UPLOAD CV

5 keys for successful change management while restructuring

user pic

Andy Raymond.

DIRECTOR, REDLINE EXECUTIVE

14/05/2024

people in suits crowded around man with laptop

The ever-shifting sands of the global business landscape have presented organisations with unparalleled challenges in recent years. The far-reaching consequences of the pandemic have compelled many companies to reassess their strategies and consider the once-unthinkable prospect of restructuring. As they strive to maintain their competitive edge, organisations must navigate a delicate balance between adaptability, cost-efficiency, and long-term viability.

While many experts had predicted a wave of restructuring among large corporations during the height of the pandemic, the majority have displayed a remarkable degree of resilience. However, as governments begin to scale back support measures and access to capital becomes more constrained, companies grappling with substantial debt burdens and structural market shifts may find themselves in need of a lifeline.

One of the most significant challenges facing organisations in the wake of the pandemic is the spectre of corporate debt. Between the third quarter of 2019 and 2020, global corporate debt levels surged by an astonishing 10%, a stark contrast to the modest 3-4% annual increases observed in the preceding decade. This will cast a long shadow over corporate balance sheets for years to come, amplifying the pressure on organisations to restore value in the face of economic adversity.

For organisations on the brink of restructuring, the path forward may seem daunting. However, by adopting a strategic approach and focusing on key priorities, leaders can chart a course through the turbulence and emerge stronger on the other side. Drawing upon extensive experience and insights from industry experts, we have identified five essential strategies for navigating the complexities of organisational restructuring.

1. Proactive Engagement of Advisors

One of the most critical steps in any restructuring process is the early engagement of experienced advisors. CEOs should always have a well-defined contingency plan in place, and boards often mandate such measures as a matter of good governance. By identifying potential issues early on and seeking the guidance of knowledgeable professionals, organisations can thoroughly assess their options and avoid being backed into a corner.

In many cases, pursuing an out-of-court restructuring may be the most pragmatic and effective approach. This process requires the close collaboration of a multidisciplinary team, including legal counsel, debt advisors, and business consultants who possess a deep understanding of the organisation's industry and unique challenges.

2. Cultivating Change Champions

While restructuring is often viewed through a purely financial lens, the human element is equally critical to success. Genuine transformation demands more than top-down directives and cost-cutting measures; it requires the cultivation of change champions at every level of the organisation.

These influential individuals possess the vision, credibility, and networks necessary to drive the change process forward and inspire others to embrace the new direction. By empowering change champions and fostering a sense of ownership and accountability, organisations can build the momentum needed to successfully navigate the restructuring journey.

3. Defining Realistic and Ambitious Targets

Setting appropriate targets is essential to communicating the organisation's commitment to a different future. These targets should be both realistic, to maintain credibility, and sufficiently ambitious to drive meaningful change. Striking this balance requires open and honest dialogue within the leadership team, as well as a willingness to challenge assumptions and think creatively.

Once targets have been established, they should be cascaded throughout the organisation in the form of clear, specific, and measurable objectives. Business leaders in each area should be empowered to bring these targets to life, translating them into actionable plans and initiatives that align with the overall strategic vision.

4. Crafting a Comprehensive Restructuring Plan

A successful restructuring demands a clear and comprehensive plan that addresses the organisation's future needs while minimising excess and inefficiency. Tools such as zero-based organisation (ZBO) and zero-based assets (ZBA) can be invaluable in this process, helping leaders to identify and prioritise the activities that are most critical to the organisation's value proposition.

By adopting a rigorous and objective approach to resource allocation, organisations can ensure that they are investing in the areas that matter most, while eliminating or streamlining those that no longer support the strategic vision. This process may require difficult decisions and trade-offs, but it is essential to building a leaner, more agile, and more resilient organisation.

5. Embracing the Human Side of Change

Finally, no restructuring can succeed without a deep commitment to the human side of change. Engaging employees at every level of the organisation, using both rational arguments and emotional appeals, is critical to building buy-in and enthusiasm for the transformation journey.

The most effective change management programs prioritise the creation of a supportive and psychologically safe environment, where employees feel empowered to voice their concerns, share their ideas, and actively participate in shaping the organisation's future. Leaders must be visible, accessible, and transparent in their communications, regularly seeking feedback and input from across the organisation.

Conclusion

Navigating the complexities of organisational restructuring is never easy, but with the right strategies and mindset, it is possible to chart a course through the uncertainty and emerge stronger on the other side. By proactively engaging advisors, cultivating change champions, defining ambitious yet realistic targets, crafting a comprehensive plan, and embracing the human side of change, organisations can successfully transform themselves and build the resilience needed to thrive in a rapidly changing world.

While the short-term pressures of managing cash flow and stabilising the business cannot be ignored, the ultimate focus must be on maximising long-term value and positioning the organisation for sustainable success. By staying true to their core values, while also being willing to adapt and evolve, organisations can weather the storms of change and emerge as leaders in their industries, poised for growth and ready to seize the opportunities of the future.

At Redline Executive we enable high-technology companies to build world-class teams, supplying exceptional professional talent to generate value for shareholders.

We understand the differing talent needs of the technology and engineering sector, where success in search requires being in tune with the marketplace both within the UK and the wider global market.

Get in touch today for more information on how we can help you and your business by giving us a call on +44 (0)1582 450054 or email us on info@RedlineExecutive.com .

Share article