There are other kinds of restructuring which are self explanatory:
Changes in top management
This means the changes in the top and the operating management in the company. This begins with the change in the CEO and Managing Director level changes to bring in the change driver commensurate with the need of the hour. The “person of the moment” is seen as a key driver of policy changes and mover and shaker by the promoter management and by the market. The team to work under the top person is many times left to his or her discretion. By and large the person brings along a tested team which perhaps has seen a good turnaround elsewhere which does not mean success is guaranteed, but that which could be tried out in the new place. This includes at the Board/operating level and may include heads of profit centers, HR, Marketing and other critical positions. Finance is usually a closely guarded level and the top management may like to bring in someone from within the loyal group of professionals.
Retention of key management team
There are also instances when some people are considered indispensable and their retention in the company is absolutely required. Such persons are retained in the company by paying the stay on bonus in cash or in the form of stock options. This will give significant motivation to persons for continuing in the organization and be a part of the changing environment.
Moving of operations such as manufacturing to lower-cost locations
In late 80’s and early 90’s the set up in various companies used to be “fractured infrastructure”. The Corporate Office set up will have Marketing, Procurement, Finance, HR apart from the usual corner office paraphernalia. The plant correspondingly would have the functions such as Sales, Purchase and stores, Accounts, Industrial relations, etc performing some parallel or even overlapping functions. Leaving a small set up for the Corporate office, MD and associated functions, it was found to be productivity and cost effective by combining functions in one location for cost saving, better plant management and effective customer and plant relations. Moving plant locations have also been done in the past to improve proximity to the raw-material and customer market, better availability of power etc.
Restructuring is a process and involves careful planning and application. The company can phase the restructuring process say over a period spanning 6 months to one year giving time for observing the impact of the restructure across the entire business. The costs and productivity being important, it is also necessary to keep the interest levels of customers and motivation of employees alive. Many restructuring has resulted in panic among these sections resulting in the flight of customers and key employees. The new of restructuring will therefore need to be timed out and suitably explained as it happens.