In the midst of massive organizational change, evolving market conditions, and drives to improve efficiencies and cut costs, it seems that every organization is going through some kind of organizational restructuring. Leaders often can’t resist heading to a whiteboard to re-imagine the squares and boxes of org structure as a visible way of stripping out cost.
However, as organizations undertake this challenging task, we see that a common pitfall is viewing restructuring solely through the lens of cost reduction and operational streamlining. This narrow focus often leads to missed opportunities and, in many cases, outright failure of the restructuring effort. To truly succeed, organizations must approach restructuring as a strategic opportunity to enhance their impact on the business and drive long-term growth, even while addressing cost priorities.
The Pitfalls of a Cost-Centric Only Approach
When restructuring is primarily motivated only by budget cutting or greater efficiencies, several issues can arise:
- Short-term thinking: Focusing on immediate savings often overshadows long-term strategic goals, which lessens the business impact of the organization and can often lead to a “race to the bottom”.
- Disengaged team members: Structural changes that are purely devoted to reducing costs will likely lead to low morale and decreased productivity, not only because there are real human costs to this approach, but because it often comes with the message that the individuals remaining need to “do more with less”.
- Innovation stifling: Reduced resources can limit the organization’s ability to innovate and adapt if those values aren’t kept at the forefront as design criteria.
- Missed growth opportunities: Excessive focus on driving efficiency can blind leaders to potential areas for expansion and development, which can feel antithetical to restructuring efforts.
Reframing Restructuring as a Strategic Opportunity
To maximize the benefits of organizational restructuring, companies should view it as a chance to:
- Align structure with strategy: Ensure that the new organizational design supports and helps drive the company’s strategic objectives.
- Enhance customer value: Reorganize to better meet customer needs (whether internal or external) and improve the overall customer experience.
- Accelerate decision-making: Streamline processes to increase agility and responsiveness to organizational and market changes.
- Foster innovation: Ensure that you have the capabilities needed to advance the organization and facilitate ways of working that drive new ideas and solutions.
- Develop talent: Use restructuring as an opportunity to identify and nurture key talent within the organization.
- Imagine AI implications: Take a ‘now and next’ orientation to consider how specific roles and tasks will evolve or even be eliminated as AI and automation is adopted.
Five Critical Questions for Leaders During Organizational Restructuring
To ensure that restructuring efforts have the greatest possible impact, leaders should ask themselves the following questions:
- Do we have a clear “north star” or vision being applied to the restructuring? How will the new structure support our company’s strategic goals and meet our customer’s needs? What does success look like beyond cost savings?
- What perspectives can we get from our key stakeholders to help drive the process? Involve team members and partners in the restructuring process to gain valuable insights that can help shape the organization going forward and ensure buy-in and ownership as the new structure is implemented.
- What opportunities for innovation and growth does this restructuring create? How can we look for ways that the new structure can foster creativity, cross-functional collaboration, and the more proactive pursuit of new opportunities – not just change the squares and boxes?
- How will we help our team navigate through this transition? Do we have a good communication and change program in place to mitigate the natural resistance and accelerate acceptance and adoption?
- What metrics, beyond cost savings, will we use to measure the success of this restructuring? How will we track our progress going forward? How will we drive accountability and alignment around these metrics?
While cost savings and efficiency are undoubtedly important measures, successful organizational restructuring must be driven by a broader vision of creating value and driving business impact. By reframing restructuring as a strategic opportunity rather than a purely financial exercise, organizations can emerge stronger, more agile, and better positioned for future growth. The key lies in balancing short-term efficiency gains with a long-term vision; ensuring that every aspect of the restructuring process is aligned with the organization’s overarching goals and values.