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Organizational Restructuring

Organizational restructuring has become a very common practice amongst the firms in order to match the growing competition of the market. This makes the firms to change the organizational structure of the company for the betterment of the business.
Some of the prime reasons for organizational restructuring are as follows:
  • Changing nature of the markets
  • The continuous innovations in technology, product, work processes, materials, organizational culture and structure
  • Various actions of work force values, global competitors, demands and diversity
  • Ethical constraints and regulations
  • Individual transition and development of the business


The most common features of organizational restructures are:

Regrouping of business
This involves the firms regrouping their existing business into fewer business units. The management then handles theses lesser number of compact and strategic business units in an easier and better way that ensures the business to earn profit.

Downsizing
Often companies may need to retrench the surplus manpower of the business. For that purpose offering voluntary retirement schemes (VRS) is the most useful tool taken by the firms for downsizing the business's workforce.
Decentralization
In order to enhance the organizational response to the developments in dynamic environment, the firms go for decentralization. This involves reducing the layers of management in the business so that the people at lower hierarchy are benefited.
Outsourcing
Outsourcing is another measure of organizational restructuring that reduces the manpower and transfers the fixed costs of the company to variable costs.
Enterprise Resource Planning
Enterprise resource planning is an integrated management information system that is enterprise-wide and computer-base. This management system enables the business management to understand any situation in faster and better way. The advancement of the information technology enhances the planning of a business.
Business Process Engineering
It involves redesigning the business process so that the business maximizes the operation and value added content of the business while minimizing everything else.
Total Quality Management
The businesses now have started to realize that an outside certification for the quality of the product helps to get a good will in the market. Quality improvement is also necessary to improve the customer service and reduce the cost of the business.

The perspective of organizational restructuring may be different for the employees. When a company goes for the organizational restructuring, it often leads to reducing the manpower and hence meaning that people are losing their jobs. This may decrease the morale of employee in a large manner. Hence many firms provide strategies on career transitioning and outplacement support to their existing employees for an easy transition to their next job.

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Last Updated on : 27th June 2013

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