CXO

Organizational change means worse results

During chaotic times, many businesses will try to get business moving ahead by making organizational changes. John M McKee says this is wrongheaded. He makes the case that great leaders have a better approach.

 We live in chaotic times. And the outlook is for more chaos.

During chaotic times, many companies will look at their organizational charts in an attempt to improve results. You've probably seen some of this during your career:

  • Leaders are let go, and new ones are promoted or hired from outside.
  • Departments may be integrated into others, or perhaps broken out, to speed up action.
  • Staffs and staff levels are generally changed. (But not usually increased.)
  • New reporting structures get created to "re-align more appropriately."

Although I have seen a few structural reorganizations cause performance change, in most cases they don't.

Usually the changes simply cause more chaos. There's little significant bottom-line improvement while everyone tries to figure out how they are to do their job now.

I was reminded of this recently when working with a client. She's a successful vice president, but she's working in a Fortune 100 company that is not as successful. Her business results have been solid, but her boss has poor results overall. So his boss decided to fire her boss. Then he reorganized the entire division under the headline of "streamlining communication." Some of the veeps will now report to different bosses in other cities.

As a result, for a while any individual who would like to step on the gas pedal is basically frozen while everybody tries to figure out how to do his or her job. During that time, most people's results will go downhill. That's because the issues that are now most important to my client, and others around her, are:

  1. Are the changes finished? Are there more to come? Who's next?
  2. "If I work for her and you report to him, who can make the final decision?"
  3. "Does this mean I have to travel by plane twice a month for the department meeting? If I don't, will I be able to get as much out of a meeting just by dialing in?"
  4. "What does this mean for me and my career path? Do I really want to stay here?"

I estimate that it will take four months before this group gets back to business as usual. It's very unlikely that results will improve during this period. On the other hand, it's very likely that fear and loathing will increase.

Next time someone brings up the idea of some structural changes at your place, keep this in mind. And remember these two rules of management:

  1. Really great leaders can make any organizational chart work effectively. (Poor leaders rarely improve results with an organizational change.)
  2. Pros know that people perform best when they are confident about their own situation, so those bosses do what they can to ensure stability. (Weak bosses whine that they can't get things done because of the org chart.)

Here's to your future,

John

About John McKee

John M. McKee is the founder and CEO of BusinessSuccessCoach.net, an international consulting and coaching practice with subscribers in 43 countries. One of the founding senior executives of DIRECTV, his hands-on experience includes leading billion d...

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