Hurdles of Business Restructuring
Chapter 2 cont....
2.4 Hurdles of Business Restructuring
Restructuring is not as simple as "Making the mission statement in the morning, assessing the corporate strengths and weaknesses in the afternoon and articulating the strategies by evening". Some of these are discussed below:
Culture: Culture is an important intermediary which determines whether the strategy will or will not be successfully implemented. Culture either helps or hinders an organization as it seeks to achieve competitive advantage. The right culture for an organization is the one that best supports its strategic objectives. The challenge for an organization is thus to assess the fit between the current culture and the culture required to implement the chosen strategy successfully and to take steps to change the organization's culture to better align it with what is required.
Inadequate focus and commitment of top management towards change program: Any change program will be successful only if it gets adequate support and commitment of the top management. If the top management themselves are not focused or committed the restructuring will be a failure.
"What is in it for me" attitude: Say in case of a merger or an acquisition, if each party is concerned only about itself rather than the organization as a whole, the restructuring would not be effective nor successful i.e. if each party tries to gain benefits for itself at the cost of the others, the new organization would fail.
Mind set/resistance to change: Any restructuring activity involves some amount of change. Be it a merger or a joint venture or a takeover, the management as well as the employees require to align themselves the new structure. If they are not willing to change their mindset, the restructuring will not be successful.
Lack of involvement of employees: A restructuring activity requires a lot of change: change in the mindset, change in the working, change in the reporting, a change in the structure, etc. Since human tendency is to resist change, the best way to incorporate any change is to involve people in the formation of this change. Failure to do so would invite resistance from them which in turn will affect a successful restructuring.
Poor planning: As goes the phrase "Well started is half done". If your planning stage itself is faulty, the whole activity would be affected.
Resource Availability: Resource availability could be another constraint. Lack of availability of adequate resources could affect the working of the business and affect the restructuring activity as a whole.
Cost and time: The cost and time involved for the gains to seep through into the organization may at times make the firm retreat from the process of restructuring.
Poor communication: At times, due to poor communication, the need and benefits of the restructuring activity has not been percolated to the lower levels of the organization. This in turn would affect the effective working of the employees and their performance. Unstructured communication flow, unclear reporting structures, etc, after a restructuring activity, could also affect the efficient working of the organization.
