The Top five Mistakes in Restructuring – and How to Avoid Them
Restructuring is never easy for any company – neither for the leadership nor for the employees. Emotionally, it is undoubtedly one of the toughest challenges a manager can face in their career. After all, restructuring often involves cost reductions, which in most cases sadly means job cuts – with all the existential fears that entails.
Regardless of the reasons, when restructuring becomes necessary, the right approach is crucial. Here are the Top 5 mistakes you should avoid at all costs:
1. Delaying the process
Because restructuring often involves painful decisions, many executives tend to postpone it. They hope for an improvement in the situation – but such hopes are rarely fulfilled. Instead, problems intensify, making the measures eventually required even more drastic.
Tip: Once the need for restructuring becomes apparent, act decisively. Every delay costs valuable time and money.
2. Applying inflexible KPIs
In larger companies, it is not always easy to compare different departments or business units in different markets. Markets differ in terms of competition intensity, price sensitivity, customer structure and product portfolios.
Mistake: Applying standardized KPIs or benchmarks rigidly across all areas often leads to poor decisions.
Tip: Use flexible KPIs that can be tailored to specific market conditions. A smart and differentiated approach ensures that actions are both targeted and effective.
3. Overly harsh measures
Restructuring that disregards individual market conditions or internal structures can weaken the company in the long run. Excessive cuts can negatively impact service quality, customer satisfaction, and market share – triggering additional financial challenges.
Tip: Ensure that your measures are effective but not excessive. Striking a healthy balance is key to keeping the company operational.
4. Measures that are too cautious
The opposite is also problematic: When restructuring is approached too cautiously, the desired results fail to materialize. This often leads to the need for additional measures shortly afterward – causing further strain on the company and its employees.
Tip: Plan measures that are ambitious enough to achieve the necessary goals. A bold yet well-thought-out approach is crucial.
5. Insufficient communication
One of the biggest risks in restructuring is poor or unclear communication. Restructuring almost always creates uncertainty within the company. Employees fear for their jobs, leading to an atmosphere of anxiety and paralysis.
Tip:
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Communicate as openly and transparently why the restructuring is necessary. Explain the financial challenges and the planned cost reductions.
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Inform affected employees as early as possible – even if it’s painful. This openness provides reassurance to those not affected and strengthens trust in leadership.
Conclusion
Restructuring is undoubtedly one of the most demanding tasks in corporate management. However, with the right strategy and professional approach, you can successfully overcome this challenge.
