Reorganizations are major undertakings that require ample amounts of resources to organize. This process is common during the lifespan of organizations, but success rates are extremely low. Why are many reorganizations unsuccessful even though they are common among all types of organizations?
Most companies are eager to jump into a full reorganization without taking a step back and looking at the organization as a whole. This can be a huge mistake, as some parts of the organization won’t need to be apart of the reorg. Developing a sound reorg plan for only parts of the organization can result in fewer resources being devoted to the reorganization efforts.
Before reorganization development, surveying leaders in different business units can help determine the areas of the company that need restructuring, and determine priorities for upper-level management during the reorganization. Surveying leaders within organizations not only better determines future objectives, but it also keeps leaders engaged in the process.
According to research, only 15% of executives set detailed goals and targets when developing a plan. Leadership teams may have certain reasons for developing such plans, but formal analysis isn’t provided to actually weigh the positive and negative outcomes of reorganization.
A cost-benefit analysis allows organizations to weigh strengths and weaknesses of a potential reorganization, and it can also help determine the resource that will be needed to complete the process. Organizations should include business unit leaders in this process to gain a better perspective of strengths and weaknesses across the organization.
During reorganization planning, organizations too often focus on lines of command and the organization chart rather than how the organization operates such as capabilities, organization culture, and processes. How a company operates is what makes an organization successful, and this should be the main focus when planning a reorganization.
Organizations with strategically developed management systems can better determine how their organizations work rather than just understanding the organization structure. Organizations that better understand this aspect of the organization will develop a more sound plan and will help set a more positive direction after the change is implemented.
A reorganization is a very difficult, disruptive process that demands buy-in from all levels of employees. Developing a reorganization plan also requires great effort to remain disciplined and on task. Those involved in the plan development process are required to remain on task in order to provide a sound plan. It is too easy to get off track and lose focus due to the conflicting influences of various stakeholders throughout the process.
Organizations must ensure that the change has direct aspirational improvements that are clearly communicated. Stakeholders may attempt to change the plan to serve interests that are not aligned with the envisaged benefits. A clear and transparent view of future benefits will assist with gaining complete buy-in from all business units. This will result in a stronger implementation of the plan and greater success in the newly organized firm.
Bâton Global has provided clients with sound guidance in developing strategic plans that implement change in the organization.
To learn how to execute on your reorganization plan, read Part Two of the "The Reorganization Journey" series here.