Business POV

Three keys to a good business reorganization

The typical reorg evokes fear, stress and suspicion -- and kills productivity. Here's how to change that.

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If you have been in business or at a business for more than six months you are probably familiar with the all too...

frequent business reorganization. Businesses reorg when they are growing, they reorg when they are shrinking. They reorg when things are good and when they are bad. With all this reorging out there you would think that there would be a tried-and-true process for it. But you would be wrong. 

The many company reorgs I have been through have been handled poorly. All but one, that is. 

What made the exception so successful was that the leadership of the organization followed three simple principles. Your next business reorganization can be a positive experience too, if you follow these three principles -- but I am going to warn you.

They aren't easy to follow. None of them.

The three keys to a successful reorganization are:

  1. Transparency
  2. Speed
  3. Participation

Transparency

I remember one company I worked for that traditionally had a reorg first quarter of every year. People didn't know who their new boss would be, what the logic behind the reorganization was or where they were going to be in the organization. Projects stopped because people didn't know if they would be on the project come March, so why work on it. Stress was high. Everyone at this company just assumed that January and February would be an unproductive time.

Gossip needs secrecy to survive.

The antidote to this paralysis? Share everything you know in a business reorganization. (I told you this wouldn't be easy.)

Transparency is typically scary for leaders. They have to share their vulnerability. They have to say, "We know these things ... and we don't know these things."

It may be hard, it may feel uncomfortable, it may go against just about everything you believe about management. Do it anyway.

Gossip needs secrecy to survive. When people don't know something and everyone thinks someone else has some tidbit of information, they gossip. When all the information that is to be known is out in the open, there is nothing to gossip about. Stress is reduced and people can focus on other things. When you start a reorganization, it's imperative to tell everyone. Not a few people ... everyone. Tell them why you are reorganizing, tell them what you plan to focus the reorganization around and what you are not going to focus on.

Early in the game you won't know who is going where or what managers are doing what or anything. Tell everyone you don't know. They want to know. If you have done a lot of reorgs the cloak-and-dagger way, they likely won't believe that you are telling them everything the first time you tell them. You will need to reinforce it and reinforce it and reinforce it.

Be ready for the questions. Get used to answering, "I don't know." You will soon discover that it is freeing when you can say that and not feel like you have to cover up or pretend like you know everything. Initially you may think it will hurt your credibility, but it will actually have the opposite effect. People will respect you more when you admit what you know and don't know.

The next thing you need to do is move swiftly.

Speed

There are two people in an organization who are important to every employee: the CEO and the employee's direct manager. Of the two, the employee's manager is the most important in a business reorganization, because reorgs often represent a change at the managerial level.

If word gets out -- and it will get out -- that a reorg is happening, people begin to worry about who their new boss is going to be. If an organization tries to keep it secret, people will talk around the water cooler or on Facebook, or on the internal chat utility. Productivity will go down, and stress will go up. All of which is bad for getting any work done at the office.  

Transparency mitigates some of the disruption in the flow of work, but people are distracted during a reorg, so be quick about it. The faster you can get through the reorg the faster you can get back to productivity.

Simple in theory but, again, hard in practice. 

Most reorgs I have seen take months and months. They don't have to. A reorg is a serious effort that affects the lives of a lot of people. Some may argue that we need to take it seriously and take the time necessary to make good decisions.

 Well, yes, this is serious business, but do the decisions need to take a lot of time?

The answer to this problem is principle No. 3: participation. 

Participation

One of the things that slows down a reorg is that the decisions are all made by a small number of high-level people. It is believed that this is the best and in fact the only way to handle such important decisions. There are many decisions in a business reorg that need to be made by high levels in the organization, to be sure. Things like:

  • Why are we doing this reorg?
  • What should the overall structure look like?
  • What are we optimizing for in this reorg?
  • What are we not optimizing for in this reorg?
  • What does success look like in this reorg?
  • How will we measure success?
  • What is this worth to us as an organization?
  • Who are the key high-level (close to the top) people in the new structure?

But there are a plethora of other decisions that do not need to be made by these people that often end up getting made by them, taking up important time and slowing down the process. Decisions like:

  • Who will report to those key high-level people?
  • Who will report to the people who report to the key high-level people?
  • What will their roles be, by name, by person?
  • How will we maintain technical integrity?
  • What new governing bodies do we need?
  • How will this affect governance?
  • How will budgeting be impacted?

And a million other things. I am not saying that the top leadership abdicates responsibility for these decisions completely. But mostly. Many of them should be given over to task forces, and in a cascading ladder of responsibility. Just as the top leaders decided who should report to them, the next level should work out who reports to them, and so forth. The rest of the work should be assigned to taskforces that are formed of volunteer teams.

Now you may be thinking that these volunteer teams will take time away from people's work, but remember that these people are already thinking about the reorg. When you give them something productive to do on the reorg you accomplish three things. First, they are given something important to do related to what they are already thinking about, so you make good use of that time. Second, you take some of the workload off the high-level leadership who are already overworked. Finally, and possibly most important, you are moving the decisions closer to the level of the organization which has the information necessary to make good decisions. 

Not only does participation help the process go faster, by giving people a vital active role in the reorg you give them a reason to believe in the reorg. They have a hand in the decision-making process so they have a vested interest in it going well. Participation is not just nice to have, it is critical to the perception of success of the reorg.

As business grow, shrink, merge, or realign strategy, they will need to reorganize. Reorgs always take your team's attention off the work that they need to be doing so take advantage of that. Tell them everything you know and everything you don't know, move quickly and get them involved to make it go faster and to create engagement. If your organization will keep these three simple principles in mind -- transparency, speed and participation -- you will greatly increase your likelihood of having a positive reorg. The concepts are simple, but they are not easy.

When you are getting ready for your next reorg, see if you can do it this way and tell me how it goes: joseph@whitewaterprojects.com.

About the author:
Joseph Flahiff is an internationally recognized leadership and organizational agility expert at 
Whitewater Projects Inc. He has worked with Fortune 50 and Fortune 500 companies, government agencies, startups and publicly traded firms, where he has been recognized as an experienced, pragmatic and innovative adviser. He is the author of Being Agile in a Waterfall World: A practical guide for complex organizations. Learn more at www.whitewaterprojects.com.

Next Steps

Previous management tips from Joseph Flahiff:

Destroying your way to organizational agility

Fire your managers! Practice supportive leadership

Three characteristics of great senior leadership teams

This was first published in March 2016

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