Lana Bradshaw: Managing director, Holloway Schulz and Partners
Restructuring an organization is one of the most complex challenges a business is likely to face. The key to a successful restructuring depends on the following steps.
Communicate reasons for the change, provide a timeline, set objectives, and above all, adhere to the plan.
Map out why and who will be directly and indirectly affected. Keep in mind that some roles aren't fully appreciated until they're gone. As such, you may need to ask employees to come back on a contract basis.
Communicate with and support your HR team. From managing message delivery to gaining employee feedback, HR, along with your legal advisers, will be an invaluable resource – and also one of the most stress-laden departments – during restructuring.
Stay up to date on B.C. labour laws, frequently and effectively communicating employee rights and services to your staff. Visit www.labour.gov.bc.ca for more.
Answer questions about how the restructuring will affect individual departments and the organization as a whole. Remember employees who are being retained need just as much attention as those who are being dismissed. After all, they are the ones who will be responsible for carrying out the organization's next steps.
Be open and honest about what's to come over the next few weeks and do your best to ease concerns about future job losses. Withholding information will only result in a nervous workforce and unplanned turnover.
Leverage an external resource to provide guidance and support for employees as well as career transition solutions and outplacement services.
Ultimately, if you communicate change clearly and are considerate of the human factors that come into play, you will come out of the restructuring process stronger and better able to focus on your organization's next chapter of growth and prosperity.
David Bowra: President, Bowra Group
What are you trying to accomplish? Is it just reducing debt? Typically a company can't pay its creditors. Cash flow is a problem; it could be declining profitability, falling revenues, inadequate working capital and lack of equity.
Why is often forgotten in the rush to stave off bankruptcy. You restructure because of financial difficulties. This is often caused by poor management. Over 90% of businesses fail due to management. Recognition that you have a problem and understanding the nature of the problem will determine how you fix it.
What am I trying to do apart from restructuring the balance sheet? Have I fixed the underlying problems? Will the restructured entity be viable? What will I be doing differently? Do I need to cancel contracts, reduce my labour force, shut down a location, hire new management or find a new lender?
Financial restructuring can be simple. Governed by federal law, usually under the Bankruptcy and Insolvency Act or the Companies Creditors Arrangement Act a restructuring involves a compromise of existing debt.
You will need to hire a restructuring professional. They have to assimilate a lot of information quickly, identify the problem and not be afraid to convey bad news. You might be the problem. Who is just as important as how.
Experience dealing with multiple stakeholders, banks, suppliers and employees is important. You are hiring an individual, not a firm. Hire someone who tells you what you need to know as opposed to what you want to hear.
One of the most successful restructurings I've been involved in was refinancing more than $50 million of debt. The owner listened, hired a good general manager and CFO, and focused on his strength, which was marketing.
George Abakhan: President, Abakhan and Associates
To ensure success of a restructuring as defined below, the project has to be led by a senior management individual (the president, chairman of the board, owner or the chief operating officer).
In addition, a restructuring manager should be appointed whose sole responsibility is to review the projects decided below, assume overall control, report to senior management on individual and/or overall progress, ensure adequate staffing is available from a wide enough spectrum of staff and/or outside consultants when necessary to ensure achievement of the objectives.
Having established these two essential criteria:
•Define the objectives: Is it financial restructuring? Elimination of unprofitable lines? Restructuring of management? Restructuring of staffing? Or a combination of the above?
•Having decided on the objectives: Identify areas of the company to be restructured. Identify staff that will be affected. Identify timelines to implement changes.
•Cost benefit: Evaluate the tasks, projects identified on a cost/benefit analysis and prioritize on the quickest payback.
•Implementation: Considering the objectives, reprioritize the findings of the above to an action plan; staff the projects contained within the action plan with responsible, knowledgeable people that will add value to obtaining a successful conclusion of the project
•Interim assessment: Depending on the circumstances, assess bi-weekly, monthly, quarterly. Ensure completion dates are being attained. Consider adding resources where appropriate.
•Evaluate results: Depending on the objective, the project should be assessed and defined in terms of dollars or man-hours or increased profit.
Most restructurings will fail if they're not led by an accountable executive.
