Getting Reorgs Right

By: Stephen Heidari-Robinson and Suzanne Heywood

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Synopsis: Chances are you've experienced at least one company reorganization. Reorgs can be a great way to unlock value: Two-thirds of them deliver at least some performance improvement, and with change accelerating in the business environment, they are becoming more and more common, the authors say. But most reorgs aren't entirely successful: According to a survey conducted at McKinsey, more than 80% fail to deliver the value they are supposed to in the time planned, while 10% cause real damage to the company involved. More important, they can be miserable experiences for employees. Research suggests that reorgs--and the accompanying uncertainty about what the future holds--may cause greater stress and anxiety than layoffs, leading to noticeably reduced productivity in about 60% of cases. That's because the leaders of reorgs don't specify their objectives clearly enough, miss some of the key actions (for example, focusing on reporting lines and forgetting processes and people), or do things in the wrong order (such as deciding on the way forward before assessing the strengths and weaknesses of what they have already). To help maximize the value and minimize the misery of reorgs, the authors have developed a simple five-step process for running them.