For many service providers, there comes a time when it’s essential to reorganise the business. The external environment has significantly changed, with a 40 per cent rise in new service provider entrants, a squeeze on operating margins and a changing customer mindset. Thus the impact of consumer choice is driving mergers or major business transformations, such as becoming customer-centric or digital transformation. Many smaller providers may be in crisis and will no doubt need to reorganise to survive, as their competitors have ramped up and they need to change to keep up.
Reorganising to be more customer-centric means aligning your organisational functions to your customer, such as consolidating common service delivery functions to provide a single holistic view irrespective of how those services are being funded. For some providers with diverse service offerings, this means merging teams managing in-home disability support and in-home aged care services into one customer-focused operating unit. Similarly, there is a growing trend of divesting service programs that either don’t have sufficient scale or are not your core business.
It’s important to accept that in most cases change is necessary and inevitable. However, that doesn’t mean you can just launch into a huge reorganisation. When organisational change isn’t managed effectively, it can have disastrous effects and possibly damage your reputation and brand name. Some of the top reasons reorganisations fail are:
Internally, no-one is clear on the ‘why’. Why exactly is the reorganising happening? Often leaders and employees rebel or resist in the absence of clarity of vision.
Too much focus is placed on positions in the org chart, and not enough on the really important elements: the right people, integrated processes and a healthy culture.
The change effort isn’t sustained – leaders sometimes prematurely stop at some time before the reorganisation is fully embedded or complete.
The importance of the process of change implementation has been underestimated. That is, the success of the change process is probably more important than the new structure.
Now we’ve looked at what to avoid, what can you do to help success? Below are five tips to keep in mind when deciding whether to reorganise and how to implement the change.
1. Why reorganise? You must first determine the return on investment and identify the benefits of reorganising. This will help assure your team as you go through the reorganisation that there’s good reason for it. Determine the real reasons you need to invest time, money and effort to go through the process. Are you cost cutting and/or trying to increase revenues? How long will this take before you’re settled into the new state? What’s the value of lost opportunities of going through a disruptive process? All of these can be measured in time or dollars to have a clear understanding of why it’s important to move in the new direction.
2. What to reorganise Before you dive in and start moving boxes on an org chart, identify what you’re good at and where your weaknesses lie. Diagnose your business and understand it first in those terms. Engage widely. Take your people on the journey. Listen intently. You might restructure the wrong part of the business and thus damage your brand or revenue streams (i.e. what you do well) if you don’t listen hard enough. Effective diagnosis will determine the right areas to look at for reorganisation and preserve what you do well.
3. How to reorganise The critical step is to explore multiple reorganisation options and properly consider them with your leadership. If we do option A, how will that impact our brand versus option B? What are we giving up with option A? Your organisation may not be completely broken, so you may need to only focus on certain areas. By ensuring your leaders have a say in these options, you then help them focus on what’s good for the organisation and let them own the outcome. The idea is to do away with self-interest, and allow leaders to determine for themselves if the reorganisation journey is the right path for them. The ultimate goal is to come up with one clear and coherent reorganisation plan, and ensure all of your leaders are on-board.
4. Translate the organisational design into an implementation plan Next, translate the impact of the reorganisation on your people. Identify bottlenecks, risks and dependencies. How are you going to get to the new state, which may involve new skills, new processes, new ways of working, etc? Where the whole organisation is involved, how does the change impact discrete teams? Develop an implementation plan by engaging as widely as possible.
A critical outcome of any reorganisation is to keep the right people, but there’s always a risk the good ones will go. With a bigger picture in mind, it’s easier to manage the disruption on a day-to-day basis as you know what the end game is. Develop the metrics to monitor the outcomes and behaviours you need to evaluate your progress.
5. Reflect and gather feedback Lastly, review progress over a sustained period to embed your new structure, people and processes. What went well and what didn’t? Feedback from all stakeholders will be critical. Develop a way to capture problems and lessons learned and use this information to have more meaningful conversations about how you are tracking.
Don’t restructure without making sure it’s the best thing for your organisation. If reorganisation is essential, make sure you set yourself up for success. Throughout the process be honest and open with employees. Find the best way to reduce the stress and uncertainty felt by your people during a period of restructure and keep them up to date. Remember, some things can’t be planned for, but by following the key steps above, you’ll be more likely to succeed.
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