How to do the re-organizaion

I’ve been meaning to write on this topic for some time after publishing Why companies reorg? post. The original article covers re-organization from the employee’s point of view but leaves the manager’s perspective open to interpretation. A certain amount of “wisdom” is required to complete a re-organization successfully. Organizations are made of people so bringing them along, building consensus, and trust is vital to land re-organization right. In this article, we will go through the detailed execution plan for changing organizational structure. This content will be useful for new managers as well as some experienced ones.

Unstructured team

Lead with a principle

Reorganization should revolve around a single specific idea that is tied to company values, the mission at hand, or an initiative that people subscribe to. One idea represents a single axis around which you will revolve your organization. If there’s more than one idea at play, it will be hard for people to discern which of them is more important in the next steps, so stick with one. The idea also needs to be simple and easy to grok for everyone affected by the change. Reorganization affects peoples’ lives so they must be able to evaluate their position in the organization relative to that idea. For example – “diversity” is a great initiative, but a horrible reorganization principle. It is border-line illegal under the US constitution.

A single principle is also valuable for you as a leader and your leadership team. It shifts the conversation from “I want these people in my leadership team” to “We come together to accomplish this vision in our leadership team”. You mitigate confirmation bias with a principle others can give you feedback on. Your direct reports and peers can work with you to evaluate candidates for positions in your team based on the principle. Avoid a principle that is too narrow and excludes almost everyone except a few individuals.

Here are a few good principles to give an example:

  • Employee-to-manager ratio – no more than X or no less than Y employees per manager. This principle establishes a required span of control for each manager and serves to increase or decrease the seniority of the leadership team. It also serves as a mechanism to flatten or deepen the organization.
  • Consolidation around functional areas of the organization serves to deepen the organization but reduce the number of managers reporting to you. This is a good principle if you find yourself being a single point of conflict resolution in the organization. By consolidating multiple areas under fewer managers you are de-centralizing the decision-making process.
  • The promotion of a specific leadership trait is a good technique to drive a cultural transformation in the organization. Nothing speaks louder about team values than the recognition of individuals that exhibit them.

This paragraph doesn’t cover the topic of which principle to pick for the reorganization and when. This is a much bigger area but has been thoroughly researched in the field. One methodology would be the STARS model – identify which situation your business is in and act accordingly.

Validate your hypothesis with impartial justices

Discuss your principle and individuals affected by it with your trusted advisers, emphasis on the word “trusted”. You are very early in the process and need to gather feedback from people who will not judge you or disclose/leak your intentions prematurely.

You shouldn’t discuss upcoming reorganization with trusted people within your organization right off the bat. Gather feedback from “impartial justices” before talking to people who might be affected by the reorganization. Even if they wouldn’t be affected in the long run, you will plant the seed of concern in their minds and may impact their stress level or performance.

It is valuable to discuss your plans with your partners in case there’s an opportunity for coordinated action. If you are in engineering and are partnering with a product management organization – consider making a change in the product organization as well to align with your change.

During this phase, you are looking to evaluate the “Risk” vs “Outrage” factor. Your superiors will tell if you when would be a good time for a change you have in mind. Now may not be the best time, given the broader context you are not aware of. Reach out to “historians” in your organization who remember similar types of changes in the past and how the organization responded to them. You may have the best intentions but people may reject the change if they had bruising experience with prior management. You cannot go wrong by casting a wide net and spending time collecting ample feedback.

Build a support base among your direct reports

At this point in the process, you know how people will respond to the change. You are ready to pick a few of your strongest direct reports, who are not affected or stand to benefit from the change, and “bring them into the tent”. Do not do that at the same time with all of them in the room, but rather talk to them individually, one after another. Walk them through the vision and reveal the principle, collect their feedback. During this phase pay attention to how they evaluate themselves against the principle – do they agree that they are not affected or do they believe you miscalculated? Give them time to think. You will likely need to meet a few more times with them individually until they are fully bought in.

The next step is to bring them together and explain that they are the foundation of the new leadership team. They are not the entire leadership team but they are the early trail-blazers who will help you build a new leadership team. They play a critical role by being your voice among their peers.

