Restructuring again?
The announcement is out, and the company is reorganizing. The announcement goes on about who’s now reporting to whom, changes in duties and the promotions of a lucky few. Your cube-neighbor pops into your space and says, “Didn’t we just reorg eight months ago?” You respond, “Yeah, and six months before that too. I’ve been here five years, and we do this every year.”
This kind of experience is common — too common, in my opinion. Just about everyone who’s been in corporate for a few years has a story about repeated reorgs.
I’ve been through many reorgs in my own career. In a McKinsey survey, less than a quarter of respondents directly involved in reorgs reported their efforts successful. What this means is that a majority of working people will be impacted by failed organizational changes every year. The statistics suggest that a failed organizational structure change is in your future. Alarming, isn't it?
The Top Five Reasons
I’ve been consulting, advising and facilitating organizational design for over 20 years and have coordinated hundreds of reorgs. And, yes, I have unfortunately witnessed far too many failures. Here are some lessons that I have learned over the years that solve for the most common causes of failure:
1. Unclear business goals: Call me old-fashioned if you want, but I firmly believe that there should be a clear business reason for organizational structure change. I’m not talking about goals for the organizational redesign, but goals for the business itself. Far too many organizational design projects focus on things like spans, layers, ratios and communications. These are all potentially good discussion points, but none of them drives the business directly. As an alternative, use techniques such as The 5 Whys or other root cause analyses to trace the expressed need to true business goals that are measurable.
2. The wrong tool for the job: Organizational structure is often one of the first changes sought, even when it’s incomplete, or worst case, the wrong solution. I believe there are seven disciplines that drive organizational capability:
- Organization design
- Decision effectiveness
- Process design
- Systemization of work
- Tools
- People
- Incentives
Attributing the achievement of business goals solely to an organizational structure change is false thinking. There are always two or more disciplines that need to be invoked to achieve the results needed. To correct for this, step back and do a formal analysis, asking the question, “What else needs to be done to get the desired performance?” You will inevitably find interdependencies that need to be sequenced and planned in order for the entire effort to be successful.
3. Incomplete execution: This is connected to the previous cause. Even in cases where the team does a good job of identifying the other work that needs to be done, failure to follow through dooms the entire effort. Unfortunately, this is way too common. To revisit point No. 1, if the initiative is focused around an organizational change, then when the new structure is announced, everyone moves on and gets back to doing their jobs. The better approach is to orient around the business goal/performance, of which organizational design might be part of the answer. Then, fuller execution of all the work streams becomes essential to achieving the goals.
4. Too much, too fast: When organizational changes are substantial, it’s useful to take the time to define a phased implementation plan and the timing that would be used to get there. These phases should then be aligned with the work from the other disciplines that needs to be completed in order for the new structure to be effective.
5. Not going deep enough: If your organizational redesign addresses one or two levels, you’re likely not deep enough to impact performance. Inevitably, desired changes in effectiveness and efficiency require an examination of the activities, processes, roles and structure at the level where the work is performed. Key outputs of a sufficiently deep organizational design are revised work flows and job profiles.
Practiced Professionals
One additional piece of advice to improve your success rates is get help from a practiced professional. Like many things in our professional lives, being good at something requires ongoing and regular practice. Even the best business leaders deal with organizational structure changes only periodically. Professionals in organizational design and business performance consulting deal with organizational designs every week of their careers, and bring with them tools, techniques and expertise to ensure you’ll have higher success rates.
The historical failure rates are high; however, it is possible to flip those statistics around to your advantage. Developing clear business goals will focus your employees on the business results and help to ensure follow-through on execution. Using a holistic approach and defining comprehensive work streams will ensure that the change efforts are fully identified and implemented. When organizational changes are necessary, phasing them over time in conjunction with other enabling changes will ensure adoption. Working at a deep enough level to improve the production processes will round out your efforts and provide you with the greatest opportunity for sustainable success.
