Phani Kumar Pillarisetty
Literature surrounding organizational restructuring is broad based and generally categorized by specific areas of expertise (e.g. human resources, financial, or strategic application); thereby, reducing the possibility of cross category insight. The focus of this paper was to selectively identify and review significant research contained in literature on organizational restructuring across the areas of expertise for commonalities and dissimilarities. A review of the literature identified four major themes within organizational restructuring: (a) the use of restructuring as a business strategy, (b) the measurements determining restructuring effectiveness and performance, (c) the sustainability of restructuring efforts, and (d) the consequences of restructuring. While restructuring is generally associated with cost cutting measures and a bottom line focus, this paper examines organizational restructuring as it relates to changing operations and structures for improving profitability or other internal needs and specifically excludes portfolio, financial, and debt restructuring. The final section of this paper proposes three research questions developed as a result of the literature along with suggested methodologies for obtaining answers to the research questions.
Keywords: cost cutting, bottom line, organizational restructuring, reorganizing, restructuring, sustainability, turn around
Restructuring is a term and business strategy generally associated with improving operational efficiency and decreasing expenses. Within the realm of restructuring, there are three distinct paths – organizational, portfolio and financial. This study will focus on organizational restructuring.
In general, restructuring is a reactive strategy undertaken after an environmental change. The strategy may involve downsizing, rightsizing, strategic realignment, selling assets, returning to core competencies, and other cost cutting or control measures designed to improve an organization’s operational and financial position. However, the methodologies used with restructuring strategies seem to be inconsistent, may not directly increase revenue, and can produce a variety of consequences both intended and unintended. In addition, the performance results or outcomes are difficult to measure and have questionable sustainability. With all the potential drawbacks, why is organizational restructuring commonplace? This question contains the answer. Reading between the words, restructuring must be perceived as providing tangible benefits to organizations otherwise its use as a business strategy would not be prevalent. The issue is not whether organizational restructuring is useful but whether restructuring is an effective business strategy and what are the determinants of a successful restructuring. Herein lays the importance of the research.
A qualitative research methodology, data mining, was used to explore existing research in the area of organizational restructuring. Secondary data for this study was retrieved from the Wilmington University Library’s Electronic Research section using the Business Source Complete, MasterFILE Premier and Academic Search Premier databases. A date criterion was not used to narrow the search criteria; however, article retrieval was limited by selecting both peer reviewed and full text articles as search filters and using keywords. The keywords were cost cutting, bottom line, organizational restructuring, reorganizing, restructuring, sustainability, and turn around. The search specifically excluded portfolio, financial and debt restructuring. The minimum sample size for the project was set at twelve but over forty articles were retrieved, although not all were used in this study.
During the selection and retrieval process, article abstracts