Leadership team agreement

Form a transitional team

Bring all your direct reports into the room and announce your intent to change the organization around a principle you identified in the first step. They should not be discussing this process outside of the room. From that moment onwards until a new team is formed, they are the transitional team. Establish the timeline and the plan for how the new team will be formed. A short presentation and a slide deck they can refer to offline can help. Ensure you cover “the why” in-depth – why now, why this principle, why their organization? Simon Sinek wrote a book on this topic, which is good reading material for leaders.

At this point, it is a very human reaction to be concerned about their jobs. Unless you are really intending to let people go, make sure you address their concerns. Reassure that they will have a place in your team and that place will be determined by the process that follows. In fact, re-iterate that their primary job for the following few weeks is to form a new team. Make yourself available for 1:1 to further clarify any questions people will have.

Distributed selection process

The process to use for team formation depends on the maturity and level of trust in the team. If trust is low or the team is not mature enough then a set of individual self-assessments would be more appropriate. Have each of your direct reports write a one-pager evaluating themselves against the reorganization principle. You will write your evaluation of them in the same document and have an open discussion. If you’ve been a good manager on top of your game, people shouldn’t learn anything new about themselves in this process. You should simply re-iterate what you have been saying. In fact, employees should know on their own whether they meet the principle or not, even without your feedback.

Centralized selection process

If the trust and comradery are high in the team, you can do this exercise in the group setting. Instead of each employee representing/defending themselves in front of peers, ask them to give feedback to each other. This process is more transparent but definitely requires a lot of trust. It will backfire if there are employees who clearly do not meet the principle. Rather than a growth exercise, it will turn into public torture. The upside of this path is a shorter distance to consensus and a deeper appreciation for the new leadership team because everyone is involved and everyone has a say.

Limit this phase to only exploration and feedback, do not make a decision.

Predetermined selection

As a leader of your organization, you can choose to name new leaders without going through the selection process. This path implies that you will do all the heavy-lifting yourself. Your existing team will not help you bring new people. This is really a nuclear option that indicates your existing team, for whatever reason, is not capable of building a new team to meet the principle.

Find new people to add to the team

Invite your transitional team to recommend additional people to bring into the team. Unless you are shrinking the number of direct reports, there may be an opportunity to increase diversity or composition or your team with additional people. People could come within your organization, from peer organizations, or from the industry. Engage your transitional team to the fullest to identify quality candidates who meet the principle of the organizational change. Ask your team to evaluate each candidate in the same way they evaluated each other in the prior step, without bringing the candidates for an in-person conversation. Do your own research on the candidates, without talking to them or their managers, and apply that filter on top of the selected few identified by your team. Going through this process with your team builds trust that comes from the transparency of the process and consistency of the bar.

Now that you are ready to engage the candidate, the candidate may not be ready to engage you. Reach out to every level of management between you and the candidate and discuss this opportunity, starting from the top. They may have other plans for your candidate, or they may be aware of the context that disqualifies the candidate. Most managers would be excited about growing their people and would welcome the opportunity. Managers will likely share with you the performance history of the employee that either helps or hurts his/her prospects on your team so listen carefully.

At some point, the candidate’s direct manager will have a discussion with the person you are interested in bringing in. If the employee is on-board, you will be given a green light to engage directly. It is important to let the process play out and not cut it short, you will not be successful in bringing that employee into the team.

Finally, you can talk to the candidate directly. Balance the amount of “selling” on the opportunity with the demands of the role. If you oversell but understate the demands, the employee can fail or regret the decision. It is worth meeting with the employee a few times, giving a week or two for thinking between meetings. Even the smartest, most passionate, motivated, and ambitious people can “jump over their heads” if they don’t internalize what’s at stake. Once the employee confirms their commitment, you are ready to move to the next phase.

What’s next for people who haven’t made the cut

The shape of the new team should be obvious to everyone, you only need to close the loop. Some people will no longer report to you directly. If you were their manager for a while this will be a hard change for employees so be sensitive.

This phase requires a bit of preparation. Do spend time identifying the opportunity for each employee affected by the change. It could be within your organization or even within another organization. Do not leave employees fending for themselves on the sidelines because you will lose their trust. It will impact their morale and career trajectory. Make sure everyone is taken care of.

