Guidelines for organizational restructuring

Guidelines for organizational restructuring

You better be lean before you play these games.

Jack Welch

In our experience, and without any shadow of a doubt, the number one pitfall in organization design is changing organizational structure before the four golden guidelines I cover in this blog have been addressed. The processes contained in the guidelines need to be comprehensively completed before any restructuring takes place.

Golden guideline number one: Verify the capacity of the leader before restructuring.

Determine the capacity of the leader in the area to be restructured before any restructuring takes place. A strong leader capable of supporting and directing a unified team is essential if an organization is to be successfully restructured. The best theoretical organization design in the world will not compensate for a leader who is incapable of delivering the goods, for whatever reason. A good leader with a bad organization design is better than a bad leader with good organization design. Unfortunately, the first refuge of the bad leader is to redesign the organization prematurely, and at an enormous cost in terms of time, resources, lost opportunities, the goodwill of the people directly involved and their capacity to change.

Golden guideline number two: Ensure a unified sense of direction and organization strategy is in place before restructuring.

Implement a unified sense of direction and an organizational strategy that is comprehensive. The optimal structure for the organization would need to be closely aligned with the strategy. This alignment between the strategy, or long-term goals, and the organization structure is essential because as organizational strategies change so too will the organizational structure. The determination of the optimal organization structure will depend directly on its capacity to achieve the organization’s strategy. Therefore it is essential that the organization’s direction and long-term goals or strategies are defined so that the logic of the new structure is clear for all to see.

Golden guideline number three: Ensure outputs, measures, and targets are set before restructuring.

Determine outputs, measures, and targets that are comprehensive. If this step is not completed prior to restructuring, there are no criteria against which the optimal organization structure can be determined. This is especially important if the organization is to be redesigned to optimize teamwork. The overriding feature of the modern team-based structure is that it is designed around empowered teams responsible for autonomous outputs, rather than any functional or historical considerations. Therefore the clear definition of outputs prior to restructuring is essential.

Golden guideline number four: Ensure technical competence before restructuring.

All competence is based on technical competence. The basic skills and knowledge necessary to achieve and survive any structural change need to be determined, developed, planned and controlled before any restructuring takes place.

Perilous pitfall number one.

Attempting to implement structural change before the four guidelines described above are followed will lead to costly errors. The quote by Gaius Arbiter back in 65 AD is apt and universal:

We trained hard, but it seemed every time we were beginning to form teams we would be reorganized. I was to learn later in life that we tend to meet every situation by reorganizing, and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency and demoralisation.

Gaius Arbiter

I conclude with a quote from Winston Churchill:

First we shape our structure, and then our structures shape us.

Winston Churchill

Detailed references and additional information can be provided on request, and questions are welcome. This email address is being protected from spambots. You need JavaScript enabled to view it.

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