Restructuring is only part of a comprehensive process of company transformation. If changes are limited to layoffs, although profitability may yield short-term results for owners, a spiral of negative effects will quickly ensue.
If employees do not see the vision, they become dissatisfied. Customers feel this, što negatively impacts profits. Thus, the owner, temporarily satisfied with reduced personnel costs, can expect a decline in the value of their company in the medium term.
We have previously written about how to transform a company without killing its healthy content, and now we present three key elements of company transformation.
Revenue is key because it drives the company
A clear strategic vision must be defined, articulated, and everyone engaged in the process of improving revenue. They drive the company, ensuring business sustainability. Revenue or ‘top line’, as we call it in strategy, is the beginning. Engaging potential in revenues is the first step in a holistic approach to transformation, regardless of the industry in question or the state of the company in the market or the trends we are discussing. Customers and the market are the first pillar around which to engage talent in the company. The result of the revenue strategy can be, for example, revenue stabilization, the introduction of a new sales approach, or a new marketing model. For engagement around revenue, companies do not need consultants; it is simply the job of the CEO and the core management team.
Thorough questioning of every cost and investment
It is essential to announce the transformation of costs and necessary investments to achieve the main goal – revenue, to examine all costs, and to start thinking in a way that does not take the previous spending method for granted. This is the job of the CFO. The atmosphere in the company, mentality, and spending habits are fundamentally the most important elements of change in the approach to this second pillar. An investment approach can apply zero-based budgeting (ZBB), where all investments and business plans start from scratch. The previous approach is not taken; previous rules no longer apply. A business case is newly developed for each investment project and business plan that considers the necessary resources and return on investment.
Which employees are too many, and which are too few
An analysis of human resources is necessary to achieve the revenue strategy and optimize costs. ‘Total workforce management’ is a simple method that, on one hand, looks at the current picture of human resources according to competencies and, on the other hand, the necessary future competencies. The difference is the competencies that are lacking and those that the company no longer needs or needs less. For new competencies, HR with resources in the company needs to create a quick learning plan in the organization (depending on the measure of new required competencies). The remainder is surplus in the company, and a restructuring plan needs to be made for that part. For non-core activities, a market partner should be found (outsourcing). Missing competencies in the company should be sought in the market. This is the job of the human resources manager.
