Adpating, not restructuring, is the key to change

Sep 13 2005 by Nic Paton Print This Article

Fewer than one in three big companies undergoing a major restructuring programme ever achieve their efficiency or effectiveness objectives, research has suggested.

A study of more than 800 chief executives, HR directors and senior managers by the Chartered Institute of Personnel and Development and Oxford's Said Business School has found that 40 per cent of structural reorganisations are not completed on budget and 60 per cent fail to come in on time.

Organisational change is now a constant feature of modern working life, the CIPD argued.

In fact change and reorganisation, both within the public and private sectors, is now so inevitable that trying to identify the perfect organisational design is a fruitless task that should be replaced by a concerted, constant effort to build the skills and capabilities required to deliver more fluid forms of organisation, it suggested.

The three-year research study, Organising for Success, argued there are seven steps to successful organisational change.

1) Sustained top management support personal commitment and political support on the part of top management is a crucial differentiator between success and failure in reorganisations.

2) Coherent change taking care to ensure that any single reorganisation initiative moves in step with the broader strategic agenda, keeping top management on board and adapting to ensure wider business objectives continue to be delivered.

3) Substantive involvement successful reorganisations can all demonstrate that they have genuinely involved and consulted staff before and during the process, not just informed and explained.

Involvement makes communications a two-way process, creating a valuable source of learning about the reorganisation's shape and progress.

4) Communications a multi-channel approach to both internal, and crucially, external communications is essential if customers, suppliers and other stakeholders are not to be adversely affected by the process of change.

5) HR involvement having good people skills in a reorganisation team strongly differentiates between successful and unsuccessful reorganisations.

Chief executives polled rated HR professionals as the most important source of advice and learning with regard to reorganisations.

More than half of HR directors were closely involved in reorganisations at least every two years, it added.

6) Project management reorganisations need organising too, and good project management can make the difference between success and failure.

But project management is not a cure-all, and without care can become overly rigid and cumbersome for the changing circumstances being managed.

7) Skilled teams assembling a team with the right skills and experience is essential.

In a business environment where major change is to be expected, on average, every three years, managers should use end-of-project reviews and similar devices to ensure that reorganisation skills are built systematically into the organisation as a whole, rather than residing with a few powerful and potentially mobile individuals, said the CIPD.

CIPD organisation and resourcing adviser Vanessa Robinson said: "The pace of reorganisations is accelerating, in both private and public sectors.

"In this culture and atmosphere, organisations are unlikely to succeed by simply trying to pick the best organisational structure 'off the shelf'," she added.

Nor was it enough to hire a few change management experts, she said. "The truly successful organisation is developing new capabilities to handle and absorb this kind of repeated change.

"Reliance on too few senior individuals and avoidance of the perspective that external experiences bring runs the risk that change leaders may end up fighting the last war on too many occasions," she argued.

Richard Whittington, professor of strategic management at Sad Business School, said: "Organisational structures have shorter life cycles today than in the past. There needs to be a dynamic approach leading to a shift from structure to structuring, and from organisation to organising. People issues are central to any such dynamic approach."

Another factor in this was increased outsourcing and globalisation, