How NOT to stuff up a company restructure
A great company restructure design can improve your chances of success. However, the process requires you to think about what constitutes a good structure.
Restructures can be an invaluable way to accelerate performance. However, they can only do so if they are well executed and considered as part of a plan that also addresses accountabilities, processes, systems and staff competencies.
Restructures are often front of mind for a new CEO, but also for those who are facing material performance pressures. Perhaps the market is slowing, competitors are becoming more aggressive or even competent, or costs are rising. Whatever the inspiration, restructuring will often be part of the CEO’s toolkit to lift performance. However, the key elements of a successful restructure design are broader than one might imagine. At a bare minimum leaders need to consider accountabilities, decision making, processes, systems and staff competencies.
To execute a good restructure, it’s important to have a strong underlying concept. This concept should allow you to clearly enunciate to all stakeholders – both internal and external – why a change is necessary, the nature of the change, and its benefits.
It’s worthwhile ensuring that all the organisation’s leaders can express this concept succinctly. However, if the concept statement simply addresses a company’s structure, then it is inadequate. The reality of the modern organisation is that it utilises more than just structure to get work done.
For starters, accountabilities and decision authorities are essential for effective operation. Staff need to be given enough information to understand what is changing and why. Leaders need to understand and explain with whom the buck stops, and who has decision rights. Some people who thought they had a veto may no longer have one, and others who dodged accountability may no longer be able to do so. Indeed changes in decision authority are often important to improve agility in the face of changing circumstances. If we know who can make a decision – and it is not always the same person – then we can move faster.
The modern enterprise is also highly dependent on clear and consistent processes. Many of our organisations have processes that are either unclear, inconsistently applied, or varied, for example by division or geography.
Restructures can provide helpful pathways to attaining consistent processes that provide a much better customer experience. However, the processes need to be considered upfront during the restructuring concept.
We need to ask, “How does this change improve our processes so that we can improve our service?” Hospitals and banks are two examples of industries where restructures have taken place to improve the customer value stream (the highest level process). Hospitals now reorganise to enhance patient flow through the hospital, and banks reorganise to give you a faster answer on your home loan application.
Furthermore, every successful restructure today must consider technology. Often we can execute a restructure before we have implemented supporting technology changes, so this means we need a clear concept of how we can get the technology to catch up with the process. A common example is that of workflow, whereby a task or customer service request must be transferred from one role or department to another – hopefully in a way that is transparent and measureable. Sometimes a fully integrated, all-singing, all-dancing technology is not what you need immediately. However, you cannot afford to ignore the role of technology in helping you integrate and coordinate across new functions.
Finally, the leadership team needs to consider competencies. It is vital to create roles that can be practically filled with staff possessing the right competencies. It is sometimes tempting to create a ‘superhero’ role description that cannot, in all practicality, be filled. Consider designing your roles so that they can be filled in the available market, then enhance your team’s competencies over time so that new role types, often with broader skillsets and accountabilities, can be deployed.
So, in planning for an effective restructure it is critical to have a clear and communicable concept. Yet this concept must address more than structure. It must describe how service and performance can be improved by addressing a number of factors which allow work to get done. At a minimum, these critical factors include accountabilities, decision authorities, processes, systems and staff competencies. This more holistic approach will dramatically improve your chances of restructuring success.
See the original article published in CEO Magazine here.
Roger Perry is the Managing Director of the Bevington Group, and one of the region’s foremost productivity improvement and organisational design experts. He has been an Assignment Director and Steering Committee member on over 40 transformation programs.