A practical case example based on our coaching work with SV Group highlights five key factors to watch out for when doing an organizational restructuring in-house
When the business division head and group executive board member at the swiss international catering and hotel business SV Group set out to redesign her organization, she knew she wanted to approach things differently.
Her goals were to reduce costs, increase market penetration, and improve strategic account management. Early on in the process, the manager decided to plan and run the restructuring work in-house, with support from the group’s HR team, but without external help from a consultant other than some focused coaching support from Management Kits.
One reason for this was the cost pressure from the heavy impact of the corona virus on the business. More importantly, however, she believed that she had the business knowledge and capacity within her team (and with her HR business partner) to pull off an optimal solution internally - one that would simultaneously be owned by her people from the start.
The manager chose a participatory, workshop-based approach, working with her current leadership team to discuss and decide on the strategy, design the new organization, and run the implementation.
Five ways to make in-house organizational restructuring a success
Based on our consulting and coaching experience leveraging Management Kits resources, we believe that several aspects of this case example are highly relevant for anyone running organizational restructuring work in-house.
Listed below are 5 ways to make participatory organizational restructuring a cost-efficient and impactful driver of organizational performance.
1. A clear strategic vision, translated into organizational priorities
Any organizational redesign work should begin with a dedicated discussion of strategy. The clearer the strategic vision, the better. This vision, however, must be translated into clear priorities for the organizational design.
In the case example, the leaders’ priorities were clear:
Realign the organizational unit structure to be more customer-focused (in this case, following a regional model)
Restructure the old General Manager “jack of all trades” model to create dedicated leadership roles for operations and for the business: one focused on running the shop and pushing operational excellence and efficiency, one focused on strategically winning clients and developing key accounts.
Build links, structures, and a culture to support collaboration between roles and between units to push market penetration and innovation.
2. Know when the participatory approach has its limits
When it comes to cost cutting as part of organizational restructuring, at a certain point participatory approaches reach their limits. Headcount reductions and middle managers changing roles lead to difficult conversations - conversations that cannot be had in a full workshop setting.
Once the organizational structure and design have been defined by the work group and it comes to “putting names to roles”, a leader must make crucial decisions.
The leader making the decision can and should consult with stakeholders. She can and should be transparent about the decision process: who makes the decision, which criteria are applied, and when the decision is made and communicated, for example.
But, notwithstanding stakeholder consultations and process transparency, at the end of the day, decisions about assigning roles, hiring, and firing cannot be made in a participatory way.
3. Fine tune and test the redesigned organization
Well-facilitated participatory workshops are a great way to come up with solutions that capture the intimate organizational knowledge owned by the team.
At the same time, you need to make sure that workshop outputs are subsequently finetuned and pressure tested.
One good way to test organizational designs is to simulate how the new organization would handle critical questions and make important decisions. Questions include:
Who would participate in the decision-making process?
Who would have which role, and what are their contributions and deliverables throughout the process?
How do interfaces and process handovers work?
This simulation can be done in a follow-on session after the workshop, where the new design was drafted.
4. Dedicated program management
When planning and implementing organizational restructuring work in-house, it is crucial to dedicate sufficient program resources to the task. This can be carved out from the work team or come from an internal HR business partner, but it has to be done and it requires discipline and focus to see it through.
Exemplary tasks include:
Do the workshop planning on both the program and the individual workshop levels, including identifying participants, scheduling, etc.
Run critical preparation work, including setting the workshop agenda, working methodologies, roles, etc.
Connect loose ends, follow up on questions that come out of the workshops, keep track of task backlog
Cover workshop documentation work, communications, and sharing of results
5. Leverage change as an opportunity for organizational innovation
Organizational restructuring work is often done in times of crisis.
But crises always entail opportunities.
In the case example, the company’s HR team had an ongoing workstream on the future of work. One important initiative was to increase the levels of self-management in the organization and to move toward an organizational structure of interconnected circles.
With the upcoming change to unit structures and roles described above, there was an opportunity to launch critical elements of forms of organizing and decision-making as part of the transformation work.
Giving critical restructuring work to a specialized consultant can fast-track the redesign and program management work. But it is also expensive and risks losing the commitment of critical team members along the way.
Choosing the in-house option means investing a significant amount of time, energy and effort upfront - an investment that can pay off later through confidence in the solution and the building of team capabilities for redesign and implementation, not to mention the cost savings.
If done the right way, an in-house approach can give you the best of both worlds.
Reflecting on the process and the outcome with some distance, stakeholders of the process at SV group agreed that they would take the same approach again - even though the journey through the crisis involved difficult challenges and, in parts, painful change. Given the industry environment and the impact of Covid 19 there had not been much of a choice whether to drive change. However, there had been a choice on how to do it. And in this regard, the organization has learned how to pursue an in-house, participatory approach, and would follow the same process if the requirement arose.
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We are grateful to SV Group for sharing their story. For any questions to SV, please reach out to Sonya Stocker, Head Training and Development, SV Group.