How to Reorganize a Company

by Sam Ashe-Edmunds - Updated September 26, 2017
Business information

Whether your company is successful and growing or is facing a significant struggle, a reorganization can help you address the situation. The key to a successful company reorganization is to determine your strategic goals, then create the tactics necessary to shape your company and its operations to achieve these goals. You can reorganize your business in a number of ways, based on your need to address your structure, staff, policies or finances.

Create a Strategic Plan

The first step in reorganizing your company is to determine if it is even necessary, and if so, why. This means setting strategic goals. Strategic goals can include diversifying into new areas, expanding the size of the company, moving into new geographic locations, dealing with market saturation that’s led to declining sales, changing your distribution channels and creating financial formulas to help you determine how to make and price your products. Create strategic plans for the coming year, as well as ones that look three years or more into the future.

Review Your Organizational Structure

One way to reorganize your business is to change how it’s structured. Common business functions include marketing, human resources, information technology, finance, administration, production and sales. If your business does not have these specific functions overseen by dedicated directors or managers, consider creating departments for these functions. Determine which functions will serve other functions. For example, at smaller companies, marketing serves sales. At larger companies, sales, advertising, public relations and promotions all fall under marketing’s umbrella. If your business is large enough, you might create a C-Suite consisting of a chief executive officer, chief operating officer and chief financial officer. These executives create the management team that sets the strategic goals for the company and guides the department heads.

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Evaluate Your Organization Chart

Another way to reorganize your company is to take a look at your staff, their positions and who reports to whom. If you don’t have an organizational chart, create one to ensure all of the tasks your business needs are being handled by qualified people. Create job descriptions for each position on your chart and determine if the people you have in these positions are qualified, need more training or need to be replaced or moved to other positions. Your organization chart should create a clear reporting system that lets each employee know to whom she reports.

Create a Policy Guide

Don’t assume your employees know how you want them to perform their jobs. Just because you’ve hired an expert accountant, HR person, IT director or marketing guru doesn’t mean they know how to fit in with the rest of your departments or understand your strategic goals. Create a company policies and procedures guide, or employee handbook, that specifically lays out how you want your staff to work. Start with basic office policies, such as attendance, dress code, use of company equipment and personal behavior. Include business procedures that tell your employees how to request vacation time, file a grievance, fill out an expense reimbursement form, enroll in your benefits program and follow safety procedures. Have each department create its own procedures for employees to start, manage and submit recurring tasks.

Create a Master Budget

The more detail your financial reports contain, the more organized your company will be. A master budget coordinates the many financial reports that can help your finance department communicate better with your executive management team, production manager and department heads. Have each department manager submit an annual budget request for his area. Create an annual budget and then tie it to cash flow statements, your balance sheet, profit-and-loss statements and your general ledger. Set finance policies, such as how much debt you’ll carry, what profit margins each product should generate and how much you’ll spend on marketing in relation to sales.

About the Author

Sam Ashe-Edmunds has been writing and lecturing for decades. He has worked in the corporate and nonprofit arenas as a C-Suite executive, serving on several nonprofit boards. He is an internationally traveled sport science writer and lecturer. He has been published in print publications such as Entrepreneur, Tennis, SI for Kids, Chicago Tribune, Sacramento Bee, and on websites such Smart-Healthy-Living.net, SmartyCents and Youthletic. Edmunds has a bachelor's degree in journalism.

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