What are the top risks in Organizational Restructuring?

The Top Risks in Restructuring

With great organizational change comes great responsibility. Therefore, in order to create a sustainable growth, companies must learn strategies on how to manage the risks in restructuring. Such risks involve an impact on ROI that may occur when applying new changes to business practices. In the midst of restructuring, there is also a risk of siloed teams not being aligned with enterprise wide strategy. Furthermore, goals and objectives have the danger of not aligning with overall organizational goals, which in turn leads to a risk that team members may not understand their new roles in the changing company. Finally, with restructuring, businesses must face the possibility of morale loss during this process. A closer look at these risks shows how restructuring takes a toll on businesses.

Risk #1: Impact on ROI

One of the dangers in changing an organization is that the company may experience an impact on ROI. Customers may not be informed with all the new changes, and chaos may ensue when a company is unable to recalibrate their business practices in an efficient manner. This risk must be assessed to see if the business can endure a loss on ROI while changes are put in place. Or, on the other hand, a business must plan for the impact on ROI by increasing communication with customers, so that all parties involved understand the new changes and can react correspondingly.

Risk #2: Siloed teams not aligned with enterprise wide strategy

Key to developing a new organizational plan is communication, whether that is between customers or team members. Financial institutions risk losing momentum if all parties involved in the change are not informed. Oftentimes without a clear plan, companies are unable to follow through on restructuring. Within a company there are shareholders who will need to be updated on changes, so executive decisions can coordinate with the new direction. In addition, company employees need to be notified of major organizational changes, as responsibilities may shift during the restructuring, and a disjointed effort from the whole team will cause problems in the transition.

Risk #3: Goals and objectives don’t align with overall organizational goals

A well thought out strategy will not be as effective if the current overall organizational goals do not align with the new leadership style or work objectives. Financial leaders must stay tuned into the organizational goals to understand what has worked in the past and where innovation can improve the business. In other words, it is important to define the issues at hand to determine the causes and to develop appropriate, potential solutions. This risk will be different for each company, but financial lenders can learn how to conduct new restructuring plans in a way that keeps each part of the team passionate about the new direction. As mentioned before, communication with the company employees will be of the utmost importance in discussing how the company will change over time.

Risk #4: Chaos from confusion of newly outlined roles or losing old team members

Although financial leaders will be at the head of new changes at the company, the best way to encourage sustainable change will be to delegate roles among the team, so multiple members can assist with establishing the new organization. Putting all the tasks on just one or two key people at the company will isolate the amount of team members who can continue the new plans in the future. Team members may not understand what their new roles are in the process, which can cause confusion and a disruption to a unified workflow.

Risk #5: Morale Demotivation

Along with the risk of having confusion over team roles, businesses risk losing team morale during restructuring. Many factors can cause this demotivation such as a decreasing ROI as business progress slows down to adjust to new objectives. Additionally, periods of change can often bring a heavier workload for the company, leaving team members feeling overwhelmed in the efforts towards restructuring. For these reasons, businesses will need to be aware of the morale in the company to ensure a strong effort in the work behind the business changes.

Looking Forward

Organizational restructuring comes with its risks, but not every company has to suffer from the challenges. Once the risks are identified, companies can learn how to avoid the pitfalls that prevent progress. Over time, businesses can anticipate an impact on ROI, communication can be clarified among all team members, company organizational goals can be assessed in light of new objectives, and financial leaders can work to keep up morale during the times of change. With these practices in place, restructuring can be completed more efficiently and successfully in the face of risks.