CORPORATE restructuring seems to be the buzzword in the current difficult economic environment and more competitive marketplace. It is a management term for the act of reorganising the legal, ownership, operations of a corporate entity, usually driven by the necessity to make financial adjustments to its assets and liabilities.
Corporations restructure for many reasons. While most do it to reduce costs and increase profit, there are other reasons, such as the need to incorporate new technology, improve competitive advantage, spin off a subsidiary company, merge with another company, decrease or consolidate debt, and concentrate on key products or accounts.
In the tech world, the recent news about Microsoft confirming its restructuring plans is expected to impact thousands with a figure of at least 3,000 employees — three-quarters of the cut occurring outside of the United States, as reported. That’s a big reality check for its employees as Microsoft has always been a solid and stable company to work for.
The restructuring for the tech giant this round is said to be one of the most significant shifts in sales force in years due to its redirected focus to its cloud service Azure, which has been making good progress and is expected to drive Microsoft’s long-term growth.
To many, restructuring is a dreaded buzzword, but it may not always have a negative effect. In fact, some companies are in dire need of restructuring to keep themselves in business.
Some may lack proper management, causing them to suffer. Let’s ponder the signs that a company should restructure.
There is a lifecycle in anything, including businesses. Everything changes through time. New technologies, new people, new methods or operational models are all part of the changes we go through as we move forward. It’s only logical to say that changes are inevitable as it is all part and parcel of future growth.
The same applies to the corporate world as they also need to change and adapt to continue with their growth trajectory. A good leader understands and recognises the signs, and makes corporate decisions to restructure, especially when profit growth has come to a screeching halt.
There are other reasons, such as when the current or old systems are no longer efficient or effective with the new economy and requirements.
Factors that contribute to restructuring are high turnover of employees or some team members are overworked while some are underutilised.
Any corporation would have also made mistakes or incorrect decisions, and would need to quickly identify the root cause to resolve such issues.
When such signs appear, the management needs to evaluate and restructure to keep the company from falling further. One has to look at the bigger picture sometimes. While it may be hard to restructure or let some employees go, it would be even worse if the whole company falls.
It is a very competitive environment and time is of the essence. Even in our daily lives, we are always seeking efficiency and effectiveness to fully utilise our time.
Corporations will need the latest technology and tools to carry out efficient and effective operations to cater to market needs.
For example, Microsoft’s Azure is a journey of exploring better and new technologies in the market. The software giant could be making a wise decision in moving on to new market segments of cloud computing.
After years of focusing on selling software for use in laptops, desktops and servers, it is about time to seek the potential of cloud computing. That said, cloud computing would require new hires with such knowledge, so this could mean employment for people with such skill sets.
I am not implying that layoffs are a good thing, but in the case of Microsoft, it could be unavoidable if it wants to continue to innovate and evolve into a new lifecycle for sustainability. There are also other major corporations that make restructuring decisions every day for the same reasons: sustainability, growth and profit.
Restructuring can be difficult for everyone involved, but for organisations that are doing it, it is a survival strategy.
Think of it this way: if you change nothing, nothing will change.
Ahmad Kushairi is the editor of BOTs, the weekly tech section in Life&Times. Trained in Maths, he has since traded his problem-solving skills with writing about how tech has helped to transform the world for the better. He can be reached via kushairi@mediaprima.com.my.