Looking back on your past reorganisations, would you say that only a quarter of your reorganisations have been successful?
According to McKinsey, only 21% of reorganisations were deemed successful by leaders. It's an astonishingly low success rate.
Reorganising is almost inevitable today. Disruptions by technology, new business models, and social-economic trends oblige all leaders to adapt their organisations to continue to thrive. But while there isn't a definitive way to go about it, the following 10 aspects are often overlooked.
1. Let the business strategy be your north star
Why are you reorganising? If you cannot articulate what will be different for your customers or how it will concretely alter your business financials, I would think twice.
Any reorganisation is worth the effort if it enables you to meet your strategic goals. As the going gets tough, it will get harder to see the woods for the trees. So let the business strategy be your north star. Link all decisions back to your business strategy, including the reason to initiate one.
2. Ways of working are more important than the structure
Copying an organisation structure is no guarantee for success. For example, Apple organises by function despite its size. It has collaborative ways of working that ensures no product develops in silos. But just because it works for Apple, it may not work right off the bat in another large company.
Before you switch to a different organisational structure, assess if it is compatible with how people work together. Alternatively, think about how realistic it is for people to change how they work to make the structure work for you.
3. Align with stakeholders
Who will your reorganisation impact? Don't let your inter-dependencies impact your end customers adversely. Best to pull your stakeholders into the change as early as possible.
Putting the pieces of the puzzle together is complex. But, if you and your stakeholders can agree on the rules of engagement that mutually benefit the business, they can play the devil's advocate and help you see around the corner.
4. Don't expect reorganisation to fix culture
Reorganising accentuates cultural issues as people experience stress. For example, suppose you are an organisation with pronounced silos. The silos will become even more pronounced as people's natural tendency is not to reach across the aisle and align.
So what are the cultural obstacles that could get in the way? Work your response into your risk mitigation plan (yes, you do need one).
5. Beware of politics
Let's get real. Reorganisations threaten power dynamics. So it's common to see people jostling for more authority and power, or at least not to lose the power and control they have.
Beware of the political undercurrent within your direct reports and the layer below. A common mistake is to reorganise around individuals as opposed to fit your talents into the new structure. Instead, make ways to anchor your decision-making for objectivity.
6. Use data
How do you think when your mission accomplished? Use data related to your reorganisation goals.
Most people focus on financial data, but there is so much more. For example, suppose your goal is to increase the speed of decision-making. In that case, you need to consider the number of management layers and the number of decision-makers.
If your goal is to be more customer-centric, you could not do without customer journey data. Using data to measure the progress can also guide you on where you need to fine-tune after the new structure is in place.
7. Don't drag it out
I'm sure you've heard this before, "How long more is this reorg going to take?"
Striving for a perfectly planned reorganisation is counter-productive. Analysis paralysis leads to a loss in momentum and disengagement, all of which impact your bottom line. Launch your new organisation within 4-6 months while the buzz is still there. You can iron out the finer details when the new organisation is in place.
8. Reorganising repetitively is a no-no
If you're about to launch another restructure on a business where bad memories from the previous one still linger, pause and reflect. Are you genuinely making fundamental changes?
Reorganising repetitively within a short duration kills employee motivation. Fine-tuning organisations is undoubtedly less sexy but can be the right thing to do. You might get a better bang for your buck by spearheading improvement initiatives instead.
Dig deeper into the reasons before launching another reorganisation. Don't take away resources that could otherwise focus on your customers.
9. Orchestrate your talent "musical chair"
Seize the opportunity to change up the roles for your talents. Bring in new talent. I am not advocating a total change of your team. I'm promoting the benefit of fresh perspectives. Will your reorganisation fail if you do not make any talent changes? No, but it is a wasted opportunity.
10. Assess skills impact
Learning and development tend to be glossed over or even left out of the discussion. If your new configuration encompasses different ways of working, your people may need new skills.
Look beyond technical skills. Consider the human skills needed (we call them soft skills, even though they are the hardest skills to develop). It's an excellent opportunity to introduce future skills and reinforce the growth mindset of your people.
Conclusion
Reorganisations consume a tremendous amount of resources, both financial and emotional. The outcome has to make a difference to your customers, employees and shareholders. Initiating a much-needed reorganisation is more likely to put you in the 21% of companies that do so successfully.
No two reorganisations look the same. Getting it right takes a good mix of art and science, not to mention a healthy dose of effective leadership.
It is unrealistic to expect reorganisations to be perfect. However, it is perfectly realistic to expect your reorganisation to be worth the effort.
Valerie Tan Ronchail specialises in Organisational Strategies. Start a conversation with Valerie at valerie@mingz.co or LinkedIn
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