Company reorgs aren’t any fun. Sure, there’s hope that the light at the end of the tunnel will be worth it, but the process of continuing business during the reorg can be painful. Employees are generally uptight, management is stressed, resources are strained and everything seems up in the air. But this doesn’t have to be the case. Reorgs may never be something people look forward to, but by following a few tips, you can ease the pain and get to the other side much faster with less collateral damage.
Jump to any section:
Why do Companies Reorganize?
It isn’t uncommon for startups to go through a reorg after they grow to the extent that they must mature. Even established companies occasionally find the need to restructure to improve business. According to McKinsey and Co., approximately 60 percent of companies in the S&P 500 have launched large-scale cost reduction and reorganization initiatives within the past five years and 70 percent of reorgs lead to increased value for the companies.
Done right, reorgs can breathe new life into a stale business model, giving it the jolt it needs to gain a competitive advantage, increase share of wallet, improve brand reputation and/or become more profitable
The corporate focus may shift from product to customer, from local to global, from physical stores to a greater online presence. There are dozens of reasons why an organization decides it’s in their best interest to shift things around a bit. Done right, reorgs can breathe new life into a stale business model, giving it the jolt it needs to gain a competitive advantage, increase share of wallet, improve brand reputation and/or become more profitable.
According to The Manager’s Resource Handbook, “The ultimate goal and purpose of any business reorganization is to either plan, accommodate or react to change. Typically, those changes will reside in our market, the economy or our competition.”
5 reasons why companies decide to restructure:
It just isn’t working
Communication is breaking down (or supersaturated)
Your customer base is shifting
The organization has grown (or reduced)
Manager span of control
Any of these ring a bell of recognition? You can easily see that it only takes time to make any of these reasons rear their heads. Once you recognize you have chronic issues related to one or more of the above, you realize something must be done or the company will suffer. The competition is stiffer than ever, margins are shrinking. Letting any of these issues go in hopes they will self-correct or simply disappear is naive and dangerous to the bottom line.
Why Do People Fear Reorganizations?
We all understand the only constant in life (and business) is change. Change often gets a bad rap. It stirs up uncertainty and as humans, we don’t always enjoy uncertainty. For employees who get used to the way things are done – those who’ve been around a while – change can be scary. They instinctively know they’ll have to learn new technologies, new processes and often, new management.
Employees at every level wonder where they will fit into this new structure. Will their job responsibilities change? Will they be required to learn new skills? Will their direct reports change or will they have a new boss? These are just a few of the questions employees may have and, depending on your role, it may be up to you to calm the waters so everyone can keep the business running through the restructuring.
How to Manage through A Reorganization
Knowing the reorg is going to bring up some “chatter” and likely instill fear and worry in many employees’ minds, it’s really up to the management to build a communication strategy into the restructuring plan. Employees will always be your greatest asset so keeping them informed and as happy as possible through the re-org will be a critical factor in the success of the reorg.
1. Be Honest and Realistic
You may think you have the reorg under wraps, but your employees likely feel a shift and they’re likely spooked. The best thing you can do is to let them know what’s really going on before they have a chance to get the rumor mill spinning.
Company emails, articles posted to the company intranet site, all-hands-on-deck meeting(s), or other corporate events may be the ideal ways to begin the conversation. Employees care about the health and viability of the company to which they dedicate 40+ hours of their week. Their jobs depend on it.
Let them know how things are really going. This shouldn’t be a surprise sprung on them out of the blue. Instead, “state of the company” addresses should be happening on a regular basis Employees at every level should know the basic numbers – profitability, market share, reputation/ratings. They’re adults and don’t need data sugar coated. Give them the facts so they can be more part of the solution. They’ll also appreciate the fact that they are kept updated and are a valued contributor towards the success of the company.
2. Communicate Corporately and Individually
What employees really want is to be in the know. No matter where they rank in the company, they all believe they deserve to know what’s going on in their company. Even more, they want to know how any changes will affect them.
Team meetings are a great way to let the whole gang know about the reorg roadmap, how the team will be impacted and what steps they need to take now and maybe later to keep productivity going. But, don’t forget that each employee will have their own concerns and questions. If you really want to engage employees and calm their fears, you’re going to need to get personal.
