Let’s Be Frank: When in Doubt – Reorganize!

By Inspector Frank. October 27, 2022

Editor’s Note:  Writing under the pseudonym Inspector Frank, the author of this column offers a first-hand, candid view of what he has witnessed throughout his career. His purpose in sharing these experiences and opinions is to encourage readers to think deeper about what they do, why they do it, and the possible impact of their decisions.

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Have you ever had the pleasure of being involved in a company reorganization? They can happen for various reasons, some of which are not a lot of fun. Maybe your company was downsizing; maybe it had just been taken over or merged. Maybe there doesn’t appear to be any good reason.

"We trained hard – but it seemed that every time we were beginning to form into teams, we would be reorganized. I was to learn later in life that we tend to meet any new situation by reorganizing. And what a wonderful method it can be for creating the illusion of progress while producing inefficiency, confusion, and demoralization."

- Gaius Petronius Arbiter, 1st Century AD (attributed)

Reorganizations can apparently have a beneficial effect on how an organization operates, but they can also have some very detrimental effects. One of the big ones is pointed out in the quote above. A reorganization can break up existing teams that are functioning well and it can take a long time to rebuild those teams into cohesive work groups.

I have also found that reorganizations can be a convenient way to show the board and shareholders that “things are happening” when in reality, nothing is happening. A reorganization of existing personnel can be a great way to give the illusion of progress without accomplishing much and without having to spend more money through the hiring process. Or, for that matter, actually putting effort into dealing with the cornucopia of personnel issues that plague most bigger organizations.

I wonder, as Gaius did 2000 years ago, if reorganizations don’t serve any real purpose except as a way to provide the illusion of change and progress. Maybe if the CEO or senior leadership is under pressure, and maybe their jobs are at risk, maybe then a reorg looks like an easier/better solution than actually putting in the work to fix an entrenched bureaucracy…

Sometimes people are even rewarded as they invent new job names and titles, perhaps even with a little pay bump to match! It can definitely make people feel optimistic about the general outlook. Who doesn’t want a more grandiose title to announce on LinkedIn… a bump in pay… an excuse not to do work for a while…?

But the big effect of a reorganization on workers and employees is always to make them worry about what is going on and how the changes will impact them. I have witnessed multiple cycles of reorganizing/restructuring at various facilities where corporate and senior management were trying to put a wonderful opportunistic spin on it. Most employees will just look at that announcement and immediately start to fear for their position, scope of work, and/or compensation.

It also tends to grind productivity to a standstill. In fact, I have never seen a reorganization not have the net effect of being a total waste of resources and money -- unless you are preparing a slash-and-burn style “streamlining.” Although, that inevitably causes a loss of competence because almost everyone who is any good at their job, even if they made it through the reorg, is now updating their resumes.

At base, the real benefit of a reorganization is to hide management incompetence. It gives everyone two excellent excuses:

  1. My last position was too “something;” too overloaded, too difficult, too much span of control, too much work (more than one position was needed), etc. “That’s why I appear to have accomplished nothing in that position; after the reorg we will have that problem sorted because we created three new upper management positions to cover off that one old position.”
  2. I am learning my new position (and will be for many months). “That’s why I am not yet rocking this out. The whole company is getting on their feet and really only starting to sink their teeth into their new roles.”

I think you’re starting to see that I do not have a lot of respect for reorganizations. That’s not entirely true; it’s more that in my entire working career I have only been part of one change that was for the better and that was executed in a somewhat beneficial and efficient manner. So, I am highly skeptical when I hear the term and I am highly skeptical of consultants who recommend it. I am also highly suspicious of the methods I hear proposed or have seen tried.

Do reorganizations work? By my observations they do not. And they are not necessarily intended to.

The ones that do seem to work out over a longer period is when the restructuring has put some effort into maintaining (or creating anew) the culture or personnel environment of the workplace. If the reorganization seems to go against the existing business culture, the already problematic process will likely go even more off the rails, unless a lot of thought has been put into what that desired change should look like. I have seen very few organizations put serious thought into what "culture » they would like to have, with or without a reorg.

That leads me to a few questions:

  1. Are reorganizations ever a good idea?
  2. What is company culture?
  3. How do you make a reorg work?

Are reorganizations ever a good idea?

Apparently, not very often. According to various studies I have been reading that were done across multiple companies and industries, more than 80% of reorganizations fail to deliver the desired change in the time planned and under budget, and around 10% cause actual damage to the organization. Those aren’t great numbers. If I had those stats as an equipment integrity professional, I wouldn’t be working long. Reorganizations, and the uncertainty they provoke about the future, can cause greater stress and anxiety than outright layoffs or cuts. I think the big reason this problem of poorly run reorgs occurs is that the senior managers involved don’t understand the existing company culture and therefore don’t have clear objectives for the reorganization and the desired outcome.

