In last few months we have read about a number of companies that have initiated some kind of organisation restructuring or re-alignment leading to job redundancies and job cuts. While these situations are painful for people who get impacted , its not a great picture for the organisation either. Most of the time these decisions are taken to support the survival of the business which allows it to protect the interests of the stake holders and employees in the long run.
Situations that lead to an organisation restructuring:
Type A: Business Growth & Expansion
Type B: New Product Categories, New Markets , New Businesses
Type C: Need for Productivity, Profitability, Cost Optimisation, Competitive Market
Decision for organisational re-alignment could be triggered by either of the above situations, or more than one situation.
While the Type A & Type B change normally leads to positive changes and some major shifts at top level – they normally don’t lead to job cuts. They may lead to role changes , reporting structure changes etc.
Type C: Organisation restructuring due to focus on higher productivity, savings, cost optimisation – can get dirty.
The moment you are focussing on productivity, savings, costs, post an organisational review, you have to:
- Streamline process
- Automate processes
- Eliminate organisations structures inconsistencies (if any)
- Eliminate duplication or overlap of roles.
- Outsource, non core activities
- Sell or divest a non productive product line or division.
Almost, all the above have an impact on the employee base. The timelines may vary. But then a section of manpower has to separate, as a one time event or over a period of time.
Realignment get’s dirty when its a knee jerk reaction, without providing appropriate background and communication to employees. Most of the time, the above are kept under wraps, till most of the backend work is complete. And, one fine day there is an announcement that the company would be trimming manpower, post restructuring.
Examples of job cuts as a result of organisation realignment by some major businesses:
We can say that the recent examples of this case could be announcement by HP – Integration of its two business – where in HP’s Imaging and Printing Group (IPG) and its Personal Systems Group (PSG) were to converge as the Printing and Personal Systems Group. The decision was taken considering a need to bring in efficiencies and cost savings. Looking at the Indian telecom industry – we saw Airtel bringing its Telemedia, Mobile , DTH business together thereby being able to create a common sales, and service front end for customers. Earlier the company had brought its Finance, HR, Network under a shared services model. Similar move by Reliance Communication, where in the company had announced restructuring of its wireless business. The geographical restructuring announced earlier this year was expected to enhance market competitiveness, execution excellence and improve productivity and quality of service in the field. According to Reliance Communication- “the restructuring would result in a leaner and flatter organization. This would also help in strengthening its customer facing – sales, distribution & customer service organization and consolidating the backend operations to deliver higher value to customers”. Even Tata Teleservices, had undertaken some restructuring leading to changes at their leadership level, as well as in their business structures at ground level. The changes lead to re branding and bringing the teams for CDMA and GSM business under one roof.
Just like any other change initiative in an organisation, a restructuring exercise is one where you learn a lot , you get to see situations, and foresee future with a new perspective.
Praveen is the Founder & Principal Consultant of KHEdge, a boutique HR & Business Process Advisory firm. Over last 15 years he has advised & worked with promoters, founders, business leaders, HR leaders in areas of - Business Strategy, HR Strategy, Organisation Design etc.