Maybe your business needs to respond to a changing marketplace, or maybe the original org chart just won't cut it as your company scales. Whatever the reason, reorgs are on the rise: Around 60 percent of S&P 500 companies have done an organizational redesign in the past five years, according to a 2016 McKinsey analysis. But the consulting giant also found that fewer than 25 percent of reorgs succeed.
"That's not always because the vision is wrong. Often, it's because people don't understand the vision or don't buy into it," says Gretchen Spreitzer, faculty director of the Center for Positive Organizations at the University of Michigan and co-author of How to Be a Positive Leader. She breaks down how to win at reworking the old way--and ease employees into the future.
If you're all ponies and sunshine about the company on Monday and then order
a reorg two days later, employees will feel blindsided. And Spreitzer's research shows that employees who don't trust management to be open and honest are more likely to withdraw or rebel against the change. "Leaders want to protect employees from concerns, but when people know that the company is making less than it used to or that more competitors are moving onto the turf, it builds trust," Spreitzer says. "People feel like they're psychological owners of the company, even when they're not equity owners, and that lays the groundwork for more efficient reorgs." Long before you announce any changes, start opening up about the reasons that are pushing you toward them.
Train, train, train
You may know what it means to shift from a functional to a matrix structure, but baffled employees won't--and will need to learn how to handle their new roles. "People always feel somewhat overwhelmed by the change process, but if they also feel overwhelmed by their skill deficiencies, that really exacerbates it," Spreitzer says. This makes a reorg a good time to ramp up your training and mentorship efforts.
Reach out to resisters
When McKinsey surveyed 1,800 execs who'd weathered a reorg, they said the biggest difficulty they had faced was employee resistance. So it's no surprise that other research shows that the best change teams include a skeptic. "You don't want a jerk, but you don't want only people who are all rah-rah about the change to guide its direction," Spreitzer says. "Diversity of opinion can make the vision better, and with a resister already on board, people who might be tentative or concerned are more likely to say it has potential."
Skip the big reveal
When you're ready to unveil the grand plan, resist the urge to do so at an all-hands meeting. CEOs usually default to this--or videoconferences for global teams--because they want everyone to hear the news at once. But Spreitzer's studies have found that people react best to the news when it's shared with smaller groups. "Employees are more likely to have a trusting relationship with their unit leader, and they'll feel more comfortable asking questions and processing the information as it's shared," she says.
Coach team leaders to focus on three layers of information: Here's where the company is headed and why, here's how that's going to work for this unit, and here's how it's going to benefit you as an individual. Go ahead and book an all-hands--just do it after those tailored talks.
The smoothest reorgs happen when a CEO enlists leaders from different teams to dig into the nitty-gritty. "Those employees might have more time to devote to this and a better understanding of their department's concerns," Spreitzer says. "They'll also feel honored to be asked, and that buy-in will go a long way toward generating broader buy-in."