Lead successful reorganization

posted 4.26.2017

Transformation projects are obviously complex in scope and difficult in implementation, but also – as they arouse resistance of employees by proposing new ways of doing things or, more specifically, by proposing staff reductions. According to latest Harvard Business Review publication, even 80% of reorganization projects do not bring expected benefits in projected timeframe, and what is even more threatening - 10% generate real, concrete loss. One can say: launching a transformation project seems to be a decision of a desperate executive.

The most important reason of transformation failure is detailed, fixed project planning, while transformation is more a fluid process. The course needs to be constantly and consciously adjusted, adapted during the transformation process. Reference for transformation must be set. Only ca. 15% of managers set business goals for transformation – so it is often difficult to indicate a reference point and track the progress further down the road.

There are several (but still few) reasons for transformation failures according to McKinsey research involving 1800 managers:

  • Active objection of employees and managers
  • Insufficient human resources, time, budget (e.g. best employees leaving during the project)
  • Decreasing productivity (and interferences in regular work)
  • Changing organization schema but not how people actually work
  • Implementation process disturbances due to unplanned / unforeseen reasons (e.g. additional IT systems to replace)

From that perspective, the “well-known” secret of successful reorganizations is to:

  • Know which elements to change and to plan proper sequence of changes
  • Communication must prove, that the reorganization process will proceed in honest and transparent way
  • Implementation is to be a rigorous process, not an improvization

Of course transformation cannot last too long for quite obvious reasons. First of all – the attention of decision makers must be kept during all time – so results (benefits!) must be brought quickly and frequently. Transformation often suffers of “tunnel effect” – like a train entering the tunnel, it gets off sight for quite a long time and then re-appears with an intention of introducing significant changes in relatively short period of time. But unfortunately, during the time it was in the tunnel – things have changed as the stakeholders ran their business as usual, often addressing some elements which were supposed to be delivered by transformation.

Secondly, the longer reorganization lasts, the higher risk of personal changes among decision makers. Newcomers might (and normally have) different point of view and often question the approach of transformation, which might lead to either re-structuring the transformation project itself or even stopping it.

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