Companies invest a huge sum of money to figure out how to move the boxes around on the org chart. Months or even a year or more of planning go into figuring out what the perfect vertical structure should be and then they announce the restructure and throw the whole mess over the wall to the HR/OD people.
“Now,” they say, “teach them how to work in this new structure.” As the chaos reigns, the OD people try to figure out what to do. By the time they have a plan, months or even a year or more has passed and things have started to settle back down.
All of that time in chaos represents costs: in productivity, in market share and in opportunity. And then just as things get back to normal, another restructure is announced and the cycle starts all over again.
Organizations restructure like mice running around a wheel – over and over and over again.
All of This Restructuring Is Not Only Costly, but Unnecessary
The restructure is focused on the vertical dimension – the one represented on the org chart. The vertical dimension is the dimension of functions/departments/business units and it’s also the dimension of power and status. It’s the dimension of the hierarchy.
We’ve lived with the hierarchy so long we don’t even recognize how destructive it is.
But the Millennials do. They don’t want to work under someone else’s thumb. They want to collaborate, in teams – cross-functional teams. And that’s the dimension of the horizontal – where you should be focused, where you should be running the business.
All of this attention on restructuring the vertical is misdirected and as I said, costly. But okay, let’s say you just went and did it again. You restructured the vertical.
What Should You Do Now?
If you haven’t rolled it out yet, then first get a plan together for the aftermath before announcing the restructure.
Let’s take a look at three components of a plan:
The first order of business is to create a plan for how to reconnect all the business processes that will be disrupted from the restructure. Business processes cross functional boundaries. Accounts payable doesn’t start in accounting, it starts in the business units that contract for products or services and it starts in procurement. Sales doesn’t start in sales, it starts in Marketing, and also in the business units for repeat customers. So, for the people doing the work, some of the real points of confusion are:
- Who do I interface with to get my work done?
- Who will be making what decisions?
- Who needs to review or approve my work?
Usually, an individual’s portfolio of work hasn’t really changed, but who they work with has.
That confusion can cripple an organization for months while people try to figure out how this new structure will actually work, at the getting the work done level. So, before you restructure, have the people at the bottom map out all your business processes indicating what all the customer/supplier relationships are, what is produced at each customer/supplier node, who makes what decisions, etc.
Then insert new names into these maps that reflect how these processes will work after the restructure. Voilà! you have a plan for keeping your business running after you announce the restructure.
Go over these maps with the various business process teams, work out any issues they have, and you are back up and running.
Before you restructure, start training people in how to work in a matrix. This means training leaders, because they are the ones that need to make the biggest changes to work in a matrix.
Even if you’re not restructuring into a formal matrix, it’s best to start getting your leadership team up to speed on how to work horizontally or cross-functionally.
No matter what structure you are using, you need to break down silos and get leaders to work together in the horizontal. This won’t happen if you only focus on the vertical – if your strategic goals are deployed down through the vertical, if leaders are only accountable for their vertical units, if performance and bonuses are based on how the vertical units perform in isolation.
This means you have to start breaking down the hierarchical thinking and get people into more collaborative ways of working. This takes years of work and it’s not going to go away.
The tides have turned when it comes to the old power. And leaders who have been wielding this power don’t let go easily – it takes time and commitment to shift the organization to be more team-based and collaborative and that’s really what a matrix is all about.
It’s not about a vertical structure, it’s about working together across the horizontal. In a matrix, the horizontal is the primary dimension, and the vertical exists to support it.