Restructuring is a corporate management tool used to transform a company’s structure, operations, or finances to enhance profitability or align with current needs. It’s essentially a makeover for businesses, aiming to make them more efficient, competitive, and successful.

There are several types of restructuring:

• Financial Restructuring: This focuses on optimizing a company’s debt, equity, and capital structure to strengthen its financial health. 

Example: Imagine a small bakery struggling to pay its bills due to rising ingredient costs or because of sudden increased demand of business. They might restructure their finances by negotiating a loan with a lower interest rate or taking on a new partner who invests capital in exchange for a share of the business or temporal profits.

• Operational Restructuring: This aims to streamline processes, enhance efficiency, and allocate resources effectively within the company.

Example: A large retail chain might restructure its operations by closing underperforming stores, streamlining its supply chain, and implementing new technology to improve customer service and efficiency.

• Organizational Restructuring: This involves making changes to a company’s structure, hierarchy, and reporting lines to better align with its strategic goals.

Example: A software company might restructure its organization by creating a new product development team, merging marketing and sales departments, and giving more autonomy to individual teams.

• Mergers and Acquisitions: M&A companies can merge with or acquire other companies to expand their market reach, diversify their product offerings, or gain a competitive edge.

Example: Back in 2005, Google bought Android, a company that made software for phones. This was a big deal because it let Google get into the smartphone world, which was really starting to take off.  They made Android open source, meaning anyone could use and change it. It was a smart move that gave Google a lot of power in the mobile world.

• Divestment: Companies may sell off unprofitable or non-core assets or business units to focus on their core competencies and improve performance.

Example: A large corporation might divest a non-core business unit, like selling off a subsidiary that manufactures unrelated products, to focus on its core business and invest in growth areas.

• Cost Restructuring: This involves reducing costs through measures such as employee layoffs, budget cuts, or outsourcing.

Example: A struggling airline might restructure its costs by laying off some employees, reducing flight routes, and renegotiating contracts with suppliers.

Restructuring can be hard on employees. It’s important to be upfront and supportive during these times, must be handled sensitively and professionally, should taking the following factors:

• Communicate transparently with employees about the typical reasons, allocations for reassignment, and potential impact on their jobs.

• Various technical assistance should be provided to address changes and acquire new skills that may be required in new roles.

• The restructuring process must be fair and equitable for all employees, regardless of seniority and skill level.

• Special voluntary programs, such as early fix it or redundancy programs, can be offered and appropriate decisions must be made regarding them.

• Compensation should be provided as optimally as possible, including compensation, benefits, and health insurance.

As a title of example, if some roles are being eliminated, you could offer training programs to help people learn new skills that might be needed for other jobs. 

In the end, companies can mitigate the negative impact on employees and maintain a strong team spirit. It’s important no matter how long they’ve been with the company or what their skills are, they should be treated fairly.