Companies and businesses are always prone to difficulties, and sometimes they take drastic measures to counteract those difficulties. And one of these measures is company restructuring. Now, this is not the only scenario in which company restructuring can happen. That’s why today, we’re gonna dive into its definition, its types, and all its pros and cons! So, let’s jump right in and learn more about it all, shall we?
What Is Company Restructuring?
Oftentimes, when a business is having financial or operational trouble, it resorts to company restructuring. This usually involves making changes on different levels with the goal of improving the company’s performance or its financial state. These changes can be on employee level and can go up to the ownership of the company itself. So after a restructuring, a company’s efficiency will have a boost along with the finances, which will lead to better market adaptability.
Types of Company Restructuring
Financial Restructuring
So, financial company restructuring usually includes moving assets around or selling them to adjust debt and pay off liabilities. And of course, that includes all the paperwork related to bankruptcy or debt negotiations.
Organizational Restructuring
This type tackles the company’s hierarchical structure. Companies here change how the hierarchy operates and who reports to whom. Or, they do rounds of layoffs to realign jobs and responsibilities. And that could also include the addition or elimination of whole departments!
Operational Company Restructuring
This type of company restructuring can go hand in hand with organizational restructuring. You see, sometimes shutting down a department means that the business will need to outsource some of its functions. Moreover, this would include automation processes too!
Strategic Restructuring
Finally, we have strategic restructuring. This one is all about the big decisions like mergers, acquisitions, and removing unprofitable divisions from the equation. Moreover, all these details will lead to the business shifting its focus onto more important things.
Pros & Cons of Company Restructuring
Starting off with the positive aspect, company restructuring can provide clarity and focus for a business. Moreover, it can reduce unnecessary costs which helps direct funds to more urgent matters. And of course, this can help both the company adapt with market changes and employees with new roles!
As for the cons, restructuring can sometimes lead to layoffs which nobody likes. And you should be ready to have a temporary disruption of the workflow due to changes. Which makes it a great time to learn how to adapt under stress. So always think of the silver lining!
Before We Go...
If you’re not sure about whether your company needs to go through a restructure, why not seek help? Outsourcing a task to advisors can help you gain an objective view on your business’s standing. And here at Noraal, we can provide you with that and much more. So make sure you check out our services that can help your business strategically grow and succeed!