Restructuration rhymes with adaptation

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We often hear of the restructuration plans of a company in Medias and newspapers that end with massive economic contract terminations as well as human tragedies.

When analyzing a result account, we may step on a title called “restructuration” that registers sometimes big expenses. When we do not read the tiny notices, it becomes harder to understand what is being carefully hidden behind such a procedure.

What is a company restructuration ?

To put it simply, restructuration of an enterprise or a firm is just the evolution of a company to new tasks and activities. In other words, it is a new resources repartition that is more suited for a better productivity.

A restructuration is not always a last resort option that is done when the company faxes a crisis. In fact, if that is the case, it means that it is being done too late.

For those who have worked in different enterprises or in the public services, I am sure that they have arrived one day at work and have discovered that their department’s name has changed, even if they did not change the office or their function. They have the same responsibilities as well as the same colleges and boss. The only little change that actually happened was the name of the office. So , what happened ? And is it really important ?

The office name’s replacement is usually the result of a restructuration

You do not need to look further, you have been restructured.

In a big company that has different tasks, in every point of development, the enterprise has established new resources, whether they could be human, material, or financial to satisfy the ambitions.

It happens a moment when the multiplication of the activities goes with different processes. This implies an increase of costs and a drop of the efficiency of a task because of the complexity of its procedure.

Let’s take a simple example :

The 1st company that is based in France is specialized in accountancy. It buys the second company, which is also specialized in accounting, in order to expand its activities.

The company has two entities : around one hundred persons in total amongst which ten computer scientists that are doing the accounting.

Each one of these companies has its own software and monitoring. The first firm makes French accountancy, while the second makes Finnish accountancy. Besides, when we look closely, both of them are fulfilling their tasks the same way, since they both follow the IFRS norms which are the national specificities.

The management decides to share the systems in order to reduce the costs of the hardware and software. We obtain an establishment of a project on which ten computer scientists will be working.

One it is done, the concerned systems of the first and second company do not need ten computer scientists anymore thanks to the restructuration plan. The will only need five of them.

Does this mean that there will be contracts terminations ?

Well, not necessarily…, in fact, it depends on the management team who will either terminate the five remaining contracts (this will result in immediate savings), or proceed to a job cut, and affiliate the remaining computer scientists in a way that allows them to use their competence to automatize other accounting processes such as establishing an electronic exchange of information with the clients that is standardized.

As a conclusion, we see that we now have different shared systems, five computer scientists instead of ten, or five computer scientists in support and maintenance along with five others with a high mid or long term value.

With a simple restructuration plan, it is possible to realize a drop in the expenses while freeing some resources for other tasks.

Of course, a real restructuration plan is more detailed and requires more steps but the main idea stays the same. Besides, the company will need, then, to proceed to the restructuration of its operational area.