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Why companies reorg?

Why companies reorg?

Being a front-line employee, deep in business trenches, putting up a good fight against the competition – your attention is focused outward. You are hammering out a new product and dreaming about blowing the socks off your future customers. Suddenly, there is an email from one of the bosses in your management chain. They are doing a re-organization, moving teams around, changing who is reporting to who. In a heartbeat, your entire future hangs in the balance. Your blood pressure rises and panic attack ensues. Why can’t these people up above just leave you alone? What’s itching them to shuffle people around every 6-12 months? In this post we will talk about why reorgs happen and how to ace them like a champ.

Panic due to reorganization

The illusion of power

From the trenches, it may seem as if your skip-manager or his boss wields an insurmountable amount of power and can swing organization in any direction at the drop of a hat. That is not the case. The reality is such, that the higher up you go in the leadership tree, the less influence you have on the product, daily lives of employees, or the culture of the organization. Your direct manager is a more powerful individual than his or her manager. He or she can stop your project, move you to another scrum team, give you a bonus, and many more things. Your skip has to work through your manager to accomplish the same tasks. Your level 3 manager has to work through your skip. You get the point.

Companies tend to systematically promote incompetent employees to management to get them out of the workflow.

The Dilbert Principle

Of course, great companies promote employees into management positions for actually useful qualities. However, manager’s power is limited:

  • A manager can hire, fire, or move people around.
  • He or she must abide by the company policy. No free for all decisions.
  • A manager is accountable to his leadership, employees, peers, customers, and partners.

If she fails to do the job – she will find herself on the chopping much quicker than a front-line employee. Let’s address common misconceptions about manager’s power:

  • A manager can’t change the organizational culture on her own. Culture comes from the bottom, not the top. However, a manager can hire people that will create the desired culture. So if you work in a stressful environment devoid of trust – that’s your boss’s fault.
  • A manager can’t storm into a design discussion and push her vision. It will backfire by alienating his or her team, tanking employee morale, and dragging down the productive output of the team. This manager will find herself on the chopping block.
  • A manager can’t complement your new haircut or highlight your fresh tan. That’s called sexual harassment, even if your boss has the same sex as you. Even if your boss genuinely wants to make your day.
  • Not to mention, any wild idea that your boss utters without thinking, will come roaring down on the front line. Employees will be confused, scared, stressed, which will impact team productivity and we all know where those managers end-up.

Global vs local maximum

It is hard to see what’s behind the horizon standing at the bottom of the mountain. However, if you climb up, you will see farther and may even see other mountains. The analogy to reorganization is that front-line employees have limited visibility into the playing field. You may think your manager is the “most awesome dude” ever worked in corporate America. However, that same boss, from his boss’s point of view could be making serious organization or business mistakes with no end in sight. While you would love to keep your boss, it may be necessary to replace your boss with another boss for the sake of you being able to provide food for your family.

Local vs global maximum of the function

Mathematic differentiates local from the global maximum of the function. If you zoom in on just the part of the graph when 0 <= X <= 4 it may seem that the peak is the highest it can get. However, if you expand your range to the entire axis, you will see that the actual maximum is somewhere between 6 <= X <= 7.

People in the management chain have a better understanding of how the business operates and what is holding it back. They are equipped with higher fidelity data to make better decisions. It may hurt to have your project cut, boss reassigned, or even have you moved to a different team altogether. However, this may be a necessary change to allow the company to grow and enact a positive change in the world.

Another analogy, while we’re at it, is a doctor. You go to the doctor and he or she inflicts pain. You may be missing teeth or going through surgery recovery. However, the outcome of a doctor’s action is your health and vitality. You keep living your life and you no longer feel pain. Think of managers as organizational doctors.

Reorganization reasons

I would say, about 75% of the time, reorganization emails actually reflect the true reasons. Sometimes managers talk about the obvious elements of reorganization and keep the juicy parts hidden to avoid rattling employees. When an email arrives, read it a few times to make sure you picked every word. These emails are hard to read because they are full of corporate jargon – “realign our strategic initiatives“, “refocus our efforts” – come again?

Another important aspect to keep in mind is that reorganization is a precursor for changes. Reorganization email and changes in management are visible and are discussed at length among different circles of people. However, once the dust settles, a swarm of small tweaks ensues. They aren’t publicized because each tweak is not super significant in itself. However, all tweaks in totality may dwarf the original reorganization announcement.

Here are the most popular reasons reorgs occur:

