How to Restructuring your Company- The Goliath of Change

Richard L. Daft one of the country’s recognized academic leadership experts raises the question, “What kind of people can lead an organization through major change?” A Turn-A-Round restructuring qualifies as a major change and requires transformational leadership.

Daft points out that this type of leader is characterized by the ability to bring about change through innovation and creativity. This type of leader motivates people to not only follow their lead but to believe in the vision of corporate transformation, the need for revitalization, to sign on for the new vision, and to help institutionalize a new organizational process.” Daft points to four principles in discussions about leading an organization through a major change. These four principles are the foundation of the restructuring Turn-A-Round process.

1. Create a compelling vision

2. Create a new organization

3. Mobilize commitment, Empowerment

4. Institutionalize a culture change

Caution – Beware of the Dip

A “Transitional Performance Dip” is common when introducing major change accompanied by a culture shift. Performance most commonly gets worse before it gets better. There are four phases of the transitional dip with the associated cause. They include:

  • Denial – Confusion exists, feelings of being overwhelmed, acting like nothing is different & checking out are common employee reactions in this phase. Communication and sharing of information is critical to overcoming this type of employee reaction
  • Resistance – Complaining, blaming others, spreading rumors, frustration, anger, and erratic performance are common employee reactions. Again, communication, understanding, and listening skills are critical during this phase of the transition.
  • Acceptance – Renewed energy starts to become evident, optimism appears and doubt begins to dissipate. Excitement and risk-taking become evident. This is when the vision must be restated and shared with every employee taking the time for a full explanation and answering all questions.
  • Commitment – Discretionary energy is released. Employees become action-oriented toward new goals. Ownership of the vision is now company-wide. Rewards and reinforcement are essential during this stage.

The length of time or “depth & width of the dip” depicting this phenomenon cannot be accurately predicted due to the complexities that determine it. Factors contributing to the length of time before the change efforts begin to show improvement can be impacted by the following factors:

  • The magnitude of the structural changes
  • The success of the communication to all employees
  • External environment factors
  • The critical mass of the company itself
  • Competency of the middle management group and their experience with structural and cultural change
  • Competency of the executive staff and their people skills
  • Effectiveness of leadership at all levels
  • The severity of the financial crisis or level of financial success
  • Timing

Change Process

The restructuring change process begins with the strategic restructuring of the organization, which is required to “Stop the Bleeding.” This process starts with the immobilization of the old culture. This is mandatory, as the introduction of change into any existing culture is difficult at best. Introducing change into a losing or stagnant culture is almost impossible. This change must deal with organization theory, social psychology, and business history. It must be dynamic and include the introduction of fresh new leadership.

This is a behavioral process. People can create change but people also resist change. The change process introduced must answer the question, “How do we get from here to there?” The answer to that question is your new vehicle for success.

This vehicle includes the restructuring plan, individual one-year departmental plans, and every strategic initiative developed by the new management team. Most importantly, this new vehicle is submerged in the empowerment theory releasing individual employee initiative.

The plans must be unified, simple, consistent, and universally understood by everyone. Most of the change that has been introduced must be induced change versus autonomous change. Autonomous change has a life of its own. It proceeds due to internal dynamics and follows its course. It is not easily controlled as it forms its dynamics. Induced change is calculated and planned. It can be controlled if the buy-in is generated through sincere communication and employee involvement.

Each step along this path will be accompanied by distinct challenges. As questions arise, management must be prepared to answer openly and honestly. While the old culture is suspended, change can thrive under the right circumstances. It is the responsibility of the executive team to ensure that these circumstances exist. The primary ingredients that create the right circumstances include open honest communication, empowerment, risk-taking, acknowledgment, and reward.

Organizational Behavioral Process (OBP)

This is basic to creating change, and it becomes an important part of the new vehicle for success. OBP may be described as the wheels of the new vehicle. This process will carry the organization on to new heights, new accomplishments. Organizational behavior has its roots in organizational theory and group dynamics. People are the most important ingredient for every organization and the organization’s behavior. People and how they are treated will reflect the organizational characteristics, the way it acts and interacts with its people.

Empowerment, the decision-making process, and the communication channels are examples of how the organization interacts with its people. Organizational behavior is not easy to change. That is why it is so important as mentioned earlier to immobilize the old culture to introduce change. (E-mail for a list of immobilizers) The behavioral process of the organization can withstand personnel changes.

