When business leaders decide to restructure or reorganize, they are transforming the company and, therefore, must carefully consider the design of such a change. Like an architect who takes months or years to thoughtfully design a building, a company must intricately and carefully plan for change. As they do so, they need to keep in mind the most critical component of an organizational redesign are the employees, whose performance can make or break a company.
Whether a start up or legacy corporation, the primary driver behind reorganization is usually profitable growth. Of course, such plans may also result from a desire for improvements in customer service performance or production quotas. But, most importantly, and often with little consideration, it’s how the restructuring will impact the people that matters most, which is why the emphasis on concise planning and thoughtful design is so important.
Many senior managers simply focus on the what, the desired end goal of organizational change: Improved financial performance as a result of restructuring and resizing. They often ignore the human factor in such a modification. Instead, it’s the innovators who bolster the objectives by carefully composing how employees will proactively participate in reorganization and impact the bottom line, and how they will interact for the good of the firm after the change has been implemented.
Throughout my career, I’ve both been directly involved with and witnessed organizational change. In one instance, as a lodging company prepared to go public in the early 1990’s, leadership made the strategic decision to streamline operations and eliminate the Assistant Manager position, thereby empowering non-exempt employees with such tasks as resolving customer disputes and making bank deposits. Imagine an hourly employee deciding to refund a dissatisfied guest! But, it worked. The hourly workforce was invigorated, and property managers now had home office support for what were then unconventional solutions.
On another occasion, I observed a division of a Fortune 500 company as it implemented a mass reorganization. In this instance, employees felt under informed and many worried about job security. As the implementation began, a good number were in limbo for months, “officially displaced” as managers competed for their skills and loyalty. It was evident that minimal consideration had been put into the human aspects of the organizational redesign and delivery.
A revolutionary example where people are at the center of transformational change is the recent decision by Zappos to embrace Holacracy, which, according to Forbes magazine, is “a New Age approach to leadership that involves no job titles, no formal bosses, and lots of overlapping work circles instead.” Certainly, Holacracy is not the Holy Grail, and all eyes will be on Zappos to see how it fares with this new model. However, one advantage Holacracy has is that its organizational premise is people-centered and focused on providing clarity around aligning resources and accomplishing tasks.
Human resources matter most when a company decides to restructure. A well-considered design with employees at the forefront will result in an operational transformation that benefits the organization, its employees, and its customers, thereby improving financial performance.
Scott Wise, founder and CEO of Scotty’s Brewhouse restaurants, professes that his employees are the key to his success. They are more important than customers. He states, “If your employees believe in your dreams and values then ultimately they will make your guests happy, too.”