Schedule a series of 1:1 with people who will not be on your leadership team and let them know. The key here is not to focus on “why not” but rather discuss “what’s next for them”. Everyone wants to be valued and appreciated. People respond to organizational changes more positively if they get an opportunity to do something bigger or more exciting. Everyone wants to grow in their career. In certain rare situations, having them line-up behind another leader could ensure business continuity and allow them to continue to put food on the table of their families, as opposed to the entire business going under. Extrapolate event progression with and without reorg and explain the implications. Your change should optimize for the global maxima (greater good of the business, as opposed to the greater good of one team or one person).

Break the ice

It is an exciting moment when a new set of people meet for the first time in a new capacity and begin a team formation journey. It will take time for them to function as a cohesive unit so don’t expect miracles and infinite trust right off the bat. They will go through regular Forming, Storming, Norming, and Performing process. The objective of this phase of reorganization is to be well within the “Forming” phase before the public announcement.

The new team needs to break the ice and get to know each other. A good first step could be to go around the room and give a short introduction by each person. Share a template slide deck with the team ahead of time and let them prepare for the presentation. Timebox each presentation to 10 minutes. Typically people cover the following topics:

  • Strengths and accomplishments. Give each person to share their claim to fame. It will set the upper bar of expectations among their peers.
  • Weaknesses and mistakes. This is a trust-building exercise that allows each person to be vulnerable for a brief moment in a safe setting. It also serves as the low bar of expectations for that individual.
  • Personal values. This list explains how to find common ground with that individual. If someone values action, they may be your future early allies.
  • Conflict triggers. Each individual should share no more than 2 behaviors in others that generate a strong negative response or reaction in them. People should pay attention to lower the Storming curve, so to speak.

I found that the RHETI test by Enneagram Institute is a great tool to build understanding in the team. Have each member of the team take the test then talk to their results in the group. People will be more forgiving and sensitive having insights into each other’s personality traits.

Tweak the organization, on paper

The sequence of steps in this article is intentional. Organization tweak comes after a new team is formed, not before. Jim Collins introduced the concept of the bus in the “Good to great” book. He argues that the right set of people “on the bus” will self-organize and ensure the bus gets to the destination, regardless of what that destination is. In alignment with that idea, you should focus on who is on your team first, before you or they decide what they do.

The new leadership team needs to work together to create the most effective organizational structure to meet the principle. In this phase, you should be an arbiter and advisor, but let the team drive the discussion. This is their first task and you can see how well they function as a team. Pay attention to who “leaderizes” themselves in the ground – they are strong contenders for your succession plan.

Team should analyze the organization across a number of different slices:

  • Projects and commitments – pretty obvious, but I’ll call out anyway. The team should crawl through the pile of work scheduled and in-flight to decide if anything can be stopped, re-prioritized, or scoped down. Re-organization is a great moment for these tweaks and makes it even more impactful.
  • Talent pool – what kind of people would each of your leaders need? Is the talent skewed in one area of the organization? Are there gaps that need to be filled by hiring?
  • Culture and interpersonal dynamic – are all teams equally diligent in their work? Are there people who can’t work together due to personal conflicts? Any employees could benefit from the change of scenery?
  • An ideal span of control – each of your leaders needs to have just the right number of direct reports and projects to be effective. Some people thrive just fine with 25 people, while some won’t scale beyond 10. Factor leadership experience in this equation as well and don’t make managers lead much more senior teams than they are.

The goal of this phase is to have a paper diagram of the organizational structure. At this point your organization is not aware of impending changes.

Write a message

Collaborate with your team on an organization update message. It should be not too short to leave logical gaps, but also not too long to lose people in the details. Set the stage at the beginning of the message to explain what follows. People would want to know “why” the reorganization is happening so spend 2-3 sentences on that topic. Be concise and to the point, avoid business jargon. People want specifics, so give them just that.

