Restructuring - Do it Right or Not at All

In the past several months, as the price of oil has plummeted and caused private sector firms and governments to recalibrate their plans, seemingly inviolable just months before, we see many organizations - private and public sector both - assess the need to reform themselves or already actively engaged in restructuring efforts.  Some of this is transpiring "organically" as organizations downsize while in other circumstances the weak are consumed by the strong(er).  All efforts are being undertaken in order to survive the current slump or perhaps even thrive and exceed market expectations despite the downturn.  The question, however, stands as to whether the restructuring efforts are well thought out or at all consistent with a long-term plan.  Is the restructuring playing to inherent organizational strengths or are actions merely short-term and short-sighted calculations?

My admonition to leaders is to undertake restructuring efforts with significant thought and caution.  As we have seen in too many organizations and sectors, restructuring is often initiated without adequate forethought as to whether it fundamentally serves the long-term goals of the entity.  How do I arrive at that conclusion?  Simple.  I just look at how many organizations are back at restructuring, sometimes doing a complete 180, as little as a year down the road from the last effort.  In doing so, not only have we expended significant time, energy and dollars in the effort (for naught), we may have also lost some of our key personnel in the transition, damaged a corporate culture that has been our competitive edge, but also damaged our own leadership credibility on this or other initiatives.  The costs to badly done restructuring are far more significant than if we had never made the attempt.

My first request to leaders in this regard is to make restructuring your last strategy, not your first.  Governments and politicians generally fall in the category of picking this option first off the table.  It gives the great illusion of action and serious intent without addressing some more fundamental, but less "timely" and time-consuming options.  For best effect organization structure should adhere to the axiom of "form follows function."  What do you require of your organization and what are the entirety of steps or initiatives you have to have in place or tweak to be successful?  Organizational restructuring is inherently disruptive and can cause you people to focus on looking back and around in terms of who they report to, whether their job is secure, and whether the pain is worth the benefit rather than focusing on the quality of customer service and the financial bottom line.

Second, if you are adamant that organizational restructuring is the only thing that is going to get you
the results you require, make sure that you understand who your top performers are and ensure their future in your organization.  There are clearly casualties in any restructuring.  Some intentional and some unintentional.  Without due diligence and effort, some of your best people may decide that this next restructuring presents them with the best opportunity to explore their horizons - at another company.  The irony of change is that your best people have the most options.  If you don't pay homage to that fact you may find yourself with a brand new organizational vehicle that no one is qualified to drive.

Hand-in-hand with having the right people place to drive your new organization structure don't throw the baby out with the bath water.  By that I mean, while you have many intended reasons for making a change in organization structure, don't be blind to other unintended consequences this change may bring.  An organizational restructuring effort is no different than any other major project or change initiative.  Be clear about goals up front, understand constituents and stakeholder interests and power, maintain or enhance clarity of accountability for results and make sure that other systems (e.g., performance metrics, reward and recognition systems) are aligned and collectively support the change you are trying to make with your restructuring effort.

Finally, as you contemplate and implement a restructuring effort, be clear about your current weaknesses and your current strengths.  Together these start to define what your organization is truly capable of achieving and in what time frame.  Build on your strengths and compensate for your weaknesses as you are best able. Also appreciate that you may not - and likely will not - go from Point A to Point B in one fell swoop.  It make take an incremental and transparent approach to change.  More broadly speaking understand your organization's current culture and how that may both assist and hinder your efforts at implementing the structural changes you are contemplating.  To put a finer point on this by way of analogy - don't expect your staff to turn into world class athletes overnight if for the past 20 years you've never even asked them to walk around the block.

As the leader of your organization, it's up to you not just set the grand vision for the future.  You must also effectively manage the transition from the old to the new.  Change is inevitable to be sure but it must be managed and shaped in a direction that is truly aligned with the long-term bottom line of the firm.  It's tempting to think that restructuring is the answer in that it shows decisive action during challenging times.  However, if not well planned and executed it can negatively impact performance and competitive advantage.  And ultimately, it will reflect back on your own leadership credibility - the coin of the realm for the next big initiative you feel compelled to undertake.
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Greg Hadubiak, MHSA, FACHE, CEC, PCC
TEC Canada Chair/Executive Coach/Senior Consultant
hadubiak@wmc.ca

Helping leaders realize their strengths and enabling organizations to achieve their potential through the application of my leadership experience and coaching skills. I act as a point of leverage for my clients. I AM their Force Multiplier.