THE RESTRUCTURING PROCESS

Whereas some of the other change scenarios we discuss in this book are more problematic (for instance, culture change and merger/acquisition), on the surface a restructuring of the organization should be a relatively straightforward affair. If we recollect the organizational change metaphors, the restructure could be quite neatly placed into the machine metaphor.

The key beliefs of the machine metaphor are:

• Each employee should have only one line manager.

• Labour should be divided into specific roles.

• Each individual should be managed by objectives.

• Teams represent no more than the summation of individual efforts.

• Management should control and there should be employee discipline.

This leads to the following assumptions about organizational change:

• The organization can be changed to an agreed end state by those in positions of authority.

• There will be resistance, and this needs to be managed.

Change can be executed well if it is well planned and well controlled.

Within this metaphor we could perhaps draw on Kurt Lewin’s three-step process of organizational change. You will remember that Lewin proposed that organizational change has three steps. The first step involves unfreezing the current state of affairs. This means defining the current state, surfacing the driving and resisting forces and picturing a desired end state. The second step is about moving to a new state through participation and involvement. The third step focuses on refreezing and stabilizing the new state of affairs by setting policy, rewarding success and establishing new standards. Clearly an organizational restructuring process could follow this model. There is a current state that needs unfreezing and a perceived end state that is required. The main focus therefore is the need to ensure that movement between the former to the latter state is as smooth and quick as necessary.

However, our experience when facilitating organizational change is that a restructuring process will not be successful if it is focused solely on generating organizational structure charts and project plans. It is disappointing to note that the CIPD research (CIPD, 2003) suggests that organizations typically devote much more time during restructuring to areas other than human resources. The finance and systems functions accounted for double the time and attention that HR issues received. Anyone managing or experiencing restructuring knows that there are many other factors to consider. The politics of the situation and the psychological needs of managers and staff play a key role. It is also important to ensure that the restructuring process is positioned as a framework to enable the organization to do something it has not done before, rather than simply as a tool for changing the structure around.

It is therefore useful to remind ourselves of Nadler and Tushman’s congruence model, which derives from the political and organism metaphors. One of the key aspects of the congruence model is that if you change something in one part of the organizational system, the whole system and other component parts are affected. If you do not factor this into your change equation you may well face unintended consequences. For example, restructuring in one part of the organization means that people in other areas may well have to develop a whole new set of relationships. Very often little is done to communicate the changes, let alone actively work to foster new working relationships.

The authors have witnessed numerous restructures in a variety of public and private sector organizations, and have concluded that perhaps the best way to approach the restructuring process is as a mixture of the machine and organism metaphors. Beckhard and Harris’ change formula is useful here:

• C = Change

• A = Level of dissatisfaction with the status quo

• B = Desirability of the proposed change or end state

• D = Practicality of the change (minimal risk and disruption)

• X = ‘Cost’ of changing.

According to this formula, important factors in any restructuring are threefold. First, the reasons, timing and rationale for the restructure must be made very clear. Second, the end goal or vision must be communicated in an appealing way. Third, the whole exercise must appear doable by being well planned and well implemented. For the majority of individuals the overwhelming experience is one of upheaval. The cost of changing is high. It is therefore imperative that the benefits are accentuated and then planned for in the most authentic and genuine way as possible.

In Figure 5.2 we outline our generic approach to restructuring, which can be tailored to individual circumstances. We highlight areas of potential problems and also suggest ways of making it a more effective process.