In the next section, talk about the principle, to the best extent possible. People are smart and will read every letter under the microscope. They will look at your old team and the new team and analyze each difference against the principle. Be sensitive to the people who were negatively affected by the change. For example “we want our managers to be hands-on” – does it mean that people affected by the change are not hands-on? On the other hand – “we are adjusting organization structure to give managers room to spend time with their teams” is devoid of personal characteristics and will land much better.

The reorganization message needs a vision section. Write a few sentences to explain where this organization is going, or how it will evaluate success. The principle discussed in the previous paragraph answers the “how” question, vision addresses the “what” or “where“. The vision should be simple, memorable, and attainable. For example – “deliver feature X 3 months ahead of schedule” is specific and simple, whereas “increase productivity” is fluff.

Introduce your new leadership team and talk about each person briefly. Explain why they are part of the leadership team and what unique value they bring to the table. Reveal their area of responsibility and who will be joining their teams. Dedicate a section to people transitioning out of your team and talk about their next steps. It would be wise to avoid adjectives in this section and just state the facts. This paragraph covers the “who” question.

Last bit of information people will need is timeline or schedule. Organization changes do not happen instantaneously, there is work in-flight that may need to be stopped. Be reasonable and give a few weeks of runway for machinery to turn around. This will answer the “when” question.

Finally, it helps to include a new organizational structure into the message. People are visual beings and perceive information much better that way. Add an organization chart, timeline chart, or any other charts you deem necessary.

Percolate the message behind the scenes

Have each team member read the message slowly multiple times and evaluate how it can be perceived by employees. Run this message by your trusted advisors from prior sections of this article, and by organizational “historians”. Pay close attention not to come across as incompatible with company culture. Even if it is not your intent, people will see things they want to see.

Make sure each of your current direct reports talks to their teams about the re-organization using this message as a reference. Do not show the message “as-is” at this point, but rather have all existing managers read it and be consistent in their communication. Once employees know, be prepared for this message to spread through the entire business like a wildfire through dry brush.

There will be a lot of individuals concerned about their careers and jobs. All managers should allocate time for 1:1 conversations and explain what will happen to employees after the reorg. Give enough time for employees to give feedback and share concerns.

If employees are changing managers, have both original and new managers meet with employees for discussion. The new manager should explain the vision, while the original manager should express support and alignment. No career trajectory of employees should be impacted and all relevant pieces of employee performance management should be transacted between managers.

Schedule an all-hands meeting

This is your chance to land the reorganization and garner support. Do not do reorganizations without all-hands meetings. People will want to hear from you and your direct reports. They want the reassurance of stability and optimism for the future. They will also want to ask questions in public and let everyone hear your answers. All-hands is a great tool for you to gauge the temperature in the organization and how receptive people are to what you’re trying to accomplish.

Send the message

Wait to get an acknowledgment from your leadership team that all employees were notified and they had time to give feedback. Friday end of the day is not the best time for this announcement. People start to disconnect from work for the weekend and won’t pay attention. Monday or Tuesday are usually the best days because everyone is fully recharged and at the top of their game.

Execute

Everything’s been set in motion, now you only have to follow through.

  • Existing managers should schedule transitional meetings with every team impacted by the change. They should invite you and the new receiving manager. Keep those short – 30 minute tops. The goal is to re-iterate the message again in a smaller setting, customizing it for the team at hand. Touch base on employees moving between managers and new team structure.
  • Bulk-upload the change into the HR tool. Reduce your margin of error and do a single bulk-update for all employees affected in a single transaction, rather than have each manager run separate transactions.
  • Establish rhythms of the new organization – what reviews take place, at what time, and who is presenting. I find the following rhythms useful:
    • Talent reviews – talk about employees to reward and those that need attention and help. You should discuss hiring needs and progress in these meetings too.
    • Product reviews – organizations exist to deliver value – review that value regularly and adjust.
    • Project reviews – this is a category that spans actual projects, organizational priorities, alignments with other organizations and conflicts, and so on.
    • Team meetings – create an agenda document and let the team drive those. They can be short 15 minute meetings and can be cancelled if no agenda is available.
    • Initiative reviews – pick an initiative that can span an entire organization and drive a change. For example – “quality” improvement is a great initiative.

There will be a lot of additional small tweaks to settle the reorganization but at least the bigger framework remains unchanged.