Thursday, September 9, 2010

Reorganizations: Don’t Just Shake up the Bird Cage

I’ve heard some employees call frequent, questionable reorganizations “shaking up the bird cage”. You get a lot of noisy chaos and ruffled feathers flying, and at the end of the say, the same bunch would just be sitting on different perches, albeit a little dizzy from all of the cage rattling. Nothing else seems to change.

That kind of a cynical reaction is often the result of an organizational design process that started and ended with an organization chart. It’s also a result of a lack of communication and change leadership. People don’t understand the rationale, so they fill in the blanks with cynicism and skepticism. Unfortunately, it’s often justified.

I’ve been involved in enough of these - as a manager, outside advisor, and recipient - to have learned a few lessons. 

Here are some tips that I hope will help the next time you’re thinking of re-drawing that org chart:

Why Reorganize?

Most managers don’t decide to reorganize on a whim - it just seems that way, usually because of a poor design or lack of communication.

The typical reasons a manager decides it’s time to reorganize are:

1. A key person has left, leaving a void and an opportunity to question the existing structure. Like it or not, management org charts are usually built around individuals, not “positions”. When a key individual departs, the rationale for the position often leaves with them.

2. There are problems (inefficiency, talent mis-matches, overlapping or underlapping roles, or other operational issues). Work is not getting done, and/or it’s not being done well.

3. It’s required in order to seize a new opportunity (new market, product, service, etc…). Your current structure just wasn’t designed to support your new business objectives.

While these are all good reasons, it’s important to consider reorganizing as just one possible alternative. There are often lots of less disruptive ways to achieve the same objectives.

Who should be involved?

This one’s always been tricky. If it’s just the manager, there’s a missed opportunity for critical input and buy-in. If it’s the entire management team or more, it can be too slow and natural self-serving interests get in the way of doing what’s best for the business.

The best choice is usually something in-between, the manager and a small team of trusted advisers. They are usually the individuals who have enough confidence in their future with the new organization to be able to put their own interests aside.

The “process”

I’m sure there are ALL kinds of ways to go about this. I’ve pulled all-nighters in rooms with dozens of flipcharts and post-it notes and take-out food containers, and it’s never come close to what I’ve learned in the books and courses.

Believe me, there is no perfect science to how to do it, but here’s a few things that seem to work:

1. Start with a strategy.
It’s critical to know where the organization or team is going – what’s important, what’s not, what are the goals, etc…. Yes, this sounds pretty basic, but it’s an often overlooked step. Don’t have a strategy? Then maybe it’s time to create one before you start messing with the org chart. Structure should always follow strategy.

2. Develop your criteria.
List the problems you are trying to solve and/or opportunities. Then weight (H,M,L) each one. This becomes the criteria that you’ll use to evaluate design alternatives and to measure your success.

3. Develop and evaluate design alternatives.
I’ve seen a lot of teams fall in love with one idea and then spend all of their time trying to justify it or make it perfect. Instead, try to come up with multiple alternatives (3-4), and then rank those against your criteria. The reality is none of the options will ever be perfect. Take the best one, and then come up with action plans to mitigate the risks.

This is also a good time to discuss other alternatives that DON’T involve reorganizing. Sometimes, the best change is no change.

4. Test the final design with scenarios.
Spend time testing the design by discussing how various business processes would work within the new structure. These “what if” discussions help fine tune the structure and clarify roles.

Change Leadership

Even the most perfect design could fail to meet your objectives - or take a lot longer – if there’s no change plan. At the risk of again oversimplifying a very complex topic, there are two critical things to pay attention to: communication and involvement.

Communication needs to be much more than one-way announcements about the change. Stakeholders, including employees, will be more likely to get on board if you not only share the “what” and “why”, but tell them about the alternatives you didn’t consider and why you didn’t. Let them know you realize there is no one perfect choice – acknowledge the potential disadvantages of the choice you made – and share your plans to address those areas. This kind of candor and authenticity is way better than trying to “sell” your change as the perfect solution. When it comes to organization structure, there is no perfect design. Every design has its inherent flaws – it’s a matter of picking the lesser of evils. If you treat people like intelligent adults, you’ll get the same amount of respect and support in return.

Don’t expect people to understand it or buy into it right away – chance are you didn’t either (remember “the marathon effect”).

More importantly, ask for their help in making it work. This is where involvement comes into play. People will support what they help create. While they may not have had an opportunity to create the new organizational structure, they can play a huge part of implementing the structure. It’s yet another opportunity to get valuable input in order to further fine-tune the structure.

How about you? We’ve all been through re-orgs before – what have you seen that has worked well, and what have you seen that has not worked so well?


Doug Hensch said...

Dan - Great post and one that is 'close to my heart.' Two quick points...

