The impact of restructuring on the productivity of companies with specific reference to Clover
Swanepoel, Sarel Gerhardus
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As businesses go through the business and economic cycles, many of them are sooner or later involved in some sort of a restructuring exercise. When the restructuring exercise is done with the intent to accommodate growth, it is usually experienced as exciting and challenging. However, when it is done with the intent to rationalise, individuals' lives are touched in an intense way. People who have been exposed to restructuring will tell you that it is at best a traumatic experience, mainly due to the uncertainty while the process continues. When restructuring by means of downsizing is done to improve a company's competitiveness, the end result should be an improvement in productivity, thus improving the company's profitability in the medium to longer term. The purpose of this dissertation is to determine the level of impact of restructuring on the productivity of a recent downsizing exercise at Clover (Pty) Ltd. The effects of the restructuring exercise were also determined. Having to compete globally, the dairy and food industry in South Africa are much more exposed nowadays than before 1994. The result is that, amongst other issues discussed in the dissertation, the low productivity in South Africa leading to non-competitiveness puts pressure on South African businesses to improve their companies' competitiveness. In the dissertation, an overview is given on the most common ways of restructuring, namely: Downsizing Outsourcing divesting some businesses and acquiring others Strategic alliances reengineering. The importance of growth while improving productivity is highlighted. At the same time, the importance of the applicable information in a time of uncertainty, and to be able to manage the company through these changing times are emphasized. Aspects that need to be considered are the company culture and how adaptable to change a company's culture is. Equally important are the internal and external forces of change. These forces need to be recognised as early as possible, enabling a company to act pro-actively and thereby staying ahead of the pack. Lastly, the planning process for organisational restructuring needs to be thorough, thereby improving the chances for success. A company that recently went though a restructuring exercise by means of downsizing and the combination of divisions was targeted in the empirical investigation. From the feedback received it is obvious that the downsizing exercise will be in the back of the minds of the employees for a long time. This emphasizes the importance that, after a company has identified that a downsizing exercise is necessary, it should be planned thoroughly to enable those responsible for the execution of the restructuring exercise to maintain momentum throughout the process. By completing the process with speed and efficiency, a lot of the uncertainty can be countered. In addition, it will ensure that the goals identified with the restructuring exercise are reached. Once the goals have been reached, a much lower cost base, as well improved productivity, can present the company the opportunity to grow. The growth of a company will provide employment opportunities for many years to come. The steps recommended to be taken, as well as the discussion, aim to guide the restructuring process, thereby assisting an organisation in the completion of a successful downsizing exercise. Although a company in the dairy industry was used, there are many companies in the South African food industry that face similar situations due to the low productivity in South Africa, contributing to the non-competitiveness of companies to compete with global companies, as well as small companies with a low cost basis that operate regionally.