Restructuring is all too often the go-to tool for many organisational issues. Poor communication, lack of collaboration, inconsistent performance, lack of alignment or siloed working will often result in a restructure. A Boston Consulting Group survey in 2017 found that only half of organisations who had recently reorganised deemed the effort as successful.
Reorganising your organisation is often costly, time-consuming, full of financial and reputational risk and disruptive to operations.
Restructuring can create uncertainty, erode trust, and negatively impact employee morale and engagement. So, if the stakes are so high, why do organisations keep opting for this and what are the alternatives?
1. Diagnose the underlying issues
What happens in an organisation is not simply a matter of structure, processes, and systems but also one of behaviour – how people act, interact, and make decisions. Some behaviours are so deeply rooted they cannot be easily modified by a structural change alone.
When assessing the case for a restructure it’s therefore essential to diagnose and address the fundamental issues, rather than merely tackling the symptoms.
Instead of opting for a full-scale restructure, explore more agile and incremental approaches that allow for continuous improvement and adjustment.
We collaborated with a rapidly growing, vibrant professional services firm that was struggling with problematic behaviour patterns, such as excessive reliance on managers for decision-making and a diminishing culture of innovation. Repeated reorganisations had done little to mitigate these issues.
To better understand the situation, we turned to the employees for their insights and found an unexpected influence. The culture of a high street bank, one of their clients, had gradually permeated their entrepreneurial culture due to regular interactions and onsite audits.
By partnering with the firm’s leaders and teams, we were able to identify this influence and subsequently guide the firm in recalibrating their culture.
2. Optimise your current structure
Before launching into a restructure, explore if you have fully optimised your current structure. All organisation designs come with trade-offs.
For example, with a functional design, where employees are grouped based on their specific skills and knowledge, siloed working is a recognised byproduct of this.
3. Try agile and incremental approaches
Instead of opting for a full-scale restructure, explore more agile and incremental approaches that allow for continuous improvement and adjustment.
Implementing small changes and closely monitoring their impact can be a more efficient and cost-effective way to drive organisational progress.
It can be extremely useful to clean up your organisation and put your house in order before embarking on a restructure.
4. Tackle dysfunctional behaviour
Your managers may be struggling to lead well in your current organisational design. They may lack the skills to resolve conflict or build strong bonds across units.
The solution lies in providing leadership training, improving governance, and addressing uncooperative individuals or units rather than a restructure.
Leadership behaviour profoundly affects an organisation. A leader engaging in uncooperative behaviour is likely to have an impact both upstream and downstream.
To tackle this, some imaginative companies opt for a temporary transfer of the offending manager, rather than reshuffling reporting lines.
By moving them to the team affected by their behaviour or decision-making, the individual can experience firsthand the impact of their actions, which promotes self-awareness and encourages behavioural adjustment.
5. Clean house
It can be extremely useful to clean up your organisation and put your house in order before embarking on a restructure.
You can ensure increased coordination and cooperation between interdependent parts of the organisation by taking a more holistic approach.
It’s useful to involve team members that represent all levels of the work in testing the assumptions you have made.
This could mean bringing teams together to clarify their expectations of each other, run regular retrospectives on how they are working together, or agreeing a way of working that builds stronger social bonds between them.
You can clarify who has decision making rights on certain issues, what to do when an issue escalates and what are the individual and shared accountabilities for critical tasks.
6. Review non-essential projects and policies
Most organisations have too many priorities, which leads to a lack of focus and duplication of effort. Deprioritising or killing off non-essential projects and clarifying to the whole organisation what is most important can liberate resources and energy.
Review policies and procedures that may be holding the organisation back. Policies that restrict employee flexibility and initiative are often the scar tissue of previous mistakes that are unlikely to happen again.
For information, know-how and innovation to flow fast, without impediment, it doesn’t require a change of reporting lines and department, but rather an environment of psychological safety, where employees feel trusted and treated as adults.
7. Avoid overusing promotions
You can also be inadvertently adding fuel to the fire and unnecessary complexity by overusing promotions to boost employee performance. Having a slew of employees with ‘senior’ in their title rarely adds much value. It results in additional layers of employees, leading to confusion, and reduced productivity.
Behaviour and culture can impact an organisation as much as structure.
8. Involve your people
Before you go for the nuclear option, it’s useful to involve team members that represent all levels of the work in testing the assumptions you have made that you need a restructure.
Due to the sensitive nature of design, the process is often restricted to a select few managers. This can lead to a phenomenon the military calls ‘incestuous amplification’ leading to narrow thinking and a failure to understand the complexity of issues.
Your people will understand how the organisation works, both formally and informally, better than any senior leader. This approach also builds trust, increases motivation, and generates innovative ideas.
Your next steps
Restructuring is often viewed as a panacea for organisational woes, but it is far from a guaranteed solution and comes with significant costs and risks.
It is crucial to first diagnose underlying issues before making such a substantial move, as behaviour and culture can impact an organisation as much as structure.
If you are contemplating an organisational restructure, then here are two next steps:
- Self-reflection: Spend time reflecting on the root causes of the issues in front of you. Are they truly structural, or are there elements of culture, behaviour, or inefficient processes at play?
- Employee involvement: Start a dialogue with your employees. Not only will this provide valuable insights into the operational and cultural dynamics of your organisation, it will also build trust, increase motivation, and potentially circumvent the need for a full-scale restructure.
If you enjoyed this, read: Prevention over cure: How OD can save you from failure.
