Company Restructures and Refinancing
Just because a company is in financial difficulties does not mean that it must close its doors and cease to trade. We regularly work with turnaround professionals who can assist struggling businesses and look at ways in which they can continue to survive. Sometimes this can be done in conjunction with formal insolvency proceedings such as an administration.
Restructuring a business - a guide
Organisations in the modern world need to be adaptable and organised in order to remain competitive. The fast-paced nature of business means that traditional structures can quickly become inefficient; as a result of this productivity can suffer considerably. Sometimes, this can drive business leaders to consider restructuring their organisation.
Restructuring your business need not be performed solely as a means of reacting to poor performance. Adjusting the way your workforce operates can be a key factor in creating a competitive advantage, allowing your business to make the most of worthwhile opportunities that arise along the way. With this in mind, restructures can be a regular occurrence to continuously improve the way your organisation works in order to maximise success.
In this guide, we will look at the most important factors to consider when restructuring your business, and suggest how you should follow the process in order to prevent problems at this often uncertain time.
Step 1: Set goals
It is essential to consider the reasons behind your decision to restructure the business. Do you have a clear objective in mind? What are you trying to achieve by restructuring?
The answer to these questions will impact the process considerably. The objectives can relate to a variety of matters, from staff expenditure to performance goals or a target headcount per department. Objectives should be SMART - specific, measurable, attainable, realistic and targeted in order to help the restructuring process unfold appropriately.
Step 2: Create a transitional team
Someone within the business needs to take ownership of the restructuring process. So before starting, it is essential that you have identified who is responsible and that this person has enough time to deliver the business transformation in the timeline required.
If you are creating a team to overlook and manage the restructure, it should include:
A decision-maker who knows the requirements and can make important calls
A data analyst who can import required data using your restructure tools
Someone who can outline the restructure, along with reports, communications and action plans required to implement the changes
Step 3: Informing staff
It is common for members of staff to feel at risk during a company restructure. Managers should be open and honest about the process, to ensure employees feel secure in their positions, and to ensure the workforce understands what is happening and why. If there is the possibility of redundancies then staff must be consulted in a way which satisfies current employment law.
Step 4: Assess the skills of your team
It can be difficult to understand where strengths and weaknesses lie within your organisation, which is why a skills assessment is often required during a company restructure. To do this, speak to line managers, and other senior staff members, to create a list of core competencies and use this throughout the restructuring process.
Step 5: Arrange severance packages
Voluntary and involuntary dismissals can be required during any business restructure. Therefore, it is important that you have planned for these in advance. This means making sure severance packages are suitable for each individual, and that all dismissals are carried out fairly and in compliance with employment law.
It is key for employers to be as transparent as possible at this stage. You will inevitably need to dispel any rumours that are circulating, while managing the expectations of your staff. Shrouding key business decisions in a veil of secrecy is one task managers can do without.
Step 6: Create talent development opportunities
During the reshuffling of staff, it is vital that management offer the right level of support and training to ensure they feel settled and satisfied in their new roles. While this does not need to start until after the restructure takes place, business leaders should look to develop talent in relevant areas where possible, both for internal good management and also for future growth, and promote skill-diversity across the business.
Skills should not be the only factors that are taken into account when moving employees to a particular role. Their place within the wider team and relationships with other team members should be considered.
Step 7: Review the process
Once the restructure has taken place, management and senior staff should regularly review and assess its success, while taking the time to perfect anything that went wrong during the process. Reflecting on any mistakes that were made can help to avoid similar problems in the future.
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Find out more about how we can help you with any aspect of the bankruptcy or insolvency process by getting in touch with Clough & Willis today. Our offices in Bury and Bolton are easily accessible for customers in the north west.