How to Reorganize Your Department or Company

Think strategically about organizational change

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“Reorganization” is one of those business subjects that usually evokes a cynical response and can fill pages of Dilbert cartoons. This skeptical reaction is, unfortunately, often well-deserved because reorganization is frequently the result of an organizational design process that started and ended with an organizational chart, not thoughtful leadership.

Reasons Managers Restructure

There are many reasons department or company leaders decide to restructure. Some of the most common include:

  • A key person has left: It leaves a void and creates an opportunity to question the existing structure. In contrast to what management textbooks tell you, organizational charts are usually built around individuals, not “positions.” Oftentimes, when a key individual departs, the position should remain.
  • There are problems: These include inefficiency, talent mismatches, overlapping roles, workload imbalances, and other operational issues. Work is not getting done, or it’s not being done well.
  • It’s required to seize a new opportunity: An example would be a new market, product, or service, and your current structure just wasn’t designed to support your new business objectives.

While these are all good reasons, reorganizing should be considered as just one possible option. There are often less disruptive ways to achieve the same objectives. If you do find that restructuring is necessary, however, it's important to handle the process carefully.

Who Should Be Involved in Reorganizing?

If just the leader of the department is involved, there’s a missed opportunity for critical input and buy-in. On the other hand, if the entire company is included, the transformation can be too sluggish, and self-serving interests may get in the way. It's best to find a middle ground by including a leader and a small team of trusted advisers. These are usually the individuals who have enough confidence in their position with the new company to put their self-interest aside.

The Process of Organizational Change

While there's no perfect science to how reorganization unfolds, here are some pointers:

  • Start with a strategy: It’s critical to know where the organization or team is going. For example, what’s important, what’s not, and what are the specific goals? While this sounds obvious, it’s an often overlooked step. If you struggle with strategy, then learn how to create one before you restructure the organizational chart. Remember, structure always follows strategy.
  • Develop your criteria: List the problems you are trying to solve and the opportunities you're seeking. Next, rate each one high, medium, or low according to priority. It becomes the criteria that you’ll use to evaluate structural design alternatives and to measure your success.
  • Develop and evaluate design alternatives: A lot of teams fall in love with one idea and then spend all their time either trying to justify the idea or perfect it. Instead, come up with three or four ideas and rank those against your criteria. Remember, no option is ever perfect. There are always trade-offs and risks. Simply select the best one and come up with an action plan to mitigate the risks.
  • Test the final design with scenarios: Spend time testing the design by discussing how various business processes would work within the new structure. These “what if” discussions help fine-tune the structure and clarify roles.

The Value of Communication and Team Involvement

As is the case with any organizational change, good communication is critical. And good communication is not just making a one-way announcement about the change.

Stakeholders, including employees, are more likely to get on board if you not only share the “what” and “why,” but explain the alternatives you didn't choose and why. Let stakeholders know you realize there isn’t one perfect choice and acknowledge the potential disadvantages of your plan. This kind of candor, open dialogue, and authenticity fares better than trying to “sell” your ideas for change as the perfect solution.

Don’t expect people to understand it or buy into it right away; chances are, you didn’t at first. If you treat people like intelligent adults, the respect you show will be returned, along with stakeholder support.

Once you've communicated with the necessary people, don't be shy about asking for their help. It's human nature that people will support what they helped create, and while your team may not have had an opportunity to create the new organizational structure, they can play a huge part in implementing the change. It's another opportunity for you to get valuable input to tweak the new structure.

Restructuring is always disruptive and fraught with challenges and risks. It should never be taken lightly, and any changes should always have a shelf life of at least five years. If you follow these guidelines, you'll have a better chance of achieving your objectives and minimizing disruption and anxiety.