Organisation Restructuring: When External Leadership Can Help

An organisation chart can be changed in an afternoon. Changing the organisation is considerably harder.

Responsibilities have to move. Reporting relationships change. Some roles disappear while others become more important. Decisions that previously travelled through one part of the business may need to be made somewhere else.

That is why organisation restructuring should not be treated simply as an HR exercise. The real test comes after the new structure has been approved: does the business work better?

Why do companies restructure their organisations?

There is rarely one reason.

A company may have grown faster than its management structure. An acquisition may have created duplicate functions. International expansion can leave responsibilities divided between headquarters and local management. Falling margins may expose layers of management that no longer add sufficient value.

Sometimes the problem is less visible. The structure appears reasonable on paper, but nobody is quite sure who owns important decisions.

Organisation restructuring consultants can help management examine these problems without being constrained by the history that created them. Restructuring is not the same as reducing headcount. Cost reduction can form part of a restructuring, but the two should not be confused. A company can reduce employees and retain exactly the same organisational problems.

Effective restructuring asks harder questions. Where should decisions be made? Which functions belong together? What capabilities will the business need over the next few years? Where has accountability become blurred? The answers may lead to fewer roles in some areas and greater investment in others. This is also why a business restructuring advisory firm needs to understand the operating reality of the company rather than approaching restructuring primarily as a cost exercise.

Where restructuring gets difficult

The organisation being redesigned must continue serving customers and running the business throughout the process. That creates tension. Managers may be asked to redesign functions they currently lead. Employees become concerned about their roles. Decisions can be delayed because people do not know what authority they will have under the new structure.

There is also a natural tendency to compromise. Functions are retained because removing them is uncomfortable. Reporting lines are designed around individuals rather than business requirements. Difficult decisions are postponed.

The result can be a new organisation chart with many of the old problems still intact.

When external restructuring leadership helps

External leadership can be particularly useful when the restructuring crosses several functions or when internal management is already stretched. Org restructuring experts bring experience from other businesses and can challenge assumptions that have gradually become accepted internally. In some assignments, advisory support is sufficient. In others, the organisation needs someone with authority to implement the changes. Corporate restructuring consulting can define a new operating model, but somebody still has to move responsibilities, resolve disagreements, establish new governance and make the structure work in practice.

From restructuring plan to working organisation

At X-PM, experienced interim executives can work inside the business during restructuring rather than remaining external to implementation. The assignment may begin with understanding the current organisation, but the work does not end with a proposed structure. An interim leader can take responsibility for implementing changes, working with existing management and dealing with problems as they emerge. This is particularly valuable when restructuring forms part of a wider turnaround, post-merger integration or business transformation.

There should also be a clear point at which the restructuring is considered complete. That is not necessarily the day the new structure is announced. It is when responsibilities are understood, decisions are being made at the right level and the organisation can operate effectively without extraordinary intervention.

FAQ

What do organisation restructuring consultants do?
They help companies examine organisational structures, responsibilities, governance and management layers, and determine what needs to change for the business to operate more effectively.

Is organisation restructuring mainly about reducing costs?
No. Cost may be one consideration, but restructuring can also address unclear accountability, duplicated functions, slow decision-making or structures that no longer suit the company’s strategy.

When should a company use external restructuring experts?
External support can be useful when restructuring is complex, politically difficult, cross-functional or beyond the capacity of the existing management team to implement alongside normal responsibilities.

What is the difference between restructuring advice and interim restructuring leadership?
Advisory work can recommend what should change. Interim leadership can take responsibility within the organisation for implementing agreed changes.