Struggling CEOs often seize on top-level corporate restructuring as a way to appease anxious boards and shareholders or to galvanize employees around the importance of change. But our research suggests that executives are unwise to assume that restructuring is a quick fix.

We studied 45 underperforming global companies, representing a wide range of industries and all major geographical regions, that had undergone a top-level restructuring from 1998 to 2002.¹ On average, these companies improved their total returns to shareholders (TRS) by 17 percent relative to their industries in the two years after a restructuring announcement. Yet a control group of 13 underperformers that resisted changing their organizational structure actually achieved a similar jump in TRS a full year earlier than those that did restructure (Exhibit 1).

Our findings reinforce the view that companies undergoing structural change can improve their performance, but not necessarily as a result of these changes. Indeed, the struggling companies that restructured may actually have been distracted by the shake-up of high-level functions, product groups, or geographies at a time when more pressing business imperatives needed attention.

A broader look at the proprietary database^2...