Organizational restructuring


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The response from within companies have to redesign their operations for a variety of reasons. The text book prescription is to align company structure with strategy. This includes redrawing of divisional boundaries, flattening of hierarchic levels, spreading of spans of control, reducing product diversification revising compensation streamlining process and reforming governance. Some of the response will take years to achieve. The core of restructuring seems has to be the decision making processes – without affecting quality.

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Employee compensation does play an important role in the turnaround strategy. It pays to unlock the entrepreneurial spirit of the employees by offering them stock options in exchange of performance. Results could be dramatic it the employees know that they could be pare owners of the company.

 

The new emphasis on improved corporate governance is not misplaced. The rules of running the company at an apex level must lend itself to  more transparent processes if lenders have to have confidence in the way the company rules itself. This would include broad basing the Board with independent directors, working Audit Committees, transparent compensation packages etc.

 

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