Companies need ability to cope with challenge of reorganisation

Over time this kind of development can result in an awkward or even inefficient structure that requires some degree of reorganisation to streamline it. 

We can separate an organisation into three major layers – operational, middle management, and top |management. Each group takes on different roles and duties and any change therefrom will have an impact on the company’s performance as a whole.

The following are challenges in the reorganisation endeavour that a company may have to face.

Filling a vacant position: Reorganisation may happen because a key position is vacant due to the resignation or retirement of that |person. This may open up an op-|portunity to reorganise the existing structure to suit the existing manpower or to improve operational effectiveness.

Cost reduction: In order to reduce operating costs, especially in the support function, adjustments to the existing organisational structure may be necessary. 

For example, the initiative of shared service in the accounting or human-resources department can result in a significant headcount reduction. 

Business expansion: A new organisation may be set up to support business expansion. This initiative can be supportive to existing functions such as a new purchasing section, or the creation of a totally new organisation such as global strategic support. Some new departments may be set up specifically to serve overseas business expansion.

Downsizing the business: It is also possible that a company needs some form of reorganisation due to the shrinking of the business or the merger of different business units. This change can necessitate the company dealing with challenges on human-resource management more than in the case of business expansion. 

In certain circumstances, reorganisation can take longer as a result of the change in key positions. 

For example, replacement of a senior vice president of manufacturing may start from promoting someone either in the same department or from a subsidiary company to fill the vacant position. 

The consequence is that the company needs to find a replacement for the person who gets a promotion to fill the first vacant position. 

That means a change of one key position can cause a change of another two or three positions.

Filling the vacant position with the best person is one of the key success factors of the company. However, in today’s business environment, recruiting the right candidate can be a tough job for human resources

Many companies have adopted the process of identifying successors for key positions through regular reviews (quarterly or annually) by each department to see who can be promoted to fill key positions under that department. 

If the department cannot identify someone as a good candidate, there is probably risk of organisational change in the future. 

The preparation to cope with this challenge should be addressed |properly followed by a good action plan.

Another challenge for many companies is determining the right timing for reorganisation. Making changes too early can cause morale issues. 

 On the other hand, delaying necessary reorganisation can also pose a risk to the continuity of the business operation. Thus, it is important for the management to make sure the company has the proper organisational structure to prosper in a highly competitive market today and in the future. 

 

Dr Yanyong Thammatucharee is head of international finance and operations at Central Marketing Group. He can be reached at [email protected].