In 2000, Nokia was the market leader in the smartphone industry. It launched one of the world’s first smartphones in 1996 and a camera phone in 2001. When the performance was not up to the mark in the following years, the company attempted a significant restructuring drive in 2004. Unfortunately, the plan backfired with key team members leaving. After another three failed restructuring attempts, the mobile phone business was finally sold to Microsoft in 2013. 

This incident serves as the perfect example of why business restructuring is not always the solution to the problems you may be facing. The ultimate reason why corporates consider restructuring is to eliminate financial obstacles plaguing the business. However, any restructuring exercise can bring the desired results only when business owners understand the fundamental problems faced by the company.  In other words, if you should restructure is just as important as how you should implement the restructuring. 

Restructuring is an expensive exercise. So before you proceed any further, here are five signs that it isn’t the answer you are looking for:

Unhappy employees 

The happiness of your employees has a direct impact on the bottom line of your company. If your employees are unhappy, you will find it difficult to retain existing talent and attract new talent to join the workforce.

But should you restructure to overcome this issue? Restructuring can further impact the morale of your employees and make them unhappier. Due to the change in workplace dynamics, they can find themselves completely lost, without knowing how the reporting structure works or what work they should prioritize. In fact, the rumors of a restructuring exercise can also set in panic.

So what’s the solution? There are several reasons why your employees may be unhappy — from poor work-life balance to not getting paid enough. Focus your energies on fixing those issues instead of restructuring the business. 

You want to eliminate functional silos

Managers always aim towards eliminating functional silos to reduce duplication of efforts. The presence of too many silos within the company can hinder the free flow of communication and ultimately affect growth. 

However, restructuring cannot help you get rid of them. Unlike the common perception, restructuring in such situations doesn’t encourage better collaboration within the team. It may give rise to a new set of problems such as stressed employees due to new responsibilities at work or team leaders having to fight over their resources due to a lack of clear distinction of functions. 

If you are facing silos, it is time to encourage departments to operate cross-functionally. Unless you address the underlying problems associated with silos and fix the system, no amount of restructuring can rescue you. 

Someone is pushing for restructuring 

A new CEO took over the reins and wants to undertake a restructuring exercise. 

Does this sound familiar? Very often, new executives treat restructuring as an experiment to drive growth in the company. However, in most cases, this results in nothing more than shifting a few functions within the organizational chart, causing more harm than good.

Proposing restructuring is usually a knee-jerk reaction, usually done to assert authority. As a result, the consequences are mostly disastrous given that such restructuring exercises are never thought through completely. 

The absence of cross-functional integration or lack of decentralized functions cannot be simply fixed with restructuring. It can actually result in low employee morale and waste both time and money. If you are not prepared to handle the aftermath of the exercise, you shouldn’t consider one. 

Your company is not performing as expected

Carrying out restructuring for a company that is not performing well is as good as fixing a band-aid on a bullet wound.  

The reasons for non-performance can be many. Instead of devoting significant resources towards restructuring, you would be better off focusing on increasing cross-functionality and synergies within the organization. Unless you address the systemic issues, no amount of restructuring can help your business. 

You want to try restructuring yet again

The Nokia example is the perfect reminder of why multiple restructuring attempts are not the answer. 

If you have already tried restructuring before and did not achieve satisfactory results, you won’t gain much by trying it again. Spending too much time and resources on expensive restructuring exercises while turning a blind eye to the real problems is the wrong way to handle the crisis you are facing. 

Instead, you need to identify the core issues that need fixing and work out an effective plan to eliminate those. 

Get experts to tell you whether restructuring is the right way to move forward

If you are not restructuring for the right reasons, you may be doing a great disservice to your business. Identifying inefficiencies that completely halt growth or shrinking profit margins may not themselves be sufficient to trigger a massive exercise such as this. You need to seek professional assistance to examine whether business restructuring is really the solution you need. 

Looking for expert assistance to evaluate whether you should opt for restructuring? Centurion Consulting LLC., can guide you through the process. Our team of financial consultants provides market research services in Dubai to understand the market in UAE and GCC. We also handle the entire spectrum of your business from concept evaluation, recommending business solutions, implementation, and achieving milestones. We examine the existing systems, identify the gaps and pain points and recommend personalized solutions to help your business turnaround. 

Our business restructuring services can provide a fresh external perspective to your internal issues. Learn more about how we can help you by setting up a 45 min free online or offline consultation session with our experts.