It’s not everyday I get to discuss corporate restructuring with an expert but recently I had the rare opportunity to interview a friend and colleague with lots of experience in this area. Jennifer Tice is a Learning and Development executive with experience in major corporations including one of our clients, Fidelity Investments. She has participated in numerous restructuring efforts and I got to ask a few questions I’ve always wanted to ask of a top executive!

1. Why do companies embark in restructuring and reorganization efforts?
2. What are some common factors that determine the success or failure of a restructuring process?
3. What are some common challenges mid-level managers face during reorganizations?
4. How do you help them balance their personal agenda and the company agenda?
5. What would you advise a top-level executive who is considering restructuring the organization? What should they definitely do? What should they definitely not do?
6. How should change management be used during a reorganization effort?

MS: Why do companies embark in restructuring and reorganization efforts? What usually drives that?

JT: There are a few main reasons. The most commonly talked about is usually to improve cost, process, etc. and those are very noble reasons, but there are other reasons that come into play. For example, the leader may think that the company is stale and wants to drive some innovation and believe that reorganizing will drive innovation. Whether it will or not may be an empirical question…there may be other ways to drive innovation. But there are two other reasons that may not be talked about, one is power and control of assets, and another one is career advancement for an executive. First, we think of organizations as eco systems but organizations are also geo political systems – leaders have some amount of organizational capital or sovereignty (i.e. who depends on who, who has more power than who), so most reorganizations are not just cost cutting but also may be some combination with geopolitical reasons, although these reasons not usually mentioned in public memos. Another reason usually not talked about openly, but rather in closed-door succession planning or retention meetings, is a reorganization to give a leader an opportunity to grow. Maybe someone wasn’t doing well over there so they’ll move him to someone else. They have growth potential that they need to develop. Then, the leader will want to put their stamp on the organization by reorganizing.

MS: What are some common factors that determine the success or failure of a restructuring process?

JT: I think creating clarity for urgency of change. I’d put that as number one, in other words, stating the ‘why’ and what the urgency is. If we don’t do that, it’ll be a definite failure because it will feel like activity for activity sake and people will fight it all the way. We have to be so clear and so crisp as to why the organization has to do this. Also, changing the names in the boxes won’t change how people do their work; you need buy-in up-down, right-left. You need to know your people and they have to understand the ‘why.’ If you don’t have that, pretty much you’re going to be in trouble. Also, you have to communicate ‘ad nauseam’…and not everyone needs the same messaging, you have to continually over communicate. Sure failure is to just send the memo out and let people experience it. When you think you’ve done enough communication, do it again and then again. Make everyone a part of it. People don’t like things done to them. People are not opposed to change, people love change, however, what people don’t like is losing something. So if you are talking about successful reorganization, you are playing with people’s life – a great part of their day, their life’s investment, is spent working. So we want to involve the people and by doing that, they will adopt change faster as they are part of it. Be clear and honest about the loss and clear about the change. You have to honor the loss. You have to pay attention to the individual loss/change process. Take the time. The time you save in lost productivity more than makes up for the time spent doing real focused data gathering, real involvement. Don’t just give it lip service…and you end up with a better product at the end. If you have the right strategy, implementation becomes very easy.

MS: What are some common challenges mid-level managers face during reorganizations?

JT: They are responsible for implementation and they are the ones that are really stuck delivering the message from the top. They are the one’s trying to interpret and create clarity for people and it probably hasn’t even been clear to them! Their challenge is that they have to put on the good face, the face of the company, when they may not even believe or understand what they are being asked to do. Mid Managers feel the same as everyone, yet they have to put on the good face for everyone else. That’s one of the hardest jobs in the organization. So having a good mid-level manager is gold. You want to seek them out and have them be your ambassadors. And, you want to give them the tools and messaging so they don’t have to struggle. In my experience, these are the folks that are usually struggling the most, wondering, “Am I going to survive this?”

MS: How do you help them balance their personal agenda and the company agenda?

JT: Mid-level managers are like the shock absorber in the organization. Having a really good leader and change management skills at that level is very important. And being very clear about their role in the change and their outcome is imperative.

MS: What would you advise a top-level executive who is considering restructuring the organization? What should they definitely do? What should they definitely not do?

JT: Clarify the cost vs. the gains and get some data first, why are we doing it, what would we gain? Are we willing to go through the loss of production? Then see who besides the immediate organization function is going to gain or lose, who will benefit and who will lose? Have clear answers to these key questions. Last, sell your vision, don’t push it. Pushing a vision will not work. It’s a sell. You are not the only game in town. You can loose employee engagement easily during this time. Create better urgency and create that buy-in.

MS: I have to ask…how should change management be used during a reorganization effort?

JT: It’s the most important thing we do. I’ve seen the most elaborate plans and one-pagers and they both failed. You’ve got to first understand what the reorganization is going to do, what’s the purpose? What’s the gain and what’s the loss. Also, remember that change management and a communications plan are two different things; they are both important but different. The effort should be thoughtful and have a beginning and an end. People should know when you’ve reached the end of change. A change management plan should set a goal; you have to have a finish.

Hope you find this information useful. Please share and/or leave your comments and questions below.