5 Keys to a Successful Reorg

The Covid crisis is still a huge weight on the economy. Many companies have been forced to restructure because of this crisis, simplifying their structure and reducing personnel. Several others have tried to stay afloat to avoid leaving the team hanging. But with a prolongated duration of the pandemic, it is very possible they will have to choose between shotting down operations or making big changes to survive.

Whether to reduce costs, refocus efforts, reinvent the business model, or, in cases such as those in the technology industry, to maximize growth, a reorganization is a process that, if well done, produces positive impacts. But it is often taken lightly, producing deficient results, affecting the work environment and the company’s productivity.

Whatever the nature of the need, always keep in mind the following elements to have a successful reorg:

  1. Have a clear strategy. The direction of the company has be extremely clear for all those involved so that the structure enables the achievement of the goals established in the strategy. It is possible that, given the market changes, the strategy may have to be revised. Having clear objectives from the beginning paves the way and helps avoid mistakes. For example, a reorganization that only focuses on cost can affect the entity’s effectiveness in fulfilling its reason for being. You must have an integral vision.
  2. Know the operation and the environment. To identify opportunities, a clear understanding of the different areas, their processes and functions is needed. Understanding what makes us different, what activities we do well, and which are easily replicable, sheds light on how to distribute resources. But having an internal view is not enough. Benchmarking and comparing our practices to that of the industry is key. Are we cost efficient producing this vs other companies? Can we do this function competitively? Understanding the company’s position relative to the market allows us to identify improvement opportunities.
  3. Generate consensus. Evaluating organizational changes with the team can be uncomfortable. The most affected people could be sitting at the table. However, to facilitate the execution of the project it is important to have open discussions and consider multiple options. Some managers tend to focus on boxes (who reports to whom), when what is important is how it works (processes, capabilities, behaviors, etc.). Evaluating alternatives allows considering the pros and cons of each option. An open and structured discussion puts you in a better position to manage change.
  4. Closely follow up on the implementation. After all the analyses to adjust the structure, the layers of different levels, reviewing the teams and their functions, and getting an approved design, we still have implementation left. The complexity of the implementation is directly proportional to the size of the changes in the structure, and it requires adequate resources to do it successfully. Whether revising job descriptions, adjusting payroll, costs, and revenues, changing systems, or accompanying impacted personnel, it is necessary to establish a realistic schedule and follow up closely.
  5. Communicate, communicate, communicate. Reorgs without proper communication can generate an uncomfortable, and even hostile work environment. Uncertainty generates stress and anguish, reducing productivity. There must be communication in every phase of the process. If the leaders clearly communicate the reasons for the changes and the objectives, with constant, sensible, and personalized communication, the change will be smoother. On the other hand, fomenting open communication and feedback can bring in better solutions and corrective measures that improve overall results.

Even with these recommendations, reorganizing a company may be difficult. It is not realistic to think everything will go perfect from the beginning. It involves the human side and affect the entire company. But all companies are going through some type of disruption and many will have to face change.

Change is constant, only adapting can we evolve. A well-managed reorg will allow the company to maximize value it can generate. Those who can adapt to their environment will the ones who win in the long run.

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