Guidelines for Reorganizing your Department or Company

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“Reorganization” is one of those business subjects that usually evokes a cynical response and can fill pages of Dilbert cartoons. This cynical reaction is well deserved, since it is often the result of an organizational design process that started and ended with an organization chart. This method is lazy management and poor leadership. People don’t understand the rationale, so they fill in the blanks with cynicism and skepticism.

Most managers don’t decide to reorganize on a whim – it just seems that way, usually because of poor design or lack of communication and change management.

The typical reasons a manager decides it’s time to reorganize are:

1. A key person has left, leaving a void and an opportunity to question the existing structure. In contrast to what management textbooks will tell you, organization charts are usually built around individuals, not “positions.” When a key individual departs, the rationale for the position often leaves with them.

2. There are problems (inefficiency, talent mismatches, overlapping or underlapping roles, workload imbalances, or other operational issues). Work is not getting done, and/or it’s not being done well.

3. It’s required in order to seize a new opportunity (for example, a new market, product, or service). Your current structure just wasn’t designed to support your new business objectives.

While these are all good reasons, it’s important to consider reorganizing as just one possible alternative. There are often lots of less disruptive ways to achieve the same objectives.

Who should be involved?

If it’s just the leader of the department, there’s a missed opportunity for critical input and buy-in.

If it’s the entire management team or more, it can be too slow, and natural self-serving interests get in the way of doing what’s best for the business.

The best choice is usually something in-between; the leader and a small team of trusted advisers. They are usually the individuals who have enough confidence in their future with the new organization to be able to put their own interests aside.

The “process”

I’m sure there are ALL kinds of ways to go about this. I’ve pulled all-nighters in rooms with dozens of flipcharts, post-it notes, and take-out food containers, and it’s never come close to what I’ve learned in books and courses.

While there is no perfect science to how to do it, but here’s a few things that seem to work:

1. Start with a strategy. 
It’s critical to know where the organization or team is going – for example, what’s important, what’s not, and what are the goals? While this may sound obvious, it’s an overlooked step. Don’t have a strategy? Then it’s time to create one before you start messing with the organization chart. Structure should always follow strategy. A new organization chart is not a strategy!

2. Develop your criteria.
List the problems you are trying to solve and/or opportunities.

Then weigh (high, medium, or low) each one by priority. This becomes the criteria that you’ll use to evaluate design alternatives, and to measure your success.

3. Develop and evaluate design alternatives.
I’ve seen a lot of teams fall in love with one idea and then spend all of their time trying to justify it or make it perfect. Instead, try to come up with multiple alternatives (three to four), and then rank those against your criteria. The reality is none of the options will ever be perfect – there will always be trade-offs and risks.

Take the best one, and then come up with action plans to mitigate the risks.

This is also a good time to discuss other alternatives that DON’T involve reorganizing. Sometimes, the best change is no change.

4. Test the final design with scenarios.
Spend time testing the design by discussing how various business processes would work within the new structure.

These “what if” discussions help fine tune the structure and clarify roles.

Change Leadership

See this post on ”Ten Models for Leading Change.”

Even the most perfect design could fail to meet your objectives, or take a lot longer, if there’s no change plan. Again, at the risk of oversimplifying a very complex topic, there are two critical things to pay attention to: communication and involvement.

Communication needs to be much more than one-way announcements about the change. Stakeholders, including employees, will be more likely to get on board if you not only share the “what” and “why,” but tell them about the alternatives you didn’t consider and why you didn’t. Let them know you realize there isn’t one perfect choice – acknowledge the potential disadvantages of the choice you made, and share your plans to address those areas. This kind of candor and authenticity is better than trying to “sell” your change as the perfect solution. When it comes to organizational structure, there is no perfect design. Every design has its inherent flaws – it’s a matter of picking the lesser of evils. If you treat people like intelligent adults, you’ll get the same amount of respect and support in return.

Don’t expect people to understand it or buy into it right away – chances are, you didn’t at first (see “the marathon effect”).

More importantly, ask for your team’s help in making it work. This is where involvement comes into play. People will support what they help create. While they may not have had an opportunity to create the new organizational structure, they can play a huge part in implementing the structure. It’s another opportunity to get valuable input in order to further fine-tune the structure.

Reorganizations are always disruptive, and fraught with challenges and risks. They should never be taken lightly, and should always have a shelf life of at least a few years. Follow these guidelines and you will have a better chance of achieving your objectives and minimizing disruption, anxiety, and cynicism.