To Reorg, or Not To Reorg?

The infamous reorganization (reorg) announcement! Depending on who you and were in the organization you either tune out, thinking "here we go again" or go into panic mode "worrying if you will survive this round?".

A quick search of Google at any time will result in a litany of companies and organizations undertaking such a venture. Throughout my career, I have been through many reorgs at all levels from being impacted to actually running them. During this, I have seen many personal emotions and reactions surface from people throw punches, abusive language, throwing items to destroying company property.  

A few reorgs were absolutely necessary for the company to evolve and handle changes in the market. Still, many have been futile exercises, much akin to shuffling deck chairs on the Titanic after it hit the Iceberg.

Before we look at what should be done to improve your chances of a successful reorg, why do they go wrong?

There are many examples of this across not only business but also the political arena which we will use to explain the negative aspect of reorgs. Whether it is a new leader (commercial or political), there is this desire to show that you are "doing something".  

What better way to demonstrate this than to pull out the current organization chart, gather trusted colleagues and advisors and then move the boxes and lines around. 

While this approach may not violate any rules or practices from a business and management perspective, the structure must follow the strategy. From a political perspective, this is holding hearings or setting up oversight committees, which in many cases ignore the findings. Don't stress, in a few years, the next politician will do the same, and the cycle will repeat.

So, if you have to do a reorg, how do you do it successfully? There really are two main factors that you need to consider if you are to increase your chances of a successful reorg:

• Employees must come first.
• Don't forget your other stakeholders.

Employees must come first.

Communication in any change is paramount and more so during a reorg. When I look back at reorgs that I have been involved with, leaders typically fall into two categories, the "wait and see" and the "Ivory Tower idealist".

The "wait and see" leader keeps everything super secret until the moment that they believe they have all the answers. The problem with this is, even when all involved are sworn to secrecy, it still leaks and employees find out. This is often due to questions like "what do you and your team do?" or please fill out this "activity analysis form". Once this starts then the rumour mill goes into overdrive with "I hear we are closing down a department" or "we don't have enough money to keep going so there will be 30% job cuts".

To curtail these types of rumours then an announcement has to be made, often prematurely stating we are amid a reorg. There will be changes, and maybe some job loss, but we will achieve amazing results.  

This type of message is toxic as it can be simpled to we are making changes and some of you are going to lose jobs. Nothing that has been said will counter any of the negative undertones from the rumour mill.

The other extreme is the "Ivory Tower Idealist" who will call a company all-hands meeting and give an impassioned speech. The speech will be about how all the problems and challenges faced today will be addressed as part of a reorg, and we will achieve amazing results.

This is the equivalent of a politician going out to meet the "common person" and kissing babies, promising that if you vote for them, everything will be miraculously be fixed.

People being people will hear this and not believe it. It will be understood as we are doing a reorg and that there will be job losses as a result. The leaders' enthusiasm will be construed as fake and uncaring, and all too quickly could be met with waves of cynicism from staff.

The only way to avoid this is through clear and honest communication that is frequent and engaging people in the organization design process.

Don't forget your other stakeholders.

The other area that in many reorgs which are often overlooked is external stakeholders. Depending on the nature of your business, there could be up to four groups that you may need to engage.

• Employee Organizations and Unions - It is essential to engage with local employee organizations and unions early. In Asia, many are associated with government parties and can be very influential. Depending on the scale of the reorg, it may be beneficial to have a representative on the reorg team.  
• Regulators and other Government Departments - This group will predominately be concerned around OHS (Occupational Health and Safety) and what impact this will have on the local economy. A key point to remember is that senior government officials in the country you are operating should be able to get answers locally. Don't expect them to navigate the complexities of a Multi-National Corporation. If you do, this could have negative impacts going forward from a relationship perspective.
• Customers and Suppliers - A danger of many reorgs is that there is more navel-gazing than fixing operational processes. If you are dependent on customers and a supply chain, then ensure that you consider all the implications that the reorg will have on them. If you introduce complexity into the process, much like government officials, you could encounter undesirable results.  
• Company Board - If the reorg is company-wide, there is likely to be an impact on performance in the short term. The board needs to be across the changes and why they are happening and the associated risks. At a minimum, the CEO should brief the board members individually and collectively on the progress.

Conclusion

Whilst there are many reasons that a business needs to undertake a reorg, they can consume a significant amount of time and energy. This can be offset with proper communication to reduce unnecessary anxiety and unproductive wheel-spinning.  

Often what is required, is not a reorg, but streamlining of operational processes which should be continual and iterative in nature. These small changes will provide many of the benefits of a reorg without the headache.