A Reorg Hangover

Author: Cherie Wilkins


It’s the morning after and your head hurts. It all seemed like such a good idea yesterday, the answer to all your problems. Now, instead of smooth sailing, things seem more like chaos and panic… and lots of questions. No, this isn’t waking up in Vegas. This is the post reorganization reality.


We have seen this time, and time again, in companies who use reorgs as their weapon of choice to address poor performance or make improvements. They believe that “boxology” (the art of rearranging the boxes on the organization chart) can provide the solution to any number of performance issues; centralize to reduce cost; co-locate to provide more focus; consolidate under the “strongest” manager; increase span of control to get things under control.


The problem with this approach is that it is “one-dimensional” thinking. It is focused on only one dimension of the organizations performance equation; the resource dimension. It ignores completely the work system or value dimension. When you simply rearrange the resources, you are not addressing how the work gets done. In fact, you have probably temporarily (or permanently) disrupted how the work gets done. It takes time for the resources to figure out the new pathways and processes to do the work they did before.  For example, in one organization, a department who had been paying all of their invoices on time, was moved from HR over to Finance. Suddenly they were 30 days late in paying their invoices because nobody could figure out the new approval paths for the payables. In most reorganizations the value dimensions (work systems and processes) are not thoughtfully redesigned as a part of the change. For every process that these resources participate in, what are the changes in roles and responsibilities? What steps do they perform differently? What support and resources have changed? Are the escalation paths changed? Are the approval paths changed? Are there changes in policy? Are there changes in standards?


Boxology usually ignores the other dimension in the performance equation; the management dimension. Although most reorgs are about moving resources from one manager’s domain to another’s, there is rarely a thoughtful redesign of the management system that goes with those resources. What needs to be planned differently? What new performance support needs to be in place? What different metrics should be monitored? What new corrective actions should we be taking to keep on course?


By thoughtfully addressing all 3 dimensions of performance, resource, value and management, organizations can avoid waking up in Vegas after reorganizing. A 3-D approach to change can ensure that the performance issues are really addressed and the results are sustainable.


For more on the 3-D approach to improvement read Rediscovering Value or White Space Revisited.