What is company culture?

I am going to keep this short because as I am writing this, I realized I have a lot I want to say about company culture, so I think I have another article to write. But let me say a few things:

According to a McKinsey study done at over 1,800 companies in 2018/2019, only 28% of executives said they understood their organization’s culture. Is that a bad thing? I think it’s horrible. Especially if you are trying to reorganize something that you don’t fully understand.

The simplest way I have seen the concept of company culture described is how you do what you do in the workplace. It's the sum of your formal and informal systems and behaviors and values, all of which create an experience. At its core, company culture is how things get done around the workplace.

If the point in a reorg is to improve how things are done (save money, improve efficiency, etc.) then understanding how your organization “does what it does” is pretty important since that is what you are trying to change. You would think a company would want to effect change to culture, and therefore the company, in a very deliberate and well-planned manner. In other words, you need a clear understanding of how something is organized before you can reorganize it.

How to reorg the right way

You know, I have been thinking on this for a while and realized I don’t have a lot of experience around a "good” reorganization. But I have seen the things that go very wrong. So, using my negative experiences, here is what I think would help make a reorganization (or any kind of big culture change) work better.

  1. Employees need to be effectively communicated with, at a greater frequency and with more information, than senior management normally communicates. One of the biggest problems I have seen is the concept of “keeping it all secret” until the process is done. This makes employees uncertain, which in turn causes them to actively work against any changes. Scared employees also start looking for new jobs and you may end up losing them, especially some of your peak performers. Why? Because they are usually the ones that will have the easiest time finding a new job.

    What a great answer to that old standby interview question: “Why did you want to leave your last job?” “Well, they were doing a poorly planned and executed reorganization without a clear sense of what they wanted to accomplish or how to do it. No one was sure what the future might bring.”

  2. You need to make a real plan and commit resources to do this thing properly. You can’t have a handful of senior management with the help of a few overpriced consultants go at it and assume it will just work itself out. I have sat in a room with a management consultant who told the team that “a reorganization is so fluid it would be madness to try and plan it all out; you have to just roll with the process.”

    Wait. What? If I had been a more senior member of management, I would have walked out. Don’t really plan it? Are you out of your damned minds? I ask any of you what your thoughts would be if, during a major shutdown or turnaround, I asked you to just roll with the flow. Let’s not even identify what we are doing! Who needs goals or timelines or even a full scope of the equipment we want to inspect/repair/upgrade? Everything will be fine…

    No – you need a good idea of what you are going to do, how you are going to do it, and then risk mitigate out some scenarios that could come up at the very least. You should also have SMEs from various departments make sure everything is accounted for. For example, what if the network requires changes to go with this personnel reorg; did anyone plan for that or is that going to shut us down for a few weeks while we pay big bucks to fix it in a panic after the fact?

  3. Your leadership team, at all levels, have to buy into the plan and be actively assisting the process. If this reorg involves firing some leaders, then maybe you had better do that firing on day one. Then, the leadership who is left knows they are staying through the reorg and you can communicate quite openly with them. If leadership does not support it, or if they are scared for their jobs too, you are going to get distracted leaders and workers. That means normal productivity is out the window and productivity on the reorg won’t fare much better.

  4. The org chart has to change to reflect the new culture/direction/focus. However, if the org chart changes, but the way we do work stays the same, then the reorganization you are involved in (or running) is a sham. Think about that in terms of reorganizations you have been a part of.

In summary, I am hoping that we (as an industry) can get better at management, especially if we want to change things up in our organization and make improvements. It is no different than any other management of change process we do, just on a bigger scale.

So, if the next reorganization you take part in doesn’t have a clear-cut plan and schedule, and people in clear roles to manage (at least as good as your worst planned and organized plant outage), then don’t be surprised if it doesn’t seem to accomplish anything. There is nothing I hate more than everyone blowing smoke up everyone else’s backside while claiming it’s the greatest magic show on earth.

I am seriously considering becoming a management consultant. Never have I seen so much money billed for so little accomplishment. And the utter BS that gets thrown around… but I digress. It seems a little like rearranging deck chairs on the Titanic after you have hit the iceberg.

Comments and Discussion

Posted by Rajaram Chidambaram on December 23, 2022
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Posted by Saeed Bafail on December 29, 2022
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