Compared to larger business organizations small business face the effect of an unstable economy almost instantly. Changes within the small business group in the same industry as the demands and pressure from competitors can affect the profit. In such circumstances, small business organizations are forced to restructure the operations for improving the efficiency to avoid failures. There are several advantages and disadvantages of restructuring inside small business organizations.
The process of restructuring involves changing of strategies and directions inside an organizations to handle the crisis. Some companies downsize during the process of restructuring which usually involves lay off workers removal of certain departments within an organization and closing of retail stores. In some cases work are outsourced to other companies during restructuring. Changing duties and technologies are also done as part of restructuring process in certain small business organizations.
Merits of Restructuring in Business Organizations
Restructuring helps in reducing the cost involved in maintaining operations within the company and retail network. Giving lay of work will lower the payroll expense for the employees. Outsourcing work also helps in reducing house labour. Restructuring the organizational hierarchy can increase the communication and reduce barriers to productivity. Introduction of new technologies also helps in increasing efficiency inside the company.
Demerits of Restructuring in Business Organizations
During the process of lay off, skilled labours will be lost which can have an effect on the productivity factors. Giving responsibilities and change in job functions can cause the increase in training expenses. The remaining workers may feel insecure after lay off and can affect employee morale. Introduction of new technologies can cause confusion in the beginning stage and time might be taken for employees to get adjusted to the roles.