HR Pulse

Don’t restructure: reconfigure

As a consultant I often get asked to review an organisation's structure. The structure is seldom the reason that an organisation or department is not performing and it follows that, on its own, restructuring is rarely a solution to the problem. Furthermore, in many organisations, continuing rounds of restructuring to improve efficiencies results in change "fatigue" and there is a limit to the benefits that can be realised over time.

What is often required, and what can result in significantly improved performance, is a total reconfiguration of the organisation or department. Reconfiguration is a holistic approach to organisational design in which all aspects of the organisation are reviewed and aligned to the strategy.

A holistic approach

The focus of an organisation is obviously the strategy which defines its purpose, markets, products and services and geographical footprint, amongst other things. If there is a significant shift in the strategy it is likely that the organisation will need to be reconfigured to deliver the strategy.

One of the main things that can contribute to increased efficiencies are the organisation's processes. Process re-engineering in organisations is commonplace and can result in the reduction of unnecessary work and improved productivity. The problem with process re-engineering on its own, is that it is often done in isolation and aims at improving an existing organisational architecture, when a complete review of the nature of work may be more effective.

Too often process re-engineering only looks at business processes rather than including management processes in the review. Meetings and reporting are just two management processes that can be streamlined and contribute greatly to making organisational performance more effective.

Process reviews are often associated with new technology and it is true that in reviewing the organisation's configuration, technology is important. Technology again needs to be looked at holistically to establish a technology architecture that extends well beyond business process technology such as SAP. Opportunities for the use of technology to improve connectivity can result in people working smarter. It goes without saying that technology should be as integrated as possible to avoid incompatible systems.

In reconfiguring organisations there is an iterative relationship between process redesign and restructuring. Structure, at a high level, is about role clarity. It is not a purely linear, rational process. Hence the role of a CEO or COO will be determined largely by what is required by the strategy and challenges facing the organisation at a point in time.

The purpose of creating structures is to establish roles and ensure that the necessary work is done at the right levels. Where jobs require a lot of discretion it is not advisable to over define the tasks. What is required is clarification of outputs. In many cases higher-level jobs may be profitably designed around people to leverage strengths and passion rather than trying to fit people into predetermined "boxes".

Whatever the structure, the success of the organisation depends upon people. No matter how good the processes and structures, if the people do not have the skills and attributes to meet the requirements of a role they will not be effective.

Too often organisations are restructured because they are not performing yet the same people are just redeployed to different roles. Hence restructuring without reviewing the people in the organisation is relatively futile.

One of the outputs of restructuring is the determination of role and people profiles. When an organisation is being reconfigured it is often useful to use a clean slate to fill the new structure. Hence, rather than try to retrofit people into a structure, it is often better to lay out the new roles and, based on the people profiles required, objectively select who is most suitable for each role. Where existing people do not meet the requirements then alternative deployment opportunities must be sought. Where subsequent vacancies occur then they should be filled from other sources.

This is obviously the most sensitive part of reconfiguring an organisation and needs to be managed with great care and respect for individuals. It is an emotional period that needs to be completed as quickly as possible to reduce uncertainty and which needs considerable leadership energy and resilience to achieve. It is the time when top talent often feel uncertain and retention strategies need to be put into place throughout.

Finally, and most challenging, is the leadership and organisational culture that needs to be shaped in order to be consistent with the strategy, processes, structure etc. This is not something that can be done overnight and requires a lot of visible leadership. However, it is one of the most important factors influencing the performance of an organisation.

Conclusion

Reconfiguring an organisation due to a new strategy or to improve performance is not an easy process. It is plagued with uncertainty and it affects people at a very personal level, no matter what the rational justification. To believe that simply restructuring an organisation, or part of it, will solve specific problems or improve performance is to avoid key issues. Organisations are holistic social entities with their own persona and dynamics and thus need to be treated accordingly.