Emerging Tech

Re-organizing? Don't bungle it

During tough times, many organizations must re-organize to maintain their profits. Some do it just to survive. In this blog, John M McKee discusses some key issues to consider before starting and then afterward.

In the past week, I've had conversations with two companies regarding their plans to reduce headcount and re-organize how they do business. This leads me to think that there must be a great deal of discussion in many companies about the same thing currently.

We are in challenging times. Consequently, companies are smart to take a critical look at their organization's structure, players, and roles. Done well, a re-organization can be a very smart approach to make a company perform better, reduce overhead, and improve communication. But done poorly, it often causes a more rapid downward spiral of bad results.

As a coach who works with corporate execs as well as business operators, I get asked this: "With so much literature on the topic of re-organizations, why do so many companies fail to achieve their established goals?"

Working with many companies and executives is like having a backstage pass to a rock concert. Sometimes it's great. In those cases I see each player performing flawlessly. Other times are bad, with results that are unsatisfactory for everyone involved. It's always interesting to see how executives go about making decisions. Some take advice and use it to do their jobs better. Others won't even consider that option.

    I've found that each have reasons which be grouped into a few categories:
1. Ego or lack of it - "I know what needs to be done, why pay someone to tell me what is obvious?" or, alternately, "If we're making a decision of this magnitude, I'd rather use someone without a vested interest in the outcome to give us a different perspective." 2. Attempts at confidentiality - Working with a solid business partner who has hands-on experience and/or a solid client list never results in leakage. And internally, although big initiatives can be kept to a small handful of leaders, most often they are not. Consequently (and this happens all the time) an executive will tell his guys, who will tell others and soon everyone knows. Media types and headhunters have amazing insight into the confidential plans of many companies. 3. Keeping "costs" to a minimum - Doesn't ever pan out as far as I can tell. While this can appear to be a "good" reason during an executive presentation ("We're spending a ton already, we need to minimize additional charges") I think it's usually bogus. A good suggestion can greatly pare expenses or improve productivity significantly. Relatedly, ROI can be measured in most any decision. 4. There's not enough time - Most execs have an amazing ability to establish action dates based on what I call "artificial deadlines" such as the timing of outside events or internal quarterly meetings. Then they rush to achieve those due-dates. This causes bad decisions because heads are no longer cool. Which in turn may result in poor budgets affecting outcomes negatively in latter quarters. In my experience there is always more time than it seems.

However these different style execs make their decisions, the hard part is the execution. I've been involved in quite a few of these. Personally, I was once appointed to head a competitor company after we acquired it. We needed to cut back on redundant staff very quickly - affecting thousands. As a coach, I've helped others to figure out the best structure and then get it enacted.

Once you've made the decision to proceed, it can be less painful for everyone if you remember these three things:

Communication - even if there's nothing to say, use an e-mail "letter to the boss" address where people can deal directly with you. If you don’t have time to manage it - have someone in HR preview it for you Timing - don't roll it out a bit at a time. Remember the old adage, it's better to pull the bandage off quickly than slowly - it's going to hurt either way but it's better to get it done all at once. With clarity the rest of the organization can get back to work Measure twice and cut once - If very drastic action is required, face the facts and cut expenses to the bone. You can add people back but delaying action resulting in a constant round after round of additional cuts is demoralizing - at the least. It can lead to a loss of your best performers (the ones you don't want to lose) because they're seeking a safe place and fear getting axed. Then you're left with the worst players, which is not a great outcome. So cut as much as you need and then a little more. And then tell everyone that the changes and RIFS are complete so they can settle down and focus on what's needed for everyone to move ahead.

A well executed re-organization can be like a good boost of energy with most people affected moving onto the next steps in their lives regardless of how they were personally impacted. A poor one will cause ongoing pain for many and over a long period.

john

Leadership Coach

About

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...

2 comments
projectmb
projectmb

In the old days when something or the economy went wrong the thing to do was reorganize; it will fix everything. Wrong!!!!! A reorg just confuses the enterprise approach and throws the work force and management into turmoil. Executives won't know what hit them until it is too late. Don't reorg; revitalize.

DigAPony1969
DigAPony1969

First of all let me say this is an interesting topic. I find corporate organizations captivating and often confusing. Organizational charts in large corporations often look like they were designed by a PhD mathematician attempting to develop a new structure in combinatorics (map theory). There never exists a simple pyramid structure instead there is this complex monster with dotted lines criss-crossing every direction that would take an extensive 3D model just to capture. Fascinating but perplexing. I wanted to ask you about the reasons you provided. Were these listed as reasons that re-orgs may fail? If so then your reason regarding egos seems vague. Are you saying that to seek no outside advice is a mistake and simultaneously to seek outside advice is bad? I can see where seeking no outside advice is a problem and making every decision based on outside advice would be crippling. I assume this is your point. Seek a combination of outside and inside advice. Is this correct? I guess your other points are keep sensitive information with those who need to know only, but don?t be surprised if it leaks. Plan and document just how much cost savings will be garnered from the re-org. And, set a realistic time table based on milestones that are achievable and not on arbitrary external events. ? good article. Thought provoking. Thank you for writing it.

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