19 October 2005

How to screw up a reorganization initiative

You can't avoid losing some productivity when you reorganize. But many companies endure prolonged productivity losses, lose their best people, and end up worse off than they started. Don't be one of them.

A reorganization nightmare
A global network and bandwidth provider decided to reorganize its sales team, focusing some individuals on hunting (new account acquisition) and others on farming (retention and growth of existing accounts). Salespeople would be asked which role they preferred, but final assignments would be made by their managers. At the time, all salespeople were responsible for both hunting and farming.

How it appeared to the frontline
A regional sales manager called together his six-person team. He explained that the sales force was going to be reorganized and that the change would be finalized the following Tuesday. The sales team asked about compensation: Would it change? If so, how? The manager had no answers. He asked them which roles they preferred. All six wanted to be hunters. A couple of days later he came back to the team and said that the company had decided to wait till Q1 of next year to implement the plan. Did the team breathe a sigh of relief? NO.

Why high performers leave
I heard this story on a recent airplane flight, from a woman who was the top performer in her region the last three years in a row and a regular member of the president's club. She was heading for an industry trade show and — rather than selling — her primary goal was to land a new job. Why? She didn't understand the reasons for the change. She worried that she might be forced into a farmer role. She was afraid that as one of two women on the team, she wasn't a member of the “boy's club,” and as such would get the short end of the stick. She didn't understand how the decisions would be made or when. She wondered this was a management attempt to thin the ranks.

Why most reorgs fail to change anything
Companies reorganize because something is not working, but the way the company is organized is not always the problem. A reorganization initiative can be a way for senior executives to blame the system or process rather than taking a penetrating look at their management approach or strategic vision. Often the real issues are hard for insiders to see. Industry dynamics change and business ecosystems evolve in ways that can be hard to decipher.

Five things that you can do to avoid failure
Here's how you can give your reorg a better chance of success:

1. Prepare: First, determine why things needs to change. If you can't answer this question, then don't do it! If you have a good reason to change, prepare to communicate it clearly and succinctly — people must feel the pain of your current situation as acutely as you do. If possible, communicate the issues early and ask for feedback. If people feel involved in the planning stages, they will be more comfortable later.

2. Make decisions: Who will report to whom? How will compensation and metrics change, and why? Any change that affects people's pay and job roles will create deep anxiety, at least in the short term. Keep comp plans simple and easy to understand — for many, complexity implies trickery and increases suspicion.

3. Visualize the change: Show people where they will fit and what role they will play. Show them how the old way compares to the new way so they can see the benefits of change. Visualize the work flow so they can see how the change will make their lives easier and deliver more value to customers. Show them the path: how do you plan to get from here to there? What will happen, and when?

4. Draw the org chart: This will increase clarity and also help later, when you will need to communicate with suppliers, customers, partners and investors. Do it now, and keep it current moving forward.

5. Be clear and consistent: When you roll out this change, remember that emotions will be strong and tensions high. Make sure your messages are simple, brief, and the rationale for change is crystal clear — if anything is vague or uncertain, people will write their own stories.
Once you have committed to the change, don't look back. GO!

Originally published in NO2GO.

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