The epidemic has forced companies to reorganise at an accelerated pace. Whether the reorganisation is motivated by growth or cutting costs, there are a few things that companies can do to maximise their chances of delivering the intended outcome in the time planned with minimised disruption.
Move quickly with a plan
Move quickly as time is of the essence. The longer it takes the more likely of failure as the business context is likely to have changed. Develop a detailed plan and implement quickly.
Analyse human capital resources.
In most companies, human capital resources are not analysed as rigorously as financial resources and hence the reorganisation may not proceed as planned since the human capital resource has not been analysed properly. Again this situation can be remedied quickly within weeks and does not require a multi-year ERP implementation.
Instead of investigating within the organisation, companies try and benchmark their cost targets with industry standards. This leads to a skewed comparison as the context, level of automation, outsourcing and performance factors vary between companies.
However, internal benchmarking, like comparing between regions the same functional teams, is likely to yield better results, enables companies to move fast, roll out best practices to other divisions.
Set differentiated targets and consider focussed investments
Fixing up a specific ratio like 20-30% cut across the board is always not the right answer, one should decide on a case by case basis. Companies that can reinvest their cost savings into building up internal capabilities are more likely to succeed, even if it means cutting down costs elsewhere.
Involve the complete leadership team
Most successful reorganisations involve the entire leadership team in the decision making process with staff input as well. The entire leadership team would b required for the execution of the plan and hence they should get involved.
However, this approach is an exception as in most companies the leader and a few of his trusted colleagues decide on the reorganisation. This is even worse than one person deciding as executives who are left out of the inner circle are the ones who will oppose the proposal later.
Allow flexibility during implementation
Most crisis-driven reorganisations fail in the implementation as the executives resist a clearly mandated solution. Companies that allow some flexibility in deciding how the change is implemented are more likely to succeed.
Decide on the overall design, set boundaries for what is acceptable, targets for the cost and a process for leaders to fill in the details. This is likely to be quicker and more likely to lead to a workable outcome.
Communicate changes quickly and humanely
Face-to-face has a much better acceptance than emails or other indirect means of communication. But is a crisis-driven company electronic mail is far more likely to correlate success as the employees would prefer to receive the communication quickly rather than be left in the dark.
It is important for the leadership team that reorganisation is also about people and you have to be seen to treat employees fairly and sympathetically and you will be judged on how you handle the situation. Even when changes happen quickly, employees need to understand why, when and how they will happen.
Create a positive feedback loop
It is unrealistic to expect an organisation will work perfectly from the beginning. It is necessary to live with it and quickly course correct it when some issues are found. Having formal mechanisms for feedback would help a lot while companies without clear processes re more likely to fail.
While growth-driven companies benefit from surveying employees about implementation issues, this may not work for companies undertaking cost-savings. Cost-cutting by its nature is divisive, so employees may take more time to accept the changes and contribute positively.
Delivering organisational change is never easy. By following the above guidelines companies are moe likely o succeed.
All these aspects are discussed in detail in the book ReOrg: How to Get it Right
7 Strategies for Leading a Crisis-Driven Reorg
by Peter Buchas, Stephen Heidari-Robinson, Suzanne Heywood and Matthias Qian
HBR Blog 2020/08
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