Assessing The Restructuring Of An Organization Business Essay

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Organizations consist of human systems and their system structure includes the worldview, values, and psychological models of their leaders and members which includes all of employees also. To change the organizational behavior requires change the belief & structure of its personnel. This process is called learning. efficient learning requires strong, clear, open communications throughout the organization.

Organizational performance eventually depends upon human behavior and to improve the performance of people requires to change their behavior. Therefore organizational restructuring should have as a primary goal is to facilitate clear and open communication that can enable organizational learning and clarify accountability for results.

Since the world is constantly changing, continuous organizational learning is necessary for survival. Organizations that will not change their system will become out of date. Leaders should from time to time examine the organizational structure of their enterprise to guarantee that it continues to provide an environment for organizational learning. A non threatening, development focused performance appraisal process can be an effective organizational learning tool.

The points of influence in organizations are the beliefs and vision of their leaders and decision makers. The sense of responsibility, vision and potential of an organization's leadership play a critical role in the results it can accomplish in the organization..

Symptoms indicating the need for organizational restructuring

New skills and capabilities are needed to meet current or expected operational requirements.

Responsibility for results are not clearly communicated and measurable resulting in unfair performance appraisals.

Parts of the organization are considerably over or under staffed.

Organizational communications are incompatible, uneven, and unproductive.

Technology and / or innovation require changes in the organization.

Significant staffing increases or decreases are necessary.

Human resources retention and turnover is a significant problem.

Workforce output is decreasing..

Morale is weakening.

How to survive organizational restructuring

Organizational restructuring has become as regular a phenomenon for consultants. Dealing with this type of large scope change can be disturbing to one's business.

The question consultants should be asking themselves when faced with a company reorganization isn't, "How can they survive this restructuring?" but rather, "How can they take benefit from it?" After all, change is a necessary factor of progress, and progress is by definition mean to excel.

Now that we have established that restructuring can be seen in a positive way, we have to set some ground rules for achieving the most wanted results from this situation. Following the five steps outlined below will help us for change and at the same time aid us in evaluating company's profitability, place in the market, and your individual livelihood.

Need for restructuring 'yes' or 'no'

Assess your value to your company and clients during the "pre-restructuring" phase: to get the answer of these questions will help us in evaluation:

Do you have a positive working relationship with your colleagues?

As a consultant to company, have you acted in the best interests of your clients?

Are you a hardworking, practical representative for your company?

Do you take pleasure in delivering best solutions to complex problems?

You should be able to answer in the confirmatory to at least two of these questions. If you can, then you should be considering your value to your company in its post-restructuring state rather than concerning yourself with "where the chips will fall." On the other hand, if you have answered "no" to more than one of these questions, you should give serious thought to exploring employment opportunities outside of your company.

Once you've weight your value to your current organization, the second step in your decision process is to draw out the full range of options available to you. IT consultants (especially those with mix skills) are aware of the demand for their skills in the marketplace, and should always evaluate and compare the actual benefits of remaining at their current job against the possible benefits of working elsewhere while making career-oriented decisions

Evaluate your risk

To evaluate the frisk you should know 'Are you comfortable with the prospect of change? Most of the employees remain in jobs that allow only average opportunity for growth in exchange for a fixed income and reliable work environment. .we should know that The work environment is obviously volatile in the middle of a restructuring period..

How high is your risk tolerance? In deciding whether to keep on job while your company changes its direction, you should ask yourself these questions:

Will I am missing out possible external opportunity in other organization by waiting for my company to discover its new structure?

If I remain in this organization, I will be suitable for the new structure?

Your mind may be influenced by the duration of indecision due to the time it takes t to reorganize itself. If you're comfortable with the prospect of short-term insecurity and the likelihood of remaining gainfully employed with your current organization, then obviously you're willing to stick it out while the situation becomes more concrete. On the other hand, if you're of the opinion that the grass is always greener, you have a modest amount of risk tolerance, and you are hungry for a new project, then it's time to start circulating resumes and contacting your opportunities.

To Decide 'what's most important to you in a job'

Study your "buy points". Just as potential employers assess your "selling points" while perusing resumes and portfolios and interviewing candidates, you should be itemizing and sorting your "buy points" when experiencing organizational turmoil or while conducting a job search.

Your "buy points" are what you look for in an employer. Make a list like this one:

What does an employer need to provide to acquire my interest in joining its organization?, does my current organization meet these criteria which offered as well as satisfy my financial and social requirements? As well.

What about benefits such as health insurance, family and retirement plans?

If I am a contract consultant, am I eligible to receive the same benefits as permanently employed people?

How critical is upward mobility and growth to my living?

If the opportunity for growth is more important to you than a high base salary, than you should give priority to the organization which has got the scope..