  • To kill a project. Says there’s a team working on project X and stopping it instantaneously is not an option due to potential backlash. A manager can choose to reorg that project leadership under another team that has completely different priorities. Natural effect – the project will start dying a slow death due to resource and leadership starvation. Eventually, it will be folded as a quick failure and a number of good learnings.
  • To save a project. It is possible that a highly promising project is limping along due to a lack of talent. It lacks leadership or engineering talent. To fund the project to succeed it may be necessary to inject “fresh blood” by reorganizing a strong team under the project leader. Naturally, that leader will tap into new people and correct the project trajectory.
  • Too many cooks in the kitchen. When there are a number of leaders that can’t reach an agreement due to personal convictions, it may be necessary to move some of them lower in the organizational structure. Those that stay higher will end-up dominating and decisions will start coming out. Not everyone will agree, but that is irrelevant because the chain of command is clear.
  • Siloed thinking. Have you seen a “not invented here” syndrome in action? It is truly entertaining to watch a few different teams solving the same exact problem refusing to talk to each other. When leadership recognizes this pattern, they may choose to reorg these teams under one leader. That leader will use the authority to inspire collaboration and reduce effort duplication.
  • Lack of end-to-end solution. Imagine a number of teams building a product. They are building different parts of it and there is no overlap, which is good. However, each team builds the product to own internal specifications. As a consequence, the whole product doesn’t come together because teams are not collaborating due to political or organizational barriers. In this case, it is necessary to reorg these teams under a single leader to break down the barriers.
  • Leadership failure. There are cases when a leader just fails to deliver the impact he or she was hired for. To prevent a catastrophe, his or her organization can be moved under another leader who will step in and fill the gap. Eventually, a failing leader will transition into a different role or leave the company.
  • Change of direction. A business can wake up one day and decide that the previous market is no longer attractive. A company can choose to pursue new opportunities in a different space. To facilitate that transition, there may be an outside hire in the company into a leadership role, with existing leaders docking under her or him. This doesn’t constitute leadership failure necessarily. Sometimes leaders need a new perspective and it may be best to hire an experienced outsider to up-level the organization quickly and avoid learning pains.
  • Cultural change. If company leadership wants to introduce certain attributes into the culture or eliminate negative behaviors, they may hire an outsider that already exhibits desired cultural traits. An organization can be moved to report to that person, who will continue to hire like-minded individuals and transform the company.

How to surf the reorg wave like a native Hawaiian

Similar to how a pull request is a result of an engineer’s work, a reorganization is the result of management work. The engineer doesn’t submit pull requests on a whim. There is a great deal of thought and maybe, even, design discussions before the pull request is submitted. Similar things happen with the reorg. Management has done extensive analysis of situations, weighed pros and cons, discussed with the relevant people up and down the management chain. Reorg announcement is equivalent to the pull request being merged into the master branch. Treat it as such when evaluating your feelings and reaction to it.


You have a choice – whether to accept your new place after reorganization or not. If new structure is completely alien to you, it is perfectly fine to discuss it with your manager and request to be transferred into a different organization. Make sure you do not bolt instantaneously leaving your team high and dry. If you choose to leave, come up with a smooth transition plan to avoid bitter aftertaste when you’re gone.

In most cases, however, it is best to accept new organization structure and play ball. You can’t predict what your future will be just by reading reorganization email. Perhaps your new manager will click with you and your career will take a boost like it never had in the past. It is also possible that after reorganization you will have access to resources/people you couldn’t get a hold off before. You will do most good to your career and your business if you demonstrate flexibility and give new organization a chance.

Be positive

In time of change people will be looking around for cues whether to panic or keep moving on. You can demonstrate leadership by endorsing reorganization in the eyes of your peers. Management will likely take note of that and if you ever wanted to become a manager, congratulations, you just bumped your changes of landing that role.

Be proactive – reach out to your peers who might be anxious and calm them down. Explain why a new organization structure makes sense to you and how you will use it to your advantage. Show them that this particular change is good for them too.

Be positive agent in the reorganization

Don’t be negative or cynical

If you can’t be positive – be neutral. Say nothing and do nothing, as if this reorganization doesn’t concern you at all. Show people around you that you could go either way.

It is a mistake to display negativity about reorganization publicly. Do not vent in the hallways or cafeterias, don’t post on Facebook or Twitter how much you hate your new boss and don’t reply to reorganization email offering a piece of advice or insight. This has nothing to do with free speech and the ability to express yourself in a diverse organization. There is time and place to vent – public venting that causes discomfort for people around you, is not it.

On the flip side, it is perfectly adequate to schedule a 1:1 with your new boss and vent into his or her face. Venting directly to the individual responsible for your distress is the right path forward. However, once you leave her or his office, go neutral.

Change yourself

Do what the reorg is intended to do. If this is a cultural change – start reading smart books on specific cultural attributes and embrace them at work. If the change is about new business priorities – start learning what the new direction is all about. It is possible that the change is a result of leadership failure – reach-out to your direct manager or even your skip and offer your help to fill the gap. To put it bluntly – act as if you always dreamed about doing what this reorg brings, and the only thing that held you back was the old organization structure.

Common mistake people make after the reorganization is continuing to do what they’ve always done and treating reorg as yet another change that happens every 6 months. Depending on leadership tolerance and patience, this can lead to outcome somewhere between strong feedback (on the good side of the spectrum) and poor performance review leading to employment termination (on the bad side). Do not ignore the reorganization – be the change agent.

Change others

This area is crossing into the leadership characteristics and management aspirations. Team, organization, or business will eventually change as a result of the reorganization. However, you can be the catalyst by helping people around you transform and adapt faster. Management will notice your deeds and can put you on the management bench.

  • Reach out to junior employees in the organization and help them make the mental change quickly.
  • Provide direct feedback to your peers or even your boss if they do not act in alignment with the new organization principles. For example, if the new direction is to be data-driven and you see people acting on a whim, tell them.
  • Publicly share material that increases awareness in the new direction or culture. If the new cultural attribute is diversity and inclusion, yet you see exclusively white male employees coming out of the hiring pipeline, share reading material about unconscious bias.

Show early results

Aim to deliver results in accordance with the new organization’s vision. If it takes a year to see any fruits of the organization change, everyone will have forgotten why they reorganized in the first place. Be the one that demonstrates how a new organization works better than the old one. It could be as simple as producing a design specification that involves people from different teams, that would never talk to each other in the past. If you are among the first ones to do it – people will take note of you. Speaking in terms of the law of diffusion of innovation, be the “early adopter”.

Law of diffusion of innovation
By Rogers Everett – Based on Rogers, E. (1962) Diffusion of innovations. Free Press, London, NY, USA., Public Domain