In other words, changing out management does not guarantee a change in organizational behavior. You must take proactive steps designed to create new organizational behavior. The new vehicle is part of that. It includes focused specific objectives, open channels of communication, empowerment, and sincere respect for the individual employee and his contribution to the organization.

Organizational behaviors become generalizations. 

They are discovered from observations of everyday work habits and they have no independent existence apart from the work processes in which they appear. They are difficult to identify but they are extremely important. They affect the form, the substance, and the character of the work processes themselves. They affect the way the work process is carried out. They are different from culture because they represent more than just values and beliefs. They are involved in the sequences producing work.

The decision-making process is a major characteristic of the behavioral process. The decision-making process is a much-studied process beginning with the studies of Chester Barnard and Herbert Simon who argued that organizational decision-making was a distributed activity, extending over time and involving several people. In other words, decision-making is not the personal responsibility of a single manager but a shared, dispersed activity that they only need to orchestrate and lead. This is still a surprising and often unaccepted theory of managers today.

The Eight Road Blocks to the Change Process

1. The lack of a sense of urgency

2. The lack of buy-in, a coalition of support

3. An unclear vision

4. Failure to communicate the vision

5. Failure to provide resources and remove obstacles

6. Not systematically planning and creating short term wins

7. Declaring victory too soon

8. Failure to anchor change in the culture as it is occurring

Sense of Urgency

Success at anything requires a sense of urgency, a commitment to accomplishing something. If employees don’t have this sense of urgency, complacency can become an issue. To meet difficult challenges, to excel at anything, to create a competitive advantage employees must release their discretionary energy toward achieving company objectives.

Discretionary energy is that extra that you can’t ask an employee to give but is automatically given by those employees that have a sense of urgency. Of course, no employee will release that discretionary energy for a leader that has not earned their trust and their respect. A leader will not be respected by the employee until he shows respect for the employee. A leader will not be trusted by the employee until he shows trust in the employee.

Forming a Powerful Guiding Coalition:

Success is not an individual accomplishment. Initiating change requires buy-in and agreement. A group of believers, achievers, and team players must be assembled to not only support the change process but to drive the process. The group must function as a unit showing unilateral support of the change process. Examination of the market and competitive reality is part of the challenge as well as identifying and discussing the potential crisis, critical constraints, and major opportunities.

Creating a Vision:

Success at initiating change starts with the creation of a compelling vision that provides a roadmap for the change. This roadmap answers the question “What’s in it for me”. WIIFM. The vision is supported by the development of strategy and action planning to achieve the vision.

Communicating the Vision:

Success requires leadership and leadership without communication is like a gun without a bullet. It looks impressive but it can’t do anything. A specific communication strategy must be outlined and acted upon to ensure that all employees are aware of what the vision is and how it is expected to be accomplished including defining individual roles and contributions. It’s about to buy-in.

Empowering Others to Act on the Vision:

When critical constraints or roadblocks are identified, they must be removed or overcome quickly. This means allocating resources accordingly. Systems or structures that can undermine the change must be eliminated. Empowerment involves trust and allowing people to use their initiative and creativity.

Planning for and Creating Short-Term Wins:

Milestones need to be set up to mark progress and allow victory celebration along the change path. Success breeds success and excitement breeds excitement. Create success and excitement by setting interim goals that can be achieved and celebrated. Recognize and reward employees accordingly that are part of the accomplishments.

Declaring Victory too Soon:

Interim success and short-term victories are important but don’t spike your own Kool-Aid. Be realistic and keep your long-term goals in sight. Consolidate those short term improvements to produce continuing change. Use increased credibility to change systems, structures, & policies that don’t fit the vision. Hiring, promoting, & developing employees who can implement the vision is essential to continued success during a major change effort. Reinvigorate the process with new projects, themes, and change agents.

Institutionalizing New Approaches:

Success must be anchored as it occurs and then built upon by articulating the connections between the new behaviors and corporate success. Leverage this success to ensure leadership development and succession.

Make no mistake, effective leadership is about creating change. This is true in every circumstance, whether a company is facing restructuring or dealing with the challenge of accelerated growth. Change is the defining moment that identifies true leaders from imposters. To become an effective leader, understanding change, creating change, and most importantly managing change is the first prerequisite.

By: Rick Johnson

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