When was the last time you went through a company re-org?
Re-orgs seem to be happening more and more regularly, especially with large organizations, and the excuses for them are often tenuous. Within the startup world, there’s buzz that Elon Musk’s mass layoffs at Twitter are providing cover for many other tech companies to implement their own reorganizations. In non-tech enterprises, merely the fear of recession is all that was needed.
Companies not hitting their targets or attempting to achieve some type of transformation, such as cultural, digital, or agile, are all potential reasons for reorganizing portions of the company.
Whatever the reason, the method is often NOT geared towards achieving the desired outcomes. The reality is that the re-org of today tends to be short-term, band-aid solutions. These solutions focus on cost-cutting and “efficiency” instead of asking the more serious question: “what structure will facilitate and incentivize the behavior we need?”
The best-laid ambitions give way to a slash and burn approach where muscle is cut instead of fat. This leads to breeding a skeptical workforce that becomes more disenfranchised.
Ultimately, the result is something that doesn’t make sense for the long-term health of the organization. It ends up contributing towards a culture of fear, angst, and anxiety in the trenches as well as fostering real cynicism and burnout. Leadership loses credibility and great talent keeps their head down to avoid rocking the boat where the latter most likely ends in resignation out of frustration.
A successful re-org can lead to transformative outcomes within an organization. To accomplish this, it needs to be done from the bottom up, instead of the top down. The top of an organization is where the real redundancy often exists. During the Industrial Age, the blueprint for creating, distributing, marketing, and selling products was all held within the center of an organization. Now, the script has flipped. Today, the knowledge exists at the edge of organizations, where customers and changing markets live.
Why is that?
In the past, based on Taylor’s Scientific Management theory, organizations were structured in a manner where people executed on a known blueprint created by management. Small deviations caused small inefficiencies — acceptable when the deviations were necessary to compete in the marketplace.
Today, however, companies are faced with fickle consumers, competition for their attention, as well as ongoing external disruptions such as war, pandemic, inflation, supply chain issues, and so on. These exist in a landscape that is both volatile, dynamic, and not within the controllable confines at the center of an organization.
Focus on the Edges
The people who experience the volatility firsthand are those on the perimeter of an organization: sales, product management, services, and customer support.
To take advantage of this, there must be a purposeful building of communications from the outside in. This promotes less management redundancy trying to keep up and more alignment, since decision-making can be made based on real-time information. It’s only through this communication flow that market knowledge can be re-contextualized and thereby work re-prioritized.
Additionally, those entities on the edge — hopefully working in agile teams — must be given the power to make decisions. Teams decide on the best way to solve challenges and report those results back to the center. This bottoms-up behavior change drives the company culture many leaders say they want: one based on collaboration, creativity, and trust. And one that results in speed, agility, and custom focus.
The modified structure and communications flow mean the middle layers of an organization can be leaner, while also more proactive and strategic.
The other component of a re-org is how it’s viewed by employees. The traditional way is top-down, where different departments or business units are viewed as separate entities, instead of an integrated whole. Decisions made to cut costs and increase efficiencies lose sight of the mission of the organization:
- Why is the company in business?
- What is the company trying to achieve?
- Who is the business trying to serve?
In rediscovering the organization’s mission, leaders look at the efficiency of completing that mission — not merely the efficiency of the IT department, for example. The efficiency of individual departments without the context of the overall mission is almost meaningless.
Redundant supply chains are financially inefficient, with a cost overhead if one looks only at the supply chain. But redundant supply chains in the face of endless external disruptions may mean the company can continue to serve its mission.
Reorgs within the mission context are accomplished in a more thoughtful way. Budget staffing decisions and resource allocation serve the financial efficiency of accomplishing the mission.
The efficiency of accomplishing its mission can only be accomplished by retaining smart, creative, and motivated people. If a re-org is looked at from a holistic view and conceived from the ground up based on the top-down mission, then it can be an incredibly powerful tool for transformation and growth.
It should be seen as a chance to re-think and re-align the company’s structure, culture, and mission. In this way, it makes for an amazing work environment where people will be happy to contribute, leading to increased retention and more engaged employees. This can create a culture that is ultimately driven by the mission of the company, which in turn will generate the results the organization is hoping for.