Dan
I remember my first corporate restructuring experience. The company announced that we missed our numbers. And the product cupboard looked bare for the foreseeable future. And thus, the corporate belt tightening was underway and a leaner organization was designed by a team of management consultants.
One morning, after months of rumors, a message was circulated around from executive leadership that all employees should remain at their desks for the entirety of the day. If you received a phone call, you were to pack-up only your personal belongings and go to a conference room where you would presumably be stripped of all corporate assets and informed of your employment status. Think George Clooney in the film, Up in the Air. My co-workers responded differently. Some joked at the absurdity. Some people chewed their nails. And some people cried. We each coped in our own individual way. For those of us who survived this corporate bloodletting, we were offered bland gestures of perseverance and then told to get back to work the next day. Only we didn’t. Not the next day. Not the next week. And hardly for the next month. Years later it is still talked about by some of my former colleagues. Much like a group of post-traumatic stress disorder (PTSD) sufferers.
The truth is; however, restructuring can be a necessary evil. Sometimes.
When an organization hasn’t taken sufficient measures during the times of growth and prosperity, imminent change can be required when the winds of fortune shift suddenly. For organizations that compete in fast paced industries (e.g. Software) or face rapidly changing market forces (e.g. Healthcare), preemptive actions may be necessary to remain relevant in the next business cycle. According to Harvard Business School researcher, Stuart Gilson, “corporate restructuring, when done right, can be win for everyone.” But is the juice always worth the squeeze when it comes to corporate restructuring? And do the effects of repeated restructurings create a hangover that effects the productivity and risk taking of employees?
When most people hear PTSD, they immediately think of combat veterans returning from the military theater. But PTSD has a much broader clinical implication, beyond the military. It can result from any fearful or traumatic experience in which an individual regularly rehashes an event (to the point of paralyzing forward movement) and resists participation in activities, situations or people they associate with the negative experience. Professionals who have endured numerous downsizings and corporate restructurings can become hesitant and survivalist in their mindset. These same grizzled veterans often choose to make safe bets at work as opposed to pursuing risk and uncertainty. The behavioral concept of loss aversion, in which the pain of a potential loss vastly outweighs a proportionate potential gain, instills a spirit of caution and conservatism. In industries where there is high volatility, companies need more people who are not wedded to the status quo and are comfortable taking professional risks.
Here’s the irony.
Many high-profile corporations (Think: Sony, HP, Boeing) have announced major corporate restructurings over the years with the intention of becoming more innovative. But in the scramble to redesign the organization, they unsettle the most important asset in sowing innovation. The People. You can tell people to “think outside the box” and act like start-up entrepreneurs, but when the psychological safety of the organization has been undermined, there is little chance that your people are going to be risk takers and bold innovators. Of course, there will be a handful of outliers who always seem to thrive in change. But if you asked an evolutionary psychologist, they would tell you that those individuals are a small percentage of the corporate employee bell curve. Whereas the majority of your employees are doing anything but innovating.
The billion-dollar question:
I would recommend starting with these 3 actions:
1. Honesty and Transparency
Stop putting the empty spin on your corporate communications and start telling your employees the unvarnished truth. Yes, there are many versions of the truth. But your employees will see right through the polished corporate double speak. Most of your employees are adult enough to handle the truth. The truth softens the blow and, more importantly, it creates real purpose behind the restructuring.
2. Employee Designers
This may sound like a wild suggestion, but I can assure you that it is not. Involving your employees to help you redesign the way your organization is structured, rather than exclusively having the management consultants designing your organization, goes a long way to building trust and psychological safety. Of course, your employees are not expert organizational designers. But that said, they know the business much better than outsiders and with the right facilitation and guidance can help reinvent the business to match the intent of the restructuring.
3. Don’t Change If It’s Going to Business as Usual
Before you pull the pin, leadership and organizational planners need to ask themselves whether they truly need to do this reorganization or if there are better, smaller and smarter ways to redesign and reenergize the organization. Changing the organization because it feels like it’s time for a change is the absolute wrong motivation for change. So, if you can’t provide a very clear and cogent argument for why disrupting the organizational structure is a strategic imperative, put the pin back in and take time to rethink.
If your aim is to build an organization that is loyal, risk-taking and innovative, you need to start thinking about the people who make up the company and not just the invisible lines that make up the corporate boundaries that have been sketched out in a PowerPoint slide. It’s near impossible to achieve that if you have a herd of scared survivors waiting for the next time the corporate shoe will drop.
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