1

PROCESS STEPS

The following sequence of events is typical of most restructuring exercises. 1.1 Strategy A new strategic plan or business structure often requires a restructuring of the organization in order best to serve a new set of objectives. Any structural change should be underpinned by a particular strategy 1.2 Design a structure derived from the strategy The next step is the design of the structure that is derived from the strategy. It typically has the following components: 1.2.1 Overall structure The overall layout of the organization, the main components of the structure and their reporting relationships are determined. There is a large body of theory determining the principles according to which structures can be designed. This design typically also includes the component organizational units of the major groupings in the organization. A typical structure may consist of a number of divisions, each typically reporting to the CEO. Each division may be made up of a number of departments and each department of a number of units. Other terms may also be used; there is no hard and fast rule regarding terminology, but the naming of organizational components is often determined by what the managers of the various components might regard as having status within the groups that they form part of. 1.2.2 Committee structure A committee structure is also often determined at this stage. A typical structure might consist of a top management group (Executive Committee) and each division might have its own management committee. These two levels consist usually of formal arrangements. At departmental level there might also be a type of management committee, but here it tends to be less formal and usually has executive powers no larger than the delegated authority of the Chairperson. It may therefore be regarded as a committee to support the Chairperson is his/her decision-making. 1.3 Description of new structure 1.3.1 Divisional/departmental/ unit functions The functions to be designated to the various components are then typically described. This description is most meaningful if it does not seek to go into every minor detail of the tasks and objectives of the various components, since a new structure is a dynamic thing and will tend to refine itself as it becomes operational. However, it is absolutely necessary to describe the major responsibilities and objectives for the various components, since this information is required in order to allocate staff to the new components, and also to recruit staff where necessary.

1.3.2 Provisional job contents Provisional job contents are usually also described at this stage, although the same comment applies here: jobs will tend to develop over time, and it is best to allow future incumbents and their managers some opportunity to participate in the final determination of job contents. 1.4 Implementation plan An implementation plan is vital if the restructuring exercise is to be completed within the required timeframes and without disruption. Such an implementation plan will require at least the following components: 1.4.1 Milestones It should describe what activities have to be completed by which date, and to which standard. This is particularly important when certain actions depend on previous actions being completed (e.g. placement of staff will depend on an adequate description of departments and jobs in the new structure) 1.4.2 Policies A number of policies will be required during the course of implementation, such as an outplacement policy for those staff members who cannot be placed; a policy on the manner and extent of staff participation on their own placement; a policy on recruitment and selection for the new structure. It is very dangerous to make up policy only when the need becomes apparent; staff are likely to view this as indecision or incompetence on the side of management. 1.4.3 Responsibilities A restructuring exercise is a huge undertaking, and the top management group will find it totally impossible to carry out all the required actions themselves. Some form of task team approach is therefore likely to be required, and it is important to define which teams and which members should be responsible for what. It is equally important that a definition of responsibilities include a clear indication of who is allowed to take which decision during the course of the process. 1.5 Preparing the organization Preparing the organization to accept and welcome the changes is crucial. A restructuring exercise is difficult enough as it is; if staff are uninformed or do not see the necessity for the restructuring, they are likely to be obstructive. The typical preparation takes place over a period of time, and starts when staff becomes aware of the fact that management is reconsidering strategy and structure. It then moves into a phase when staff is increasingly exposed to elements of the new approach, and are invited in to share in some parts of the re-design. The uncertainty and turbulence of this period is not necessarily a bad thing; a degree of tension tends to operate in favour of management when it becomes clear that the new structure will address a number of difficulties and issues that staff members have been aware of. The important point about the preparation phase is that management should be as open as possible with staff, and that the process be made as participative as possible without affecting the statutory rights of management to take decisions.

1.6 Staff placement in new structure This issue, more than any other, can bedevil a restructuring process. Employees typically feel insecure under conditions of uncertainty, and tend to resist any attempt at change. It is often the incompetent individuals who are most vocal, since they now run an increased risk of being exposed it is therefore in their interest to resist the new structure. Often, where an organization is unionized, the union will be brought in and significant pressure will be brought to bear if there is any indication of job losses. Techniques for deciding on staff placement include the following:

1.6.1 Voluntary self-selection If the new organization is described clearly enough, and if the strategic reasons for the restructuring are clear enough, it is often advantageous to give employees the opportunity of indicating where they believe they would be best placed in the new structure. This is a very participative approach, but obviously subject to the principle that management will take a final decision on any placement. A typical approach is to ask employees to submit written proposals on their first two or three choices for placement, together with some supportive arguments as to why they should be placed in a particular position. These proposals are usually submitted to a neutral point in the organization, and by a given deadline. The sum total of the employee proposals will give management a very good starting point for their deliberations on placement. 1.6.2 Selection by management Management may, however, wish to appoint certain individuals to particular positions for strategic and practical reasons, in which case the decision is a managerial one. At the same time, some of the staff proposals for their own placement may be unrealistic, or based on a lack of insight by the staff member concerned, and in such cases management will also need to take a decision. In certain cases, individuals may prove to be incapable of placement in the new structure, at which point an outplacement approach becomes necessary. 1.6.3 Temporary placement to fill gaps Management may also exercise the option of effecting certain temporary placements in order to develop and stabilize the new structure. Such temporary placements may be of existing staff (e.g. an extremely capable individual who is given particular responsibilities for a time to develop a function), or of temporary outside contract appointments (e.g. in cases where specific skills and abilities required to develop the new structure simply do not exist within the organization).

1.7 Recruitment and selection of new staff Often the new structure will require new and additional skills and capabilities on a permanent basis. This indicates recruitment from outside the organization. Two difficulties need to be planned for: a typical recruitment process at managerial level may easily take six months or longer (affecting the implementation speed), and the recruitment process is complex, time-consuming and subject to various legal requirements. It simply does not make sense for management to be involved too deeply in this process (at a juncture where they will have their hands full with implementing the new structure), unless the organization has a well-staffed human resource function with spare capacity. The selective use of reliable recruitment consultants can lessen the burden, but would require a substantial and in-depth briefing of the consultants. This briefing in turn requires that the necessary structure descriptions are available and have been approved. 1.8 Phasing-over from old to new structure There is often a requirement for a phasing-over period, during which time staff members will remain responsible for duties and activities that they performed under the old structure. This implies that for a period of time they will not be able to devote their full attention to responsibilities in the new structure. It also implies that the phasing-over process will need to be managed carefully in order to ensure that certain staff members do not spend an indefinite period on old activities. 1.9 New structure fully operational The final phase will have been reached when the new structure is fully operational. Some prior thought will have to be given to what would constitute fully operational, and how all old activities are to be finally closed off.