5 Leading Indicators Your Company Needs Restructuring and How to Measure Them

There are several indicators that a company needs restructuring, which can be measured to determine the need for restructuring. One of the most obvious signs is poor competitiveness, where a company is beaten by its competitors and no longer number one or two in its industry^[1]. Another sign is declining sales, which can indicate a need for restructuring to uncover efficiencies and leverage resources to scale up and become a dominant player^[2].

Increasing dependency on debt, runaway costs, and cash-flow shortages are delayed indicators that a company needs restructuring^[2][3]. A financial crisis can escalate quickly and put a business in danger, but often, when these problems surface, it takes a severe burden on the company to reverse the damage.

In this post, we will explore the five leading indicators that suggest a need for restructuring and examine the methods for measuring these signs effectively.

1. Slow and Outdated Processes

Sign: Your company has inefficient processes, too much red tape, or outdated procedures.

Measurement: Check how long processes take, error rates, and output. Compare these to industry standards or previous data. Regularly review processes and get employee feedback to find issues.

2. Unhappy Employees

Sign: Employee morale is low, people are leaving, or there are many complaints.

Measurement: Conduct employee surveys once a quarter to gauge happiness and engagement. Review exit interviews to spot patterns. Track turnover rates and compare them to industry standards. Monitor productivity and goal achievement.

3. Poor Communication and Teamwork

Sign: Communication is unclear, and team members have trouble collaborating.

Measurement: Use anonymous employee surveys or focus groups on getting feedback on communication and teamwork. Check the number of issue escalations, number of meetings, and bottlenecks in the cross-department collaborations. Track the number of project delays in cross-department projects on a two-weeks cadence.

4. Unhappy Customers and Market Misalignment

Sign: Customer satisfaction is dropping, or your company is not keeping up with market trends.

Measurement: Survey customers regularly to measure satisfaction and get feedback. Stay informed on market trends and competitors to spot shifts in customer preferences. Compare your performance metrics to industry benchmarks.

5. Overworked and Ineffective Leaders

Sign: Managers struggle with heavy workloads, insufficient support, or too many people to manage.

Measurement: Assess manager performance through reviews, feedback, and team results. Do not mix individual contributors’ performance reviews with the managers’. Look at managers’ workloads and the span of control.

Takeaways

Corporate executives must remain vigilant and recognize the five key signs that point to a need for restructuring, such as sluggish procedures, disgruntled workers, poor communication, unsatisfied customers, and overburdened leaders. Executives can decide whether or not restructuring initiatives are necessary by employing efficient measurement techniques, including surveys, performance reviews, and benchmark comparisons. Organizations can keep their competitive edge and adapt to market changes by proactively embracing change and resolving emerging issues. Businesses can encourage growth and success through timely restructuring initiatives, keeping them flexible and adaptable in a constantly changing world.