Restructure – why, when and how

You hear it all the time – “We’re restructuring.” Sometimes it is accompanied by “We’ve been too busy restructuring to do (whatever the subject of discussion)”. “I lost my job in a restructure,” is an all too familiar wail. It seems that restructuring is happening all around us and most of the time. Is it right, is it necessary, does it work? Change for change’s sake seems daft.

The incidence of restructure today is greater than at any time in my career. Unfortunately, a lot of it is taking place to accommodate egos of individuals who must be placated because they are losing some of their power. The cause of this shift of power is often right. New technologies, regulations and workplace attitudes all demand a different mind-set. Older hands may be able to adapt to this and keep up with change, but it can prove difficult.

What is a structure for? Why does it need renewing?

Originally structure was an hierarchy of communication. Best informed were at the top. Information moved from the top, down. Because information was the tool of power, the communication channel was also an hierarchy of authority. This gave rise to the pyramid structure most organisations still have today. There certainly needs to be authority. You cannot lead a rabble. Your troops must be disciplined and orderly if you are to get them working successfully.

But information power has declined as general information has become widely available. Certainly, information about the organisation and its performance is still in the hands of the boss but it is a foolish boss who doesn’t share it. Not to do so puts the whole organisation at risk and guarantees that in the end the boss will be removed. Little information power is left in most organisations.

Hire and fire power still exists and with it the right to promote, demote, reward and withhold reward. Laws and regulations on dismissing people have weakened these sources of control and employee rights have blossomed to the point where good employees have significant power in their hands, whether directly or via social media. Improved education, even among artisans and lower-paid workers has given them confidence and personal self-worth way above what they once knew.

The power a boss wields is therefore very different and much less than previously. His management has to be more collegial. One of the tools he has in his quiver of controls is structure. At its simplest this is ‘Divide and Rule’. Structure is more complex than that, of course, but D&R is how some managers try to maintain authority. It is an ineffective way to do so.

Much restructuring is a waste of time and effort. Moving the pieces around the board may give a boss a feeling of control but it seldom makes sense to the point where the new layout is worth it. As a way of incorporating new technologies it is almost bound to fail because it will lead to a power battle either outcome of which will be disastrous for the business. If the new wins, the old will be disrupted in an unhelpful way. If the old prevents the new from gaining ground the exercise fails.

Restructure is necessary when one part of a business is going to become redundant or less important and / or another part is about to make a major contribution. The restructuring then needed is usually simple and designed to provide resources for the sunrise without removing them from the sunset. Shifting a few staff is not restructuring, nor are minor changes in reporting lines.

Assuming the members of the organisation are properly connected and not part of a dreaded matrix structure, changes should be clearly visible with unambiguous reporting lines. Anything resembling a restructure should normally take place infrequently and should be presented as a minor swell not a major shipwreck. Restructuring because it is fashionable to do so is negligent.

Every business needs a frequent wash and brush-up. Disciplines need tightening from time to time. Basic minimum process will change as resources and demands change. But the idea that restructuring an organisation will make it suddenly more productive is generally nonsense. When new technologies have to be learnt they should be taught by training and cohesive coaching.

Churning the structure of a business is as bad as churning anything.

Think before you restructure — and save yourself time and money.