Concern for Restructuring is concerned Reengineering is concerned mo
Who? primarily with shareholder well- with employee and customer we being rather than employee well- being than shareholder well-being. being.
Other Names Restructuringalso called Reengineeringalso called proce
downsizing, rightsizing, or management, process innovation, delayering process redesign
Process Involves reducing the size of the Involves reconfiguring or redesigni
firm in terms of number of work, jobs, and processes for t employees, number of divisions or purpose of improving cost, qualit units, and number of hierarchical service, and speed. levels in the firms organizational structure. The focus of reengineering changing the way work is actua This reduction in size is intended carried out. to improve both efficiency and effectiveness. Example
Recall that benchmarking simply Developed by Motorola in 1986 a
involves comparing a firm against made famous by CEO Jack Welch the best firms in the industry on a General Electric and more recen wide variety of performance by Robert Nardelli, former CEO related criteria. Home Depot, Six Sigma is a qualit boosting process improveme Some benchmarking ratios technique that entails traini commonly used in rationalizing several key persons in the firm the need for restructuring are the techniques to monitor, measur headcount-to-sales-volume, or and improve processes a corporate-staff-to-operating- eliminate defects. employees, or span-of-control figures. Six Sigma has been widely appli across industries from retailing Example financial services.
Recessionary economic conditions CEO Dave Cote at Honeywell a
have forced many European CEO Jeff Immelt at General Elect companies to downsize, laying off spurred acceptance of Six Sigm managers and employees. which aims to improve wo processes and eliminate waste This was almost unheard of prior training select employees who a to the mid-1990s because given judo titles such as Mast European labor unions and laws Black Belts, Black Belts, and Gre required lengthy negotiations or Belts. huge severance checks before workers could be terminated. Six Sigma was criticized in a 20 Wall Street Journal article that cit In contrast to the United States, many example firms whose sto labor union executives of large price fell for a number of years aft European firms sit on most boards adoption of Six Sigma. of directors. The techniques reliance on t Job security in European special group of trained employe companies is slowly moving is problematic and its use with toward a U.S. scenario, in which retail firms such as Home Depot h firms lay off almost at will. not been as successful as manufacturing firms. From banks in Milan to factories in Mannheim, European employers are starting to show people the door in an effort to streamline operations, increase efficiency, and compete against already slim and trim U.S. firms.
Massive U.S.-style layoffs are still
rare in Europe, but unemployment rates throughout the continent are rising quite rapidly.
European firms still prefer to
downsize by attrition and retirement rather than by blanket layoffs because of culture, laws, and unions. Organizational Restructuring is concerned with Reengineering does not usua structure eliminating or establishing, affect the organizational structure shrinking or enlarging, and chart, nor does it imply job loss moving organizational employee layoffs. departments and divisions. The argument for a firm engaging i reengineering usually goes as follows : Many companies historica have been organized vertically by business function.
This arrangement has led over time
to managers and employees mind sets being defined by their particul functions rather than by overall customer service, product quality, corporate performance. The logic is that all firms tend to bureaucratize over time.
As routines become entrenched, tu
becomes delineated and defended and politics takes precedence over performance. Walls that exist in the physical workplace can be reflections of mental walls. Duration Restructuring is characterized by Reengineering is characterized strategic (long-term, affecting all many tactical (short-term, busines business functions) decisions. function-specific) decisions.
Implementation Firms often employ restructuring In reengineering, a firm uses
when various ratios appear out of information technology to break line with competitors as down functional barriers and create determined through a work system based on business benchmarking exercises. processes, products, or outputs rather than on functions or inputs.
Cornerstones of reengineering are
decentralization, reciprocal interdependence, and information sharing.
The Wall Street Journal noted that
reengineering today must go beyon knocking down internal walls that keep parts of a company from cooperating effectively.
It must also knock down the extern
walls that prohibit or discourage cooperation with other firmseven rival firms.
Example
A firm that exemplifies complete
information sharing is Springfield Remanufacturing Corporation, whic provides to all employees a weekly income statement of the firm, as well as extensive information on other companies performances. Benefits The primary benefit sought from A benefit of reengineering is that it restructuring is cost reduction. For offers employees the opportunity t some highly bureaucratic firms, see more clearly how their particul restructuring can actually rescue jobs affect the final product or the firm from global competition service being marketed by the firm and demise.