Have direct managers schedule one-on-one meetings with their reports so they can answer these questions and address any concerns
Have direct managers schedule one-on-one meetings with their reports so they can answer these questions and address any concerns. Managers can discuss potential changes to their job requirements, salary, job title, direct reports, management, physical office location, travel expectations, etc.
3. Use the Company Org Chart
If you haven’t already pulled out your company org chart, now is the time. Org charts are being used by the executives to view and rework the organizational structure but HR and management can use it to communicate with employees.
The business org chart is the ideal way to graphically represent the current and future structure of the company. It’s a great way to show employees how things are before and after the reorg – where they’ll move, how they’ll fit in, where everyone shifts, who will do what and what the company will look like when it’s all said in done.
The org chart provides the best visual guide to walk employees at all levels through what the reorg will mean – to them individually, to their teams, to their departments and to the company as a whole
We are mostly visual learners. The org chart provides the best visual guide to walk employees at all levels through what the reorg will mean – to them individually, to their teams, to their departments and to the company as a whole.
Here’s an example of how Pingboard can be used during reorganizational planning.
In this example the VP of Sales is moved under the CMO with just a click. In Pingboard users can create multiple versions of their org chart, and share them with others for collaborative planning.
4. Anticipate and Plan for Difficult Situations
Let’s address the elephant in the room. Reorgs often mean some people aren’t going to be around after the restructuring. It’s safe to say that’s the biggest fear for employees. You’ll also likely have those who will stay, but they ain’t gonna be happy about it (and they’re going to make sure everyone knows). Plan on it. Plan for it.
It’s hard to watch team members be let go. Plan to communicate with the remaining team members so they know why the person was let go, how they can continue to add value and that their jobs are secure. For those who decide to take a stand, have a plan in place on how you will manage them.
You don’t have to be concerned only with office talk. There’s this thing called social media where employees are free to rant in front of massive numbers of people. Employees can do as much damage, if not more, to a brand’s reputation than customers. Be sure you have a strategy in place to mitigate risk and rapidly respond.
5. Give Employees Time
As with change in any area of our lives, getting used to the idea of it takes time. Afford your employees a reasonable amount of time to soak it in, come up with questions and get them answered, and see what the reorg feels like. Even though the executives have likely meticulously planned the reorg for months on end, employees are often made aware just before the reorg actually happens. They need time to process it before they can fully get on board.
It’s a good idea to set up Q&A sessions with the various departments, such as HR for any payroll or benefits changes; direct management for job responsibility changes; department management for changes to their division; and executive leadership for overall corporate strategy and business drivers. Try adding informative bullets, blogs, webcasts and articles to company intranet sites. Remember: communication is king and there’s rarely an instance where there’s too much of it.
6. Measure and Communicate Success
Once you’ve asked your employees to go through the reorg, it only makes sense to let them know how things are going during and after the reorg. If management has played their cards right, things should be better after the reorg than before. Measurement will take time as not all metrics are immediately measurable. As new milestones are recorded, however, celebrate them with the employees so they can see the pain was worth the effort.
Even the littlest victory, the smallest ROI, the tiniest bump in market share is newsworthy
Even the littlest victory, the smallest ROI, the tiniest bump in market share is newsworthy. In fact, as employees learn about the progress, they will be motivated and inspired. Get excited about these successes so your employees will too. A little bonus, perk or even a catered lunch at the end of the reorg goes a long way to show employees you appreciate their perseverance through and dedication to the reorg.
Related: 6 Effects of Poor Employee Communication
The company reorg impacts every level of the company. While it may originate behind closed doors on the top floor, it trickles down to employees who feel it most. Understand their pains, communicate well and often, answer their questions and reward their efforts. The success of your reorg is predicated on the buy-in from your employees. Managing them well through the process may be challenging but it can also be the difference between those 70 percent of companies who experienced value from their reorgs and the 30 who didn’t.
Related: Get your team excited about using live org charts. Download The Definitive Guide to Org Charts
Connect your people now with Pingboard
Sign up for a free trial today
Get Started for Free
No credit card required