Reorganizations come in many forms, but the common element is the toll it takes on people. Whether it is flattening the organization for faster decision making, or a merger and acquisition that necessitates the integration of a common management structure, the impact is real and can distract your people from daily operations. People are creatures of habit and disrupting the comfortable nature of their reporting and peer relationships can create anxiety and frustration for your teams. It is natural for employees to be concerned about the impact these changes may have on career opportunities, ability to contribute in a meaningful way, and job satisfaction.
And while these changes are always made with a lot of careful consideration, they tend to go wrong more often than not. According to McKinsey research, only 16% of merger reorgs fully deliver their objectives in the planned time, 41% take longer than expected, and in 10% of cases, the reorg actually harms the newly-formed organization. Common pitfalls include a lack of cultural understanding between the integrating parties, poor integration leadership, and a focus on the wrong activity set or the wrong targets.
One study conducted by Bain & Company not only found that less than a third of reorg's resulted in significant performance increases, but that some actually did just the opposite -- they destroyed value.
Some of the more common reasons cited for these failures include:
- Failure to think through what the critical decisions are for the business, who should be responsible for them, and how the new structure will help people make and execute them better.
- Misunderstanding the true strengths and weaknesses of the organization.
- Missing key details of how the new organization will actually function.
- Sticking to a flawed solution for too long.
While all of these and many more are key problems, I think there is another key aspect that impacts all of the above: the lack of tools available to really understand the impacts on people. As mentioned earlier, there is no lack of planning regarding these larger reorganizations. However, there is often little data available to help forecast the impact on people, and there are very few tools that help with creating multiple scenarios for managers to choose from.
According to the authors of this recent Harvard Business Review article on merger reorganizations, "In developing organizational solutions, explicitly choosing from a number of options is the best approach. No solution will perfectly fit all future possibilities and every solution will have its downsides: only by weighing alternatives will you see what you might gain and what you might lose."
But how do you choose from a host of alternatives if it is difficult or impossible to truly identify the potential options? This is where Cloverleaf comes in. Not only are you able to visualize the strengths and cultural dimensions of each organization but you can actually scenario plan the impact of combining, consolidating or re-shuffling the people inside organizations and teams.
Now - at least for culture, strengths and personality - you can know that you will go into the changes with eyes wide open. We may not be able to solve the detailed integration questions, but with Cloverleaf, you now have a powerful people planning tool. Contact us to find out more about our enterprise solutions or create a free account for up to 1 team.