Managers today manage more
people spread over different locations, travel more, manage diverse functions, and are change agents even when they have nothing to do with the creation of the plan or disagree with its approach.
Downsides But the downside of restructuring Reengineering can also raise
can be, reduced employee manager and employee anxiety, commitment, creativity, and which, unless calmed, can lead to innovation that accompanies the corporate trauma. uncertainty and trauma associated with pending and actual employee layoffs.
Another downside of restructuring
is that many people today do not aspire to become managers, and many present-day managers are trying to get off the management track.
Restructuring in many firms has
made a managers job an invisible, thankless role.
Managing others historically led to
enhanced career mobility, financial rewards, and executive perks.
In todays global, more
competitive, restructured arena, managerial jobs demand more hours and headaches with fewer financial rewards.
Example Sentiment against joining management ranks is higher today than ever.
About 80 percent of employees
say they want nothing to do with management, a major shift from just a decade ago when 60 to 70 percent hoped to become managers.
More workers today are self-
managed, entrepreneurs, interpreneurs, or team-managed.
Managers today need to be
counselors, motivators, financial advisors, and psychologists.
They also run the risk of
becoming technologically behind in their areas of expertise.
Employers today are looking for
people who can do things, not for people who make other people do things. Imagery Dilbert cartoons commonly A maker of disposable diapers portray managers as enemies or echoes this need differently when i as morons. says that to be successful cooperation at the firm must stretch from stump to rump. Example From Avon Products restructured in Hewlett Packard is a good example Textbook 2011 partly due to corruption of a company that has knocked investigation in its Russia and down the external barriers to Brazil operations. cooperation and practices modern The company reduced its six reengineering. commercial business units down The HP of today shares its forecast to - (1) Developed Market and (2) with all of its supply-chain partners Developing Market in essence Shares other critical information wi going to a divisional by its distributors and other geographic region type structure. stakeholders. Avon has been reporting lower HP Does all the buying of resin for sales and profits amid missteps in many manufacturers, giving it a key markets. volume discount of up to 5 percent CEO Andrea Jung is installing five HP has established many alliances new regional heads and new and cooperative agreement. presidents in Avons U.S and Russia markets. Example From From Textbook Other Source Adidas ADIDAS-Salomon Group (2005) Example 1 ADIDAS sell Salomon to The Adidas product line include Amer Sports in 2005 but more than 20,000 items, from keeping the Taylor-Made soccer and inline skates to brand as it is the only outdoor jackets and snowboard stable part of Salomon. with thousands of product Decision for this variations. restructuring as the group To keep up with market demand has lacked the scale to and competition, the company make a big push into the changes its product range twice winter sports market during year. a global decline in demand The change in the product rang for ski equipment. depends more often on the The France-based Salomon availability of the new group also been hit by the technologies and the also on th rising value of the Euro. product range and technology o The first-quarter operating the competition. losses widened from 16m Adidas also designs product for in previous year to 25m. local, vertical and niche market Adidas CEO, Herbet Hainer said, Now is the time to focus even more on our Example 2 core strength in the athletic Over the past 15 years, Adidas- sportswear and apparel Salomon transformed itself from market as well as the a manufacturing organization to growing golf category. a global sports brand manager The restructuring involves with 14,000 employees located the loss of 160 French jobs. around the world. Previously, Adidas-Salomon Other Sources operated in a decentralized Taylor Made-Adidas Golf (2014) manner, and each operating un Taylor Made-Adidas Golf s chose software that suited its CEO, Ben Sharpe announced a geography and internal restructuring of the companys preferences. product teams (Taylor Made The company believed that and Adams brands). implementing and creating Part of new strategy called common processes, especially i Playbook 3.0 its sales organization, would he This strategy is focused on it establish global direction, making the company more streamline and automate its efficient. business. Operations thereby improving Move Adams from Plano, TX to flexibility, scalability, and Carlsbad, CA. visibility across the extended Adidas realigned the resources enterprise. to ensure innovation was at the core for all new products. Sean Toulon, Executive VP of Product Creation team, will oversee all product design for Taylor Made and Adams. George Talge, VP of Global Product Strategy, will manage all strategy and product lines.