The goal of organizational transformation is to align your corporate culture, structure, and talent with your business strategy. There are several reasons you may have to reorganize the operations or other structures of your organization, including the following scenarios:.
Any merger or acquisition invariably requires a restructuring exercise in order to eliminate duplicate work systems, incorporate preferences of new managers, and ensure consistent procedures.
Organizational transformation enables companies to adapt to changing business conditions. Vertical management hierarchies are being replaced by simpler, more horizontal organizational structures. Adopting an agile, flat and open operating model requires a restructuring approach that facilitates departmental collaboration in a truly integrated manner.
As businesses adopt new strategies or alter their product mix, some staff are made redundant. In such situations, organizations may need to downsize their workforce through restructuring. During this process, job descriptions are reviewed and teams are reworked to ensure that the remaining workforce is able to complete required jobs without being overworked.
Innovations in technology that influence businesses may require organizational transformation to keep up with the times. Changes that result from the adoption of new technology is common in most organizations. That approach is best if your organization is completely broken although such cases are rare or is facing a fundamental market shift that cannot be navigated under the current model.
That approach is best when the overall organization works well or the focus is on cutting costs. The analysis you conducted in the first two steps will help you make the choice.
If in doubt, choose the second approach. A common mistake in this step is to focus on what the organization looks like its reporting structure, for instance and forget about how it works management and business processes and systems; and the numbers, capabilities, mindsets, and behaviors of its people. In our experience, the latter is usually more important than the former. Finally, you should explicitly choose from a number of options for exactly how to restructure your organization.
Any solution has its downsides; only by weighing alternatives will you see what you might gain and what you might lose. Too often leaders realize late in the day that they missed something in the original design.
At the media company, the top 12 global business leaders gathered offsite to debate the relative merits of three options. They were assigned to teams—one for each option—and asked to advocate for their given option no negatives allowed and to answer questions from the other teams. Leaders who were expected to dislike a particular model were deliberately put on the team for that model: For example, the most autonomous local leaders were put on the team for the most centralized option.
During the debate it became increasingly clear that the most centralized model was the only one that would provide sufficient benefits to justify the disruption and the human cost of the change. At the end of the meeting, nine of the 12 leaders voted for that option, and the specific concerns of the remaining three were accounted for in the detailed design.
Through the workshop, we came to a good answer, and—perhaps more important—we brought our leadership team along with us. After step 3, most executives stand back, trusting their teams to handle the details of the new organization and the transition plan. External consultants usually clock off at this point as well. The secret is knowing all the elements that need to change and planning the changes in the right sequence.
For example, you must create new job descriptions before the jobs can be filled, and they must be filled before you start location moves, potentially across countries.
All this takes effort, and if you miss something in any area of the detailed design—structural changes, processes and systems, or people—you may either hold up the whole reorg or find that your new organization has been launched half born. Executives at the media company put in extra effort at this stage. The CEO continued to spend significant time on the reorganization; leaders were appointed to their new roles before the switchover so that they could begin to own and steer the work; and the reorg project team members moved from managing the process out of HQ to visiting the regional businesses that would be most difficult to transition and working with the local management teams to hammer out the plan.
Of course, this process highlighted previously unappreciated challenges—such as the fact that customer segmentation, which was clear at the global level, was sometimes less clear in a few countries where customer groups blended together; and the need to account for acquisitions that were midway through integration when the detailed design was developed.
This prompted the company to make some tweaks and exceptions to its new structure and processes and to lengthen transition periods for some units.
One activity around developing content, which had been allocated to a new business line, was returned to its original unit, because synergies that had been persuasive on paper turned out to be less impressive in practice.
Back-office activities, untouched by the revenue-focused reorg, were further consolidated afterward, bringing cost savings into the mix. Within three years of the reorg, the company had met its goal: The issue of flat revenue had been addressed and the growth target met.
You have 1 free article s left this month. You are reading your last free article for this month. Subscribe for unlimited access. Create an account to read 2 more. If you do find that restructuring is necessary, however, it's important to handle the process carefully.
On the other hand, if the entire company is included, the transformation can be too sluggish, and self-serving interests may get in the way. It's best to find a middle ground by including a leader and a small team of trusted advisers. These are usually the individuals who have enough confidence in their position with the new company to put their self-interest aside. While there's no perfect science to how reorganization unfolds, here are some pointers:.
As is the case with any organizational change , good communication is critical. And good communication is not just making a one-way announcement about the change.
If you treat people like intelligent adults, the respect you show will be returned, along with stakeholder support. Once you've communicated with the necessary people, don't be shy about asking for their help. It's human nature that people will support what they helped create, and while your team may not have had an opportunity to create the new organizational structure, they can play a huge part in implementing the change. It's another opportunity for you to get valuable input to tweak the new structure.
Restructuring is always disruptive and fraught with challenges and risks. It should never be taken lightly, and any changes should always have a shelf life of at least five years.
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