Do your research and make a well decision

How accessible are the decision-makers in your organisation? Do what you can to speak with management you trust in your current organization. Go as high up as you possibly can without ruffling feathers. After all, during a restructuring, the deliberate wear and tear rate is normally quite high. Therefore, management" in the know" can be a valuable asset in helping you make your next career decision. If they consider you a valuable resource, they'll help you decide where you fit in the "new" organization and do whatever they can to encourage you to continue through the discomfort of a restructuring.

In times of organizational restructuring, it's critical that you conduct relative research. At the very least, you should participate in informational interviews outside your company. It never hurts to learn about other businesses, even if you're not quite ready to make a move.

Will I fit in the "new" organization? Will the new organization be a fit for me? finally, before you jump ship even if it seems to be sinking you should build practical hope of your new organization to maximize the chance you'll land on your feet. One of the often-overlooked factors is to consider when joining a new organization is the length of the transition phase into this unfamiliar environment. Prepare yourself for a reasonable transition period, similar in duration to that of your previous organization's restructuring phase.

Keep in mind that it may take a time to get used to to the new business traditions and social climate, culture as well During this adjustment phase, apparently small issues such as job environment, dress code may weigh heavily on your comfort level, and desirable project work may not be willingly available. Ask yourself if you can survive this short-term sacrifice in comfort.

Restructuring in the Banking & Financial Services Sector

Banks and financial institutions all over the world have been forced to take restructuring action to address the deep-rooted issues. In real, these actions have involved cutting jobs and locations to spotlight on crucial and profitable units. The financial crisis has also forced institutions to cut off their operations abroad and focus on their local markets where they have local knowledge. The banking & financial services sector is expected to see more efforts going forward, to defeat their struggling rivals. In particular, Western companies with units in the Far East and other countries are expected to continue divesting to local firms. However, many sellers are finding it difficult to divest units at sound valuations in the current market. Indeed, several restructuring challenges exist along the way, which need to be addressed resourcefully to make the most of current concerned opportunities and help companies to come out stronger from the uncertainty and insecurity.

Restructuring in the banking sector is not a straightforward process.

One agreement that will tell the challenges of amalgamation during the consolidation process is the break-up of ABN AMRO between two banks i.e RBS, Fortis and Banco Santander, in the biggest banking takeover in history of world. Following the beginning of the financial crisis, the Dutch government nationalized the divisions owned by Fortis, while the British government is now in control of the divisions allocated to the RBS bank due to the financial bailout (assistance) of the scotland bank. The process of integrating of ABN AMRO's some divisions into the new owners, and divesting others, has not been achieved yet. "Dutch financial markets are still in the process of settling the issues surrounding the split up and subsequent merger of Fortis and ABN," says Vincent Vroom, co-head of the restructuring group at Loyens and Loeff N.V. "Furthermore, other financial institutions, such as bank-insurance companies, like ING, have been forced to restructure by governmental authorities, such as the Dutch government or the European Commission, in order to improve their risk profile or the market structure in general." Under European rules, companies that received state support when they are in the financial crisis have been required to submit a restructuring plan to show their long-term feasibility. The main aspects of ING's plan, announced last year, included a complete division/sepaeration of its banking and insurance units and the divestiture of some operations.

Governments and regulators in other countries have also pressed for restructuring efforts to be undertaken by financial institutions. The US administration launched a series of regulatory proposals in June 2009 addressing consumer protection due to the historical default in banking sector, executive pay, bank financial cushions or capital requirements and expanding regulation of the shadow banking system and derivatives. Last January, President Obama proposed additional regulations limiting the capability of banks to engage in proprietary trading. "But institutional lenders are in something of a double bind from federal policies in the US," points out Patrick Darby, a Bradley Arant Boult Cummings LLP. "On the one hand, members of Congress and the administration of USA criticize banks for hoarding capital and not making loans to individuals and small businesses in the country. On the other hand, the federal regulators are pushing underwriting standards that attempt to eliminate risk or reduce risk to levels that are unrealistic. Congress also is considering additional regulation to prevent another credit crisis." He adds that by preventing banks from taking risks when lending, federal regulation in this area threatens to choke the recovery. The US Senate is currently considering financial reform legislation which would create a new Bureau of Consumer Financial Protection. .

Seizing distressed opportunities

Due to potential regulatory hurdles, financial institutions are strongly advised to take careful steps when restructuring their operations. "Depending on the kind of financial institutions, a contemplated restructuring may require the approval and cooperation of the competent supervisory authority," explains Mr Vroom. "Establishing a clear time-path for all parties involved, including the competent supervisory authority, is key. Involving professional advisers who not only know the rules but also the merits of the relevant supervisory authority and maintaining good contact can create advantages."

in spite of potential difficulties, restructuring and consolidation efforts are necessary to maximize recovery and opportunities that currently exist in the banking and financial services sector. As Mr. Darby points out, some financial institutions have become more aggressive about selling their distressed loans to third-party investors. "The downside of this is that distressed loans sell at a discount. The upside is that a sale of distressed paper presents a quick exit strategy. The discount on principal is balanced in part by reduced costs of managing the loan through restructuring (enforcement of legal remedies). Plus, the institution is able to update its procedures and clean up its balance sheet faster." Some lenders are also willing to bring litigation against obligors and guarantors, and to enter into settlements of loan debts at below par value in order to improve their ability to recover from the financial disaster.

