Preparing to restructure your organisation

Many charities are considering some kind of restructuring in response to the current economic climate. This might include closing a division, amalgamating head office functions, general downsizing or some sort of relocation. Whilst all of this might seem like a rather daunting prospect, it has been done successfully by many and has led to some very successful organisations. We summarise below five key ingredients of a successful restructuring. 1. Think 'sustainable Ensure that the restructuring is sufficient to create a sustainable way forward, ie one where likely future income is sufficient to cover costs on most scenarios. You will want to avoid having to undertake such an exercise again, so spend time considering all possible options to make sure this is a one-off exercise. 2. Remember your staff... Keep staff engaged with the process and inform them of the new ways of working as early as possible. Uncertainty and speculation about the future is a natural reaction but can be very damaging to staff morale. The more you can keep staff engaged in any changes the more likely they are to be really bought into the process. 3. ...and your stakeholders Consider whether you want to, and how you want to, inform your stakeholders. Some stakeholders may be instrumental in helping achieve a successful restructuring and so will be involved from the start. For others who are less involved on a regular basis it may not be necessary to let them know of changes until after the event, or even at all, depending on how major the new way of working is for the charity. Communication with stakeholders will often be key to manage their expectations. 4. Measure your benefits Be clear as to the benefits you expect to derive and ensure that your management information allows you to measure these accurately. Measuring the benefits, whether that be in terms of reduced cost, enhanced service delivery or greater profile will enable all parties to look back and focus on the real impact for beneficiaries. At the end of the day it should be all about ensuring that the beneficiaries are the focus through effective delivery. 5. Consider the tax implications Review the tax implications of the restructuring before you proceed. Whilst there will be an up-front cost in taking tax advice, this will be significantly less than having to unravel things if you inadvertently set up an arrangement with the wrong tax structure. Many charities will not have had experience of material restructuring and will understandably be concerned as to its implementation. However, with the appropriate planning, the reorganisation should provide a robust platform from which to grow and prosper in the years to come. • Ian Oakley Smith is a director at PwC and a specialist in turnaround and restructuring for charities and other not-for-profit entities. Click here to sign up to the Guardian Voluntary Sector Network