By Stephen Heidari Robinson and Suzanne Heywood
Harvard Business School Press
252 pages, $44
Workplace reorganizations are commonplace. Or perhaps that should read: Failed reorganizations are commonplace. Five out of six fail to deliver the value expected at the time the impetus was established, research suggests.
"Yet if you work in an organization today, it's likely that you will lead or be part of a reorganization effort. A successful reorg can be one of the best ways for companies to unlock latent value, especially in a changing business environment – which is why companies are doing reorgs more often," consultants Stephen Heidari-Robinson and Suzanne Heywood write in ReOrg: How to Get it Right.
Interestingly, much of the related management literature is on change management or project management. This looks specifically at reorganizations and outlines 18 major pitfalls, some of which you undoubtedly have never thought about. They revolve around a five-step reorganization process the consultants recommend:
Construct assess the reorganization's profit and loss. Too often reorganizations start without any rigorous thought about what the actual financial effects will be: The benefits are ill-defined, there is no consideration of the financial and human resources required and no agreed timeline. In effect, no proper planning for what's ahead. The consultants advise you to explicitly define the value you expect to gain from the effort and to identify the risks and costs you foresee. Take time to imagine the bottlenecks that might arise so you can intervene quickly. Set an accelerated timeline. "The quicker you get a reorg done, the less human stress it causes," they note.
Understand current strengths and weaknesses. There is no great need to change elements of the company that are effective, but often, in a zeal to shake things up, leaders forget that danger. "In most reorgs that we have seen only 20 to 30 per cent of the organization actually changes. The trick is to identify the right 20 to 30 per cent," they stress. So identify the strengths you wish to preserve. Another pitfall at this stage is to listen only to leaders at head office rather than reaching out to the front lines and understanding, for example, regional differences if the company has a large geographical footprint. Hearsay will be abundant, as well, but it helps to get objective facts on the table.
Choose from multiple options. Often companies skip those prior steps and jump to redesigning based on the latest theory or best practices drawn from competitors or analogous industries. That is likely to lead to "organ rejection," the consultants warn. Structures are devised – lines and boxes – without discussing people and culture. They say that would be the same as taking over a soccer team and changing from a 4-4-2 formation to a 4-3-3 arrangement because another team has been successful with it, rather than fixing your team's skills and how they play together. "Just like soccer teams, all organizations have three dimensions you have to consider: People, processes and structure," they say. Often only one recommendation is put forth, rather than discussing a variety of options and perhaps creating a hybrid solution appropriate to your company. And top officials will often try to work around those they believe will be resistant, rather than recognizing it's better to have them in the metaphorical tent than out.
Get the plumbing and wiring right. Too often planners intend a long sequence of activities over time but the consultants urge you to implement quickly while continuing to plan and rejig. You need to be careful in how you handle leaders who are to be shuffled from their current posts but if kept there too long can resist the changes they lack enthusiasm for. Another pitfall can be to try to change too much: In some cases, a unit may be so small it's not worth worrying about. Finally, people charged with implementation can become confused because there is no detailed cookbook explaining the recipe.
Launch, learn and course-correct. Repeatedly companies only measure inputs – whether the elements of the reorganization have been put in place – and not at whether the intended benefits are being reached. Issues can be left to fester as the outcome strays from original plans, rather than identifying and addressing the problems. Since the biggest wish is to return to business as usual, often leaders sensing the mood pull back before they should. And rarely do they identify the lessons from the reorganization to use in the next one they face. "So far we have never come across a company that does capture the lessons of reorgs in a systematic way. This may seem like great news for reorganization consultants, but it is less good news for companies," they state.
But the good news for companies is that this book exists, with its pungent, sensible advice on the pitfalls of reorganizations and how to overcome them. It includes advice for communication at every stage of the effort. Reorgs are us. They happen routinely. The book can help you make them more effective.
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