We’ve all lived through the challenges and pain of restructuring efforts
Raise your hand if you’ve ever worked in an organization that restructured, leaving people feeling confused, disenfranchised, and demoralized. That doesn’t include those who were ‘restructured’ out of the organization. OK, everyone, put your hands down.
I worked and led in large and small organizations for 25 years and have advised dozens of organizations and hundreds of leaders on strategy and organization for another 20. I also taught this topic in an MBA program for many years. That’s code for highlighting that I’ve been around, or have personally engineered, departmental and organization-wide restructurings many times. And with all this mileage and experience, I still look suspiciously at the leaders’ motivations and rationale behind many restructurings, and downright cynically at their potential to create value.
In my experience, changing an organization’s structure is an easy out for avoiding the heavy lifting of truly diagnosing and building a viable market strategy and execution approach. It’s easy to move boxes. Those with power seek gains—those without play to minimize damage. In too many cases, there’s no clear connection to the market and the need to create value for clients.
Restructuring wreckage
Most organizational restructurings generate a lot more wreckage than expected or even needed. Yet, if market forces and strategy (not organizational politics) merit changing the working guts of the organization, there are ways to reduce this wreckage.
A story amplifies the realities and costs of restructuring wreckage:
I worked in various capacities with a global electronics firm over several years. The firm, headquartered in Japan, operates on an April-to-March fiscal year. And like clockwork, the organization restructures every April.
The pattern is predictable.
Announce the big changes in April, offering a vague rationale of better alignment, competitive forces, and the push to become more efficient. For some, the organizational musical-chair exercise stops, and they find themselves without a chair.
Leaders run around talking to business units, reinforcing the vague rationale and offering even vaguer answers to good employee questions, such as: Why are we doing this? What do we expect to gain? Results were great and forecasts solid; why are we changing? What was wrong with last year’s structural plan? What changed? Was last year’s plan a mistake? Why will this be any better?
Then, everyone spends a quarter figuring out how to get work done in the new structure.
As working relationships and decision-making processes finally begin to clarify, the organization gets a solid six months of execution until people come back from the holidays in January. At this point, rumors and speculation run rampant, hitting a crescendo in March. Decision-making grinds to a halt. Creativity dries up. Toxic politics break out across the organization. Strategy lives only in a slide deck.
Six months of execution. Six months of needless disorientation. Subpar results. Lost market share.
Time for a new structure.
Restructuring wreckage.
A mostly failed management tool
Restructuring is often a failed model perpetuated by short-sighted leaders too busy jockeying for position to recognize the human and marketplace toll of mostly politically motivated empire-building. In many cases, the strategic rationale is manufactured. Beyond the boxes on slides, little effort goes into addressing the looming human fallout from yet another inexplicable shift in the working environment.
Nine Steps leaders can take to minimize restructuring wreckage.
1. Design for organizational health
Keller and Price, in the book Beyond Performance, which summarizes the McKinsey research study on organizational health, offer: “Organizational health is the ability to align, execute, and renew faster than competitors.” This powerful framing accepts the need for structure, strategy, and execution to be fluid, constantly learning and adapting. If your plan ignores the reality of the Align/Execute/Renew cycle, it’s likely politically motivated and risks creating restructuring wreckage.
2. Involve them first, restructure second.
Give a major voice for structural ideas to those closest to strategy execution. The people doing the work feel the limitations and know the bottlenecks of the present structure. No one in the C-Suite gets it with the clarity and passion of those doing the heavy lifting. Tap into this source of creative power and energy. Their ideas are better than yours.
3. Respect that your organization is a complex, easily broken system of interoperating parts
While people are indeed adaptable, the flow of communications, decision-making, and how work happens is a complex system. When the system is dismantled and reassembled, people bounce around like disoriented zombies seeking clarity. Old workflows no longer function. Decision-making rights and processes are ambiguous. And precious time is spent figuring out how to do something versus doing it. Respect the system and ask for their help in reconfiguring it.
4. Give agency: task them with creating the change(s)
If, as I suggest above, you involve your broader workforce first in identifying opportunities to strengthen the Align/Execute/Renew cycle, the context for change is apparent. Reinforce the insights and involve them in making the changes. We fear the loss of agency, and alternatively, we thrive when given agency. I want people thriving and driving the needed changes, not fearing what it might mean for them.
5. Coach them in the restructuring efforts
I love the idea of ensuring the larger picture and overall business system are considered alongside the human issues. Assigning capable, experienced coaches (not consultants) to support the restructuring is a positive practice.
6. Recognize the power of relationships in getting things done
Work happens because relationships are forged, handoffs happen, and shared accountability emerges. If you shake up the organization because it looks good on paper and sounds good to the board and analysts, you break many of those working relationships. They don’t spontaneously regenerate overnight.
7. Beware losing context for priorities
If an initiative was mission critical before restructuring, is it still important? And if you’ve moved the boxes, who is supposed to work to bring it to life? Review and reinforce priorities and leverage the coaching referenced above to help ensure new teams move quickly from the storming to performing phase.
8. Stop playing all-knowing with people’s careers
Too often, assignment, report-to, and job title changes happen without involving the individuals affected. This loss of agency is toxic. Career coaching is essential in these situations.
9. Build a scorecard that measures restructuring wreckage
I love leading indicators in business, and nothing is more leading than tuning in to where restructuring efforts are going wrong. Focus on measuring the fallout and costs. Today’s wreckage is tomorrow’s shortfall in results: measure and repair.
The Bottom Line (for now):
Given the constantly shifting market forces and the need for organizations to find new ways to leverage technologies, restructuring is a fact of life. When you must restructure, do it for the right reasons. Link it to market drivers. Emphasize the imperative to ensure structure enables alignment, execution, and adaptation (learning and adjustment). And, importantly, commit to not letting restructuring wreckage derail your business. Tap into the most important source of building power and creating success in your business: your people.
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Check out Art’s latest book, Wake-Up Calls for Managers: Insights to Sharpen Focus and Elevate Results
