it often doesnâ€™t realise the intended benefits is because it is poorly planned and badly executed. Organisations that are effective are delicate structures, and much like the human body, drastic â€šdietingâ€› can have an adverse effect on health. In the same vein as the cost-cutting exercises, re-structuring is often reactionary and driven by pressure to plug the stream of money that is flowing out of a business. When the going gets tough, ask yourself this important question: Why isnâ€™t it working? (Be specific.)
My Top 10 â€šDietingâ€› Tips:
- Get people who truly understand your business to advise you on re-structuring. Cutting away too much fat can leave your organisation overworked, under resourced and itâ€™s ultimately the customer who suffers..
- Be realistic. Just as there is no way to â€šget rich quickâ€› , there is also no short cut to cost savings
- Where possible, be prepared. There are going to be bad days, so in the same way that you have â€šdisaster recoveryâ€› for your IT systems you should have â€šdisaster recoveryâ€› for your business. That way at least you wonâ€™t have mass hysteria when the you-know-what hits the fan.
- Be honest. Itâ€™s amazing how quickly rumour gets around an organisation, and how quickly it gets distorted. The last thing your companies needs is low morale and uncertainty.
- Change management. Changes are unavoidable, so make sure that there is enough support for your staff. Make sure that all communication channels are open and that people have the opportunity to be heard.
- Be prepared for a bumpy ride. Often re-structure and process re-engineering go hand-in-hand. If you are going to start changing processes, be prepare to spend time and effort re-educating the people effected. Donâ€™t implement the change and hope for the best. The chances are it will flop.
- Itâ€™s not about the numbers. A re-structure should not be about â€šreducing head count by 20%â€› because thatâ€™s how much money you need to save.
- Learn from previous mistakes. If it didnâ€™t work 2 years ago, what makes you think it will work this time round?
- Never underestimate leadership. Do as I do and not as I say. Make sure that management is setting the example when it comes to cost cutting exercises.
- Be creative. Throw some wild ideas about and donâ€™t be afraid to do things differently.
Hereâ€™s to a more healthy restructure!