Reorganization is a process whereby a company decides to change the way it operates. It is often the result of a merger or consolidation, and can include many changes in strategy, management, and staffing. Employees, for the most part, must be on board with any changes. And while a reorganization is usually not a bad thing, it should be done with due care and caution. Listed below are some things to consider before launching a reorg.
It can be a merger or consolidation
A reorganization is a type of corporate restructuring that combines two or more corporations. “Type A” reorganizations occur when two or more corporations merge under one legal structure. In a merger, one corporation retains its corporate existence, and the other corporations cease to exist by operation of law. A consolidation, on the other hand, creates a new corporation that replaces two or more corporations. A merger is a legal arrangement between two companies for long-term benefits for all parties.
A reorganization is an agreement by two or more constituents to combine their assets and liabilities. They merge to form a new corporation or unincorporated entity known as the “resulting” corporation or entity. This type of reorganization is historically referred to as a consolidation, and many corporation statutes still use that term. The resulting entity assumes the assets and liabilities of the constituents.
It can include staff, management, and strategy changes
Reorganization is a process of reorganizing an organization to address a specific challenge or improve performance. It is often accompanied by staff, management, and strategy changes, and may include the addition of new or additional business units. The resulting organizational design should focus on breaking down silos while fostering open communication and cooperation. The new structure should reinforce desired behaviors and impose meaningful consequences for undesired ones. It should be clear what the desired behaviors are, and reinforce them with incentives.
Reorganization can also involve closing branch locations, merging with another organization, or acquiring a company. A merger or acquisition will likely require some form of restructuring, including the closing of branches and departments, and the assignment of employees to a new department. A company might also choose to merge with another organization, consolidate branch locations, or appoint one person to lead multiple departments. To effectively plan for a reorganization, UW Human Resources should be involved from the start.
It can lead to significant reduction in employee headcount
Reorganization often involves significant reductions in employee headcount. In addition, reorganization is a time of significant change in the company. A reorg typically falls into the category of SOSR, or some other substantial reason. While redundancy is limited to the closing of a business or a reduced need for work, reorganisations can also involve changes to the terms and conditions of employment and changing working practices.
While a reorganization may result in a reduction in employee headcount, it is a necessary part of change. Reorganizations are necessary for a company’s survival, but they can lead to significant reductions in employee headcount. These changes can occur due to a range of factors, from financial need to programmatic redefinition. In some cases, reorganization causes employees to lose their jobs.