What is restructuring in the context of change management?
Restructuring is more than just adjusting organizational charts or cost structures. It fundamentally changes the way managers and employees work together—new responsibilities, new processes, and often new business models emerge.
Corporate restructuring, therefore, does not merely consider business and structural factors when planning and implementing measures. The commitment and ability of the involved managers and employees to support and shape the change are equally crucial.
Is change management worth it during a restructuring, or does it just result in additional costs?
During a restructuring, resources are often very limited. That’s why this question comes up frequently in practice, usually out of concern for the financial budget. The effort involved in change management is well worth it and indispensable—for the following reasons:
Restructuring involves a profound transformation, the success of which depends on how well it is implemented. It’s not just the numbers and finances that matter. The soft factors—the human element—are at least as important. Those who cut corners here risk having the actual structural measures derailed by human resistance.
What is the difference between strategic and operational restructuring?
The more the strategic dimension takes center stage in a restructuring and transformation, the more attention is focused on questions regarding new business areas and current and future product or service portfolios.
Changes aimed at improving the efficiency of individual business units without altering the company’s fundamental market positioning are considered operational restructurings. In practice, these two dimensions often overlap. In change management, it is important to clearly distinguish between them and highlight how they may be linked within a restructuring process.
What are the risks involved in restructuring, and how can they be managed?
In addition to employee resistance, the loss of customers is also one of the key risks of restructuring. Therefore, this target group should also be included in the change management process. After all, negative impacts on customers—at least temporarily—cannot be entirely avoided, for example due to changes in service and product offerings.
Effective change management involves transparent communication, employee engagement, and risk management. This allows problems to be addressed proactively, such as skills gaps, employee resistance, or customer loss.
How do you deal with criticism and resistance during restructuring?
A restructuring strategy often involves alternatives—it is rare for a single path to lead to the goal. That is why addressing criticism and a wide range of fears is essential in change management. These include, first and foremost, concerns about job security or changes resulting from a new job description, new teams, and new leaders. Resistance can be very persistent and should be anticipated from the outset for the intended transformation.
Employees should always have structured channels through which to voice resistance and criticism within the company. To this end, specific measures can be implemented during the restructuring process; depending on the organization and industry, these might include, for example, a physical bulletin board, a (virtual) suggestion box, quality circles, or larger “town hall” meetings. Criticism and resistance can often positively influence the further implementation of the restructuring by providing important operational insights.
How does restructuring affect customer relationships?
Customers are sensitive to changes within a company: They may lose confidence due to uncertainty or changes in the service or product offerings and switch to competitors. Carefully managed customer communication during restructuring is therefore just as important as internal communication with employees.
What role does the works council play in a restructuring?
Cooperation with employee representatives is a critical success factor, especially when it comes to personnel changes: Actively involving and collaborating with employee representatives and works councils is often crucial to the success of restructuring efforts. Without this early coordination, there is a risk of delays and legal disputes that could jeopardize the entire timeline.
The legal framework—in Germany, primarily the Works Constitution Act—provides a stable foundation for employee participation. During restructuring, the informal level is often just as important for building trust in a shared future.
What are some other important aspects of restructuring?
Management and leadership unlock the potential of restructuring measures so that the intended goals can be achieved. These “soft factors” enable the “hard factors” (business model, cost structure, processes, governance, etc.) to be successfully implemented.
The issue of decision-making under uncertainty is therefore of paramount importance. This is where it becomes clear whether executives and employees are successfully supporting the restructuring effort. Ultimately, executives bear the responsibility for the success of the change.