Change is Most Powerful When It Comes From the Top
Refresh Your Organisation to Increase Power
How often do you change the structure of your organisation? Recent research suggests that many organisations, are in a nearly permanent state of organisational change.
One plausible explanation for the continuous need to change is that, every time an organisation switches direction, it alters it structure to deliver the hoped-for results. Rather than small, incremental tweaks of the kind that might have been appropriate in the past, today’s organisations often need regular material change.
Frustratingly, it also appears the regularity of organisational redesign reflects a high level of disappointment with the outcome. According to the research, less than a quarter of organisational redesign efforts succeed. Almost half run out of steam after getting under way, while a third fail to meet objectives or improve performance after implementation.
The good news is that organisations can do better—much better. Success doesn’t just mean avoiding the expense, wasted time, and morale-sapping scepticism that invariably accompany botched attempts; a well-executed change program pays off quickly in the form of better-motivated employees, greater decisiveness, and a stronger bottom line.
Why Restructure in the First Place?
Organisational redesign involves the integration of structure, processes, and people to support the implementation of strategy and therefore goes beyond the traditional tinkering with lines and boxes.
When do executives know that an organisation isn’t working well and that they need to consider a redesign? Sometimes the answer is obvious: say, after the announcement of a big new regional-growth initiative or following a merger. Other signs may be less visible—for example, a sense that ideas agreed upon at or near the top of the organisation aren’t being translated quickly into actions, or that executives spend too much time in meetings. These signs suggest that employees might be unclear about their day-to-day work priorities or that decisions are not being implemented. A successful organisational redesign should better focus the resources of a company on its strategic priorities and other growth areas, reduce costs, and improve decision making and accountability.
Focus First on the Longer-Term Strategic Aspirations
Leaders often spend too much time on the current deficiencies of an organisation. It’s easy, of course, to get fixated on what’s wrong today and to be swayed by the vocal (and seemingly urgent) complaints of frustrated teams and their leaders. However, change that merely address the immediate pain points often ends up creating a new set of problems. It’s necessary to be clear, at the outset, about what changes are intended to achieve and ensure that this aspiration is inextricably linked to strategy.
Take Time to Survey the Day to Day
The biggest and most common mistake is not spending sufficient time assessing the state of the organisation ahead of the change initiative. Managers can too easily assume the current state of affairs is clear and that they know how all employees fit into the organisational chart. However, it’s often the case the data managers use are often inaccurate or out of date.
Knowing the numbers is just part of the story. Leaders must also take time to understand where the lines and boxes are currently drawn, as well as the precise nature of talent and other processes. That helps unearth the root causes of current pain points, thereby mitigating the risk of having to revisit them through a second redesign a couple of years down the road. By comparing this baseline, or starting point, with the company’s strategic aspirations, executives will quickly develop a nuanced understanding of the current organisation’s weaknesses and of the strengths they should build on.
Be Structured About Selecting the Right Blueprint
Many companies base their preference for a new structure on untested hypotheses or intuitions. Intuitive decision making can be fine in some situations but involves little pattern recognition, and there is too much at stake to rely on intuition in organisational redesign. Almost four out of five survey respondents who owned up to basing decisions on “gut feel” acknowledged that their chosen blueprint was unsuccessful. In our experience, companies make better choices when they carefully weigh the redesign criteria, challenge biases, and minimise the influence of political agendas.
The unique mix of strategy, people, and other assets within a company generally requires an individual answer to things like role definition, decision-making governance, and incentives, albeit one based on a primary dimension of function, geography, or customer segment. The key is to get the right set of leaders reviewing options with an open mind in the light of redesign criteria established by the strategic aspiration.
Be Rigorous About Drafting in Talent
One of the most common—and commonly ignored—rules of organisational redesign is to focus on roles first, then on people. This is easier said than done. The temptation is to work the other way around, selecting the seemingly obvious candidates for key positions before those positions are fully defined.
Competition for talent ratchets up anxiety and risk, creating a domino effect, with groups poaching from one another to fill newly created gaps. This is disruptive and distracting. A talent draft that gives all units access to the same people enables companies to fill each level of the new organisational structure in an orderly and transparent way, so that the most capable talent ends up in the most pivotal roles. This approach promotes both the perception and the reality of fairness.
Identify the Necessary Mind-Set Shifts – and Change Those Mind-Sets
Leaders of organisational-redesign efforts too often see themselves as engineers and see people as cogs to be moved around the organisational machine. Organisations, however, are collections of human beings, with beliefs, emotions, hopes, and fears. Ignoring predictable, and sometimes irrational, reactions is certain to undermine an initiative in the long run. The first step is to identify negative mind-sets and seek to change the way people think about how the organisation works. Actions at this stage will likely include communicating a compelling reason for change, role modelling the new mind-sets, putting in place mechanisms that reinforce the case for change and maintain momentum, and building new employee skills and capabilities.
Establish Metrics that Measure Short and Long Term Success
Nobody would drive a car without a functioning speedometer, yet a surprising number of companies roll out an organisational redesign without any new (or at least specially tailored) performance metrics. Some older ones might be relevant, but usually not the whole set. New metrics, typically focusing on how a changed organisation is contributing to performance over the short and long term, are best framed at the aspiration-setting stage. Simple, clear, key performance indicators (KPIs) are the way forward.
Make Sure Business Leaders Communicate
Any organisational redesign will have a deep and personal impact on employees—it’s likely, after all, to change whom they report to, whom they work with, how work gets done, and even where they work. Impersonal mass communication about these issues from the corporate centre or a program-management office will be far less reassuring than direct and personal messages from the leaders of the business cascaded through the organisation. An interactive cascade (one that allows two-way communication) gives people an opportunity to ask questions and forces top leaders to explain the rationale for change and to spell out the impact of the new design in their own words, highlighting the things that really matter. This can take time and requires planning at an early stage, as well as effort and preparation to make the messages compelling and convincing. When a top team has been talking about a change for weeks or months, it’s all too easy to forget that lower-ranking employees remain in the dark.
Manage the Transitional Risks
In the rush to implement a new organisational design, many leaders fall into the trap of going live without a plan to manage the risks. Every organisational change plan carries risks such as interruptions to business continuity, employee defections, a lack of personal engagement, and poor implementation. Companies can mitigate the damage by identifying important risks early on and monitoring them well after the redesign goes live.
Tracking operational, financial, and commercial metrics during a design transition is helpful, as are “pulse checks” on employee reactions in critical parts of the company. Clear leadership accountability for developing and executing risk-mitigation plans is so important that this should be built into regular appraisals of managers.
In our experience the most successful organisations combine stable design elements with dynamic elements that change in response to evolving markets and new strategic directions. Corporate redesigns give organisations a rare opportunity to identify the stable backbone and set up those elements ripe for dynamic change. Successful leaders and successful companies take advantage of such changes to “rebuild the future”—but a landscape littered with failed efforts is a sobering reminder of what’s at stake. Following the nine simple rules described in this article will increase the odds of a happy outcome.
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