Uncertainty during the pandemic has caused many businesses to reorganise or restructure their model as they tried to remain cost effective, agile and ultimately profitable during the last two years.
Government assistance during the height of the pandemic enabled many companies to avoid restructure and remain resilient, however, as government support has become more restricted, those with higher debt who are navigating volatile market changes, may find themselves in need of help.
As businesses continue to evolve through challenging circumstances, there is a greater pressure to ensure companies a profitable future. If approaching a restructuring process, business leaders must establish a clear vision that restores stability and defines their future business model.
Within this article we explore five actions that should be considered to ensure a successful restructuring process.
Don’t leave it too late
Identifying and diagnosing issues early is crucial. With early diagnosis, a company can fully evaluate options and avoid being cornered. Diagnosing and resolving these issues requires specific expertise both in restructuring and in the specific industry. Business leaders will need to collaborate with lawyers, debt-advisors and business consultants early to discuss viable options and lead the way for a clear and detailed plan.
Select leaders who will champion change
If businesses are to truly transform, they need to start by finding the right leaders for the journey. Restructuring is not an issue that can be resolved by making swift top-down decisions to address debt loads and pushing through operational changes. Leaders at each critical level of the organisation will need to share the company vision and be able to drive the change process and influence those around them, becoming true ‘change champions’.
Set appropriate targets
In order to evolve, the future of the company needs to be different than its’ past. Financial targets must be set along with the required business strategy in order to achieve these targets. They should sit comfortably between being realistic to ensure credibility and ambitious enough to see that changes occur. This will require a constructive discussion within the leadership team and once targets are set, they should be clearly and concisely communicated to the leaders in each area of the business.
Have a clear and detailed plan
It is important to demonstrate to internal and external stakeholders that the organisation has a concise and detailed plan in place to ensure profitability in the future. It needs to prioritise the highest-impact activities such as supply chain and headcount to align with the future strategy and ensure targets are met. It is crucial to set timeframes to any significant transformational events for transparency and accountability. Ultimately, when developing an operational turnaround plan, it’s important to gain rapid clarity about future organisational needs whilst minimising or eliminating excess wherever possible.
Approach Change Management with care
Change can only be successful if there is a high degree of psychological safety where employees can voice concerns and opinions without fear of repercussion. Employees will have a different insight to the business and could have ideas for improvement that may have been overlooked. Engaging employees using reason and emotion to help them adjust to structural changes is important as change is challenging, especially without communication and thoughtful leadership. Leaders should be prepared to clearly articulate the challenges and opportunities that lie ahead as the uncertain times pass.
It is vital that the collective team focuses on maximising long-term value that supports the strategy. This sets the precedent of the entire transformation and enables employees to feel a sense of ownership rather than resisting change. If done well, leaders will be able to make the desired changes for a more resilient future.