1) Taking your approach will (theoretically) reduce stress and increase motivation. By involved staff in the reorg, you give them autonomy and a sense of control. In fact, I think that there are ways to involve the entire group/organization in a very positive way without creating massive chaos (eg; Appreciative Inquiry).
2) Your method helps the group 'slow down to speed up.' That is, your well-thought-out process is simple enough to grasp but slows the group down to really think about what is important so that there is less to 'fix' after the reorg.

Great post!

davidburkus said...

I'd add communication is key. Shaking up the bird cage is unproductively because it leads to so much speculation and rumoring that no one really works for months.

ESchwarzrock said...

I’ve been working full time and out of college now for just over 5 years and have been through 2 re-orgs at the same company. Both times, the reasons and rational were muted, or at least at the mid to lower levels. It’s a difficult process for most people to go through, especially when the process is common knowledge well before the ‘moves’ are made. It leaves so many people with distaste for the company, its leadership, and the system. I like the comment about re-orgs occurring when key people have moved on and left a void. It does make sense that people are different than titles and most people don’t do the same job the same way. Eventually after both re-orgs I began to see the rational but each time there was usually some restructuring that made sense and some that absolutely didn’t. My thoughts are that when leadership begins a re-org too many people get involved and too much re-structuring is made. I would think it’s best to reorganize as little as is needed, and to be careful not to get caught up in moving too many positions. Great insight and great article. Thanks.

Dan McCarthy said...

Doug -
Thanks, I really appreciate that. It's a lot more work for the leader - but it's really all about who you're supposed to be leading, right?

David -
Right, it is incredibly disruptive, and should not be taken lightly. Thanks.

ES -
Right - it was not explained to you, so you filled in the blanks. Thanks for sharing that.

mlipkowitz said...

There are several great points made in this post and a few things that have given me new insight. I agree that during a re-org communication is essential. The company I work for just went through one a year ago. During the re-org there were many speculations of why it was happening and many people felt dishearten. Definitely the more transparent the company is the easier the transition will be. I do like the point made about org charts being made around individuals and it is not the position they fill but curtail the position to the people who are in it. Looking back on the last re-org I can see where this point fits in. This post has given me new insight and another sign of when a re-org might take place and why. Thanks for the insight.

Dan McCarthy said...

Mike -
Thanks. I'm glad it helped.

Robbi said...

Have to agree with this so much. Why mess with a good thing? Just have them take a leadership development course if you want them to improve.

Dan Zaccagnino said...

I really liked this topic. Reorganizing is sometimes an excuse for companies to fire people. However, if more companies would take your strategic approach and actually implement a plan of action, using several designed alternatives, then there could be positive changes happening and not just saving money by eliminating a position on the payroll. I also liked this topic because it is very relevant in today’s economic times.

Dan McCarthy said...

Robbi -
Uh, OK.... thanks.

Dan -
Thanks, glad you liked it.

Dan McCarthy said...

Robbi -
Uh, OK.... thanks.

Dan -
Thanks, glad you liked it.

Brian Dailey said...

Hi Dan,

My company just went through a re-org. We've been through several in our short 5 year life span, but this one stood out due to good communication and gaining buy in.

One action taken was that the decision makers prepared a presentation and presented to all high and mid-level managers. The presentation started off with the issue/opportunity, followed by the details of the new structure. Next, different strategic roles were discussed in detail, and it concluded with a discussion of benefits to the organization and idividual groups. After the presentation, each manager was held accountable to presenting the material to their teams. The actual presentation was made available to all employees.

I was happy to see this change in communcation from out leadership team. I didn't realize how positively it was received until I read your post.


Dan McCarthy said...

Brian -
Sounds like someone put some thought into it.
Thanks for sharing.

Wally Bock said...

Congratulations! This post was selected as one of the five best independent business blog posts of the week in my Three Star Leadership Midweek Review of the Business Blogs.

Wally Bock

Dan McCarthy said...

Wally -

Unknown said...

Thanks for the great post, Dan. I also see that engaging employees during a reorganization is key, and has to be done substantively. In order to make things transparent, I think the process needs to be split into 3 separate parts:

1. Design the organization. Focus on fulfilling a strategy, not making assumptions on who will ultimately fit where.

2. Show everyone the org design and ask employees where they see themselves fitting best. Gather their preferences to be used when making staffing decisions.

3. Make consistent staffing decisions based on company needs and employee preferences.

Done right, this can optimize an organization to the last person (and help people focus on a fair opportunity instead of being anxious about change).

It's a potentially complicated process, but the right tools can make it efficient. (We built our OrganizationWeaver software specifically for this).


Dan McCarthy said...

Nick -
Wow, that sounds interesting. Sure beats the old show them the new design and make everyone apply for the new positions.

Unknown said...

Excellent piece and you’re absolutely right: Making changes for the sake of doing so doesn’t add up. It does pay to really consider the need for a big shakeup before diving in with both feet. As this article ( points out, sweeping change can backfire.

Dan McCarthy said...

Julie-ann -