Did you know only 23% of companies rate their reorganizations a success? That means over 75% of business leaders who’ve rolled out a reorganization have given themselves a failing grade. What’s causing the high failure rate? McKinsey analysts recently discussed the topic with reorganization survivors and developed a list of best practices that you should check out.
For many businesses, a new organizational design comes into play based on what hasn’t been working. It is a far better idea to reorganize based on what you’ll need for the future. For example, as many businesses have learned in the past few years, online shopping isn’t going away. The retailers who allocated more resources during a reorg to support omni-channel selling are the businesses which are succeeding.
Keep in mind that technology is driving increases in the speed of business. To keep pace, you may need to reorganize your business every 2 to 3 years. In the past, a reorganization cycle of 5 to 10 years might have been sufficient.
One reason reorganizations fail is because leaders don’t look at every department during these critical reviews. As a leader, you may be focused on developing a key part of the organization you’ve identified as necessary to help the business meet its next set of goals and objectives. During this focus you might be overlooking other parts of the organization that aren’t operating efficiently. Some department might even be muttering behind your back that you’re deliberately avoiding making changes to a specific organizational area because it’s headed up by an FOB (friend of the boss). Don’t let long-standing business or personal relationships get in the way of your reorganization. If you have a conflict of interest, assign someone else the task of reviewing how efficiently each department is operating and how well the departments will contribute in the new structure.
Once you’ve decided on the new structure of your organization, communicate changes to all team members. Hold informational meetings at department and team levels to be sure each person understands his changed role. Keep the lines of communication open. Your team members will feel stressed and uncertain following a reorg, and it’s your job to reassure them that they have key roles to play in the company’s future success.