Evaluation of the effectiveness of restructuring
Posted: Sun Jan 12, 2025 7:49 am
The following criteria are used to assess the effectiveness of a company's restructuring:
Financial results
Common indicators for various sectors of the economy include profitability, liquidity, and financial stability ratios.
When analyzing financial indicators to assess the success of restructuring Russian companies, it is important to take into account that many methods and recommended values of indicators have been developed by foreign economists for stable financial conditions abroad.
These parameters may not correspond to the realities of domestic companies, and seasonal fluctuations and specific conditions may distort the data (for example, profit), and as a result, not fully reflect the effectiveness of the restructuring.
Companies with monopoly status tongliao phone data and short-term strategies can temporarily raise prices, which brings them significant profits in the short term.
However, such incomes in themselves do not allow us to separate monopoly companies that conduct “passive” restructuring from those that use active restructuring in conditions of market competition.
Data on market share, production and sales volumes, level of competitiveness
If there is an increase in these areas, this indicates that the restructuring is successful and meets the set goals. The downside of the indicator for the increase in the share of new products is that it can be useful for assessing the success of a company's restructuring in the food industry, but may not provide an adequate picture of the results for chemical and metallurgical companies.
The share of new items indicator does not reflect the improvements that were introduced into existing products during the company's restructuring process.
Productivity and wage levels
The most reliable criterion for assessing the effectiveness of restructuring is labor productivity. The level of employee salaries, in turn, does not always reflect the results of changes, especially in monopolistic companies that can maintain high salaries regardless of the reorganization process.
In some cases, monopolistic and quasi-state companies may inflate labor costs in order to increase the cost of production and justify the need to raise prices or increase expense items and the budget for their operation.
Productivity and wage levels
Source: shutterstock.com
At the initial stage of a company's restructuring, it is advisable to develop performance indicators. This will not only help establish measurable criteria for success, but will also allow you to correctly prioritize the reorganization process.
To successfully implement the restructuring, a monitoring plan should be developed based on the selected performance indicators. At each stage of monitoring, factor analysis should be performed, the causes of deviations from the planned data should be identified, and appropriate management measures should be developed.
"Pitfalls" of the business restructuring procedure
Many managers fail to consider the psychological and practical difficulties that may arise when implementing structural changes. Let's look at some of them:
The illusion of quick results from restructuring
In reality, the immediate effect of a company's restructuring is not always obvious, and negative dynamics may even be observed in the early stages of the process. For example, an increase in the tax burden will reduce profitability. There is no need to panic: in the long term, a carefully planned restructuring will increase the capitalization of the business.
Financial results
Common indicators for various sectors of the economy include profitability, liquidity, and financial stability ratios.
When analyzing financial indicators to assess the success of restructuring Russian companies, it is important to take into account that many methods and recommended values of indicators have been developed by foreign economists for stable financial conditions abroad.
These parameters may not correspond to the realities of domestic companies, and seasonal fluctuations and specific conditions may distort the data (for example, profit), and as a result, not fully reflect the effectiveness of the restructuring.
Companies with monopoly status tongliao phone data and short-term strategies can temporarily raise prices, which brings them significant profits in the short term.
However, such incomes in themselves do not allow us to separate monopoly companies that conduct “passive” restructuring from those that use active restructuring in conditions of market competition.
Data on market share, production and sales volumes, level of competitiveness
If there is an increase in these areas, this indicates that the restructuring is successful and meets the set goals. The downside of the indicator for the increase in the share of new products is that it can be useful for assessing the success of a company's restructuring in the food industry, but may not provide an adequate picture of the results for chemical and metallurgical companies.
The share of new items indicator does not reflect the improvements that were introduced into existing products during the company's restructuring process.
Productivity and wage levels
The most reliable criterion for assessing the effectiveness of restructuring is labor productivity. The level of employee salaries, in turn, does not always reflect the results of changes, especially in monopolistic companies that can maintain high salaries regardless of the reorganization process.
In some cases, monopolistic and quasi-state companies may inflate labor costs in order to increase the cost of production and justify the need to raise prices or increase expense items and the budget for their operation.
Productivity and wage levels
Source: shutterstock.com
At the initial stage of a company's restructuring, it is advisable to develop performance indicators. This will not only help establish measurable criteria for success, but will also allow you to correctly prioritize the reorganization process.
To successfully implement the restructuring, a monitoring plan should be developed based on the selected performance indicators. At each stage of monitoring, factor analysis should be performed, the causes of deviations from the planned data should be identified, and appropriate management measures should be developed.
"Pitfalls" of the business restructuring procedure
Many managers fail to consider the psychological and practical difficulties that may arise when implementing structural changes. Let's look at some of them:
The illusion of quick results from restructuring
In reality, the immediate effect of a company's restructuring is not always obvious, and negative dynamics may even be observed in the early stages of the process. For example, an increase in the tax burden will reduce profitability. There is no need to panic: in the long term, a carefully planned restructuring will increase the capitalization of the business.