Implications of organisational restructuring

More Control

One way to restructure an organization is to create departments to handle tasks you previously
outsourced. This might include hiring a full-time bookkeeper, information technology person, human
resources manager and marketing director. Unlike contractors, employees are at your beck and call,
with no other boss to work for, giving you more control over their work.

Improved Efficiency

When many businesses launch, a handful of people often share the large workload associated with
running a company. This can lead to different areas of your business being underserved as
employees multitask and make choices about what work to put on a back burner. Restructuring
results in stronger employee job descriptions, brings specialists to work in each area and results in
more accountability and greater focus on individual tasks. A common example of an organizational
restructuring improving efficiency is moving human resources out of accounting and creating two
separate departments.

Increased Administration Work

As you restructure, you might find you have more administrative work, especially if you hire more
employees. In addition to recruiting and training new hires, you must manage them, spending time
on departmental goal setting, budget planning and weekly meetings. Before you can create a
company budget, for example, you will need your managers to submit budgets for each of their areas
and you'll need to review them before you can begin working on your master budget.

Cost Implications

An organizational restructure can increase or decrease costs, depending on the type of restructuring.
For example, if you bring contracted work in house, you will initially increase your costs as you hire
new employees but save money in the long term as you eliminate high contractor fees. As you add
multiple employees to departments, your overhead costs will increase. If you add sales and
marketing staff, their efforts should lead to more sales and revenues that directly pay for their costs.
If you add additional finance or human resources staff, they won’t increase your sales, although they
might improve your efficiency and prevent decreases in productivity.

Cultural Changes

When a business has a flat organizational structure, where only a few employees report directly to
the owner, top staff members have more autonomy and authority. If you restructure by adding
departments, former key staff members become one step removed from the boss, often working
under a chief operating officer or chief financial officer. If a department such as marketing splits into
advertising, sales, promotions and public relations, former allies begin to mark their territories to
protect their budgets and their places in the company hierarchy. If the restructuring is a downsizing
or consolidation of departments, those who remain might band together in groups they feel offer the
best chance for survival and job security.