by Harvey Lau

Today's Environment

In today’s fast-paced business environment, nearly every leader will be challenged with the need to change organizational structures. Entire organizations and individual departments are reconfigured as leaders seek out the best structure to increase efficiency, add value, and better engage with internal and external customers and partners. Reorganizations can have significant business and personal impacts on the leader, the team members, customers and other stakeholders.

The challenges of reorganization are compounded as organizational structures become more complex. Consider the matrix: Since its popularity in the 70s, it has become a common structure for large organizations for its ability to leverage expertise across the business to increase collaboration, synergies and buy-in. More recently, we see many conventional, two-dimensional matrix structures evolving into multi-dimensional matrixes that incorporate new business models and partnerships. For example, many healthcare organizations are experiencing this growing complexity through mergers and acquisitions, evolving operating models, and the need for integration throughout their care delivery systems.

Point B’s Perspective

Given the vast complexity of the multi-dimensional matrix, reorganizations are only successful when teams across all dimensions of the matrix can quickly adapt and collaborate.

For example, we recently completed an organizational change for a global foundation dedicated to reducing poverty by increasing agricultural productivity in developing countries. In order to make holistic and dramatic change, the foundation must fund grantees in multiple areas: scientific research and development in agricultural productivity; innovations throughout the value chain for specific crops and livestock; and advocacy and policy for individual countries, where real changes to real lives occur. The redesigned organization is a three-dimensional matrix that reflects the realities of the complex world in which this foundation operates.

How do the most effective leaders help ensure successful implementation of a new and complex organizational structure?

1. Manage the change from day one. Reorganization is a major change that impacts roles and responsibilities, workflows and processes, and multiple human resource components. Leaders must actively drive and manage the change. Engaging your frontline managers and employees is also key, and it calls for methodical planning. Diligent project management can help stakeholders understand the business need and execute the transformation while minimizing adverse impacts to daily operations. Develop an implementation work plan together with a change management plan focused on communication and engagement to keep everyone moving in a unified and cohesive direction. But keep in mind, plans are not enough. The right resources must be allocated to execute the plans. A failed reorganization not only derails execution of the strategy, but it also deteriorates employee morale and may even increase unwanted attrition.

2. Develop team charters. When teams are shuffled and reformed, people need time to understand how they fit into the new structure, and what they must do differently. A team charter is an effective tool to ground a team in the new vision, revised strategies and changed expectations. A successful team charter engages each team in determining its mission and the shared values that will guide its interactions and work. It clarifies the role and expectations of each team member. It also enables teams to understand what other teams contribute, and how they must collaborate to achieve the organization’s goals. A side-by-side view of multiple teams’ charters will help identify and resolve any overlaps or gaps in scope and responsibilities and help employees collaborate sooner.

3. Keep a focus on core work. Reorganizations are disorienting to people. They may not have been engaged in the design process or the thinking that led to the decisions made. Nevertheless, they’re expected to implement the new order as soon as the new structure has been announced. This disorientation can distract people from their mission critical core work and reduce productivity for a long time. Leaders must help their people focus on delivering core work even as they figure out how to operate within the new structure. How can your leaders do this most effectively? Start by focusing on work processes—the fundamentals of how the organization creates value. Go beyond the org chart and job descriptions with the “3Ds,” focusing on what each team and team member must:

• Decide – Clarify ownership of specific decisions and the role in making those decisions.
• Do – Define specific work activities.
• Deliver – Confirm specific work products and timelines.

4. Clarify decision rights and processes. One main reason why reorganization causes major disruption is that decision rights get reshuffled. The ownership of a decision is tightly tied with the degree of autonomy and control of resources. Following a reorganization, people are trying to figure out what they’ve gained and what they’ve lost. Unclear decision rights can result in political tugs-of-war. Organizations can avoid this waste of time and energy by being clear about who owns each decision. RACI (Responsible, Accountable, Consulted, and Informed) diagrams are a time-tested tool for clarifying decision rights. It’s also critical to clarify how decisions will be made. How much input is needed for key decisions, and where will it come from? What is the decision-making process? What is the escalation path? Once a decision has been made, how will it be communicated?

5. Observe and reward new behaviors. When an organization is restructured, people are expected to adopt new behaviors to produce new results. This doesn’t happen automatically. Leadership must define new behaviors and communicate which old behaviors must be discontinued. Goals and incentives must be aligned with the new behaviors, roles and responsibilities—for both individuals and teams. The beginnings of a successful reorganization can be seen in demonstrations of new behaviors. It’s important to highlight examples of new behaviors and small wins. Tell the stories; share the successes. Focusing on behaviors helps to make change tangible and builds ownership.

The Bottom Line

A redesigned organization chart is a framework; it’s only the first step to reaching the vision that inspired it. Successful implementation requires diligent, tactical steps toward redefining what each team and individual must do differently. Leaders must provide the clarity, structure and time for the team and employees to understand how they fit into the new structure. Leaders must also celebrate wins—both large and small—to recognize and propagate the new behaviors that deliver results.