In the Dutch market, a main point of focus has been on the enforcement of share pledges by senior lenders. "Two key Dutch cases have dealt with this the past couple of years: the enforcement of the shares in JVH Gaming B.V. and subsequently the enforcement of the shares in Schoeller Arca Systems," says Mr Vroom. "JVH Gaming B.V. concerned an entity in the industry and was the first loan market association-type share enforcement transaction in the Netherlands. This was a deal, without court participation. The senior lenders enforced their share pledge in Schoeller Arca through a court practice," he adds. On 23 September 2009, the Dutch court gave its approval in respect of a private sale of the shares in the Dutch holding company Schoeller Arca Systems, by way of an enforcement of a Dutch law share pledge. It was the first Dutch court ruling in respect of a Dutch pre-pack whereby an enforcement sale of a Dutch holding company is pre-agreed between a buyer, the company and its senior lenders - its subordinated association lenders opposed to the proposed sale.

This decision has introduced the chance for a secured lender either to wipe out subordinated mezzanine debt or to implement a loan-to-own strategy.

With several investors and firms now in a stronger position, some hotspots of distressed deal activity have emerged in recent months. The US market presents a significant number of potential opportunities in the banking, asset management and insurance sectors for investors that have the liquidity and capital strength to be acquisitive again. Recent large deals include the $51bn sale of foreign life insurance units relinquished by American International Group, as well as the $2.31bn sale of PNC Financial Services Group's investment servicing unit to Bank of New York Mellon. Consolidation is also increasing among independent, small to mid-sized asset managers in both traditional and alternative asset management sectors, as valuations improve. "Market participants and commentators have noted that cash-rich investors have sat on the sidelines through much of the financial crisis but in recent weeks and months, we have seen a great deal of money move into the market for distressed assets. Apparently, many investors have determined that the market has hit bottom and are eager to find bargains," says Mr Darby. He also believes that private equity investors and strategic purchasers with an interest in underlying assets will be well situated to conduct distressed deal activity, as long as they have plenty of capital and the ability to wait for the expected rebound.

In Europe, with UK banking groups required to divest a large portion of their operations to meet EU competition rules, acquisitions by foreign financial institutions are expected to be a key source of activity. Some of the larger European firms benefiting from distressed opportunities include ING, which is expected to strengthen its position as the largest player in the Dutch market. Deutsche Bank may also play an improved role in the Dutch market following its acquisition of a stake in ABN Amro, which had to be divested as a result of the merger. Although restructuring efforts can sometimes be painful and difficult, they are also necessary not only to abide by with banking regulations but also to improve the long-term prospects of a financial institution. Divestiture requirements will create distressed acquisition opportunities for investors and firms.


In recent years, growth and turnaround in Pakistan's banking sector has been extraordinary and unprecedented. Classified as Pakistan's and region's best performing sector, the banking industry's assets have risen to over $60 billion, its profitability is exceptional and at an all-time high, non-performing loans (NPLs) are at an all-time low, credit is fairly diversified in different sectors and bank-wide system risks are well-contained. Almost 81% of banking assets are in private banks. similarly, the present foreign stake comes to 47% of total paid-up capital of all the financial institutions regulated by State Bank.

Given its achievements, Pakistan's banking sector reforms offer a useful insight into design-specific lessons for others countries venturing to restructure and reform their banking sectors. Dwelling on these lessons, I propose to further draw the significant impact and benefits of banking restructuring of Pakistan (on its population and economy). While a lot has been done and achieved, sustainability of banking system requires the banking industry to position itself to address the emerging challenges and complications, which were commonly observed in the post-banking liberalization era. Recognizing this, the State Bank of Pakistan (SBP), in partnership with the industry of Pakistan has planed to implement the reforms agenda, while also taking new initiatives, to widen and expand the banking system.


To study the restructuring process in an organization

To study the restructuring process in banking sector of Pakistan

The main objective of this thesis is to examine the current restructuring process in banking sector efforts undertaken by the government of Pakistan to gain the efficiency in the financial sector and make it stronger..

The study also examine the outcomes resulted from the banking restructuring and suggest necessary improvements.


The banking sector use markets information efficiently


The rest of the study is structured as follows: in chapter 1 discussed restructuring of an organization, restructuring in banking sector, problem statement, aims and objectives of the study, research question, scope and limitations of the study.

In chapter 2 review of the different literatures and in chapter 3 research methodology and research have been explained, also discusses the theoretical rationale of banking restructuring in Pakistan.

In chapter 4 describes the current banking restructuring process carried out so far in Pakistan and assesses the results of restructuring in Pakistan. At the end concluding remarks are given and recommendations have been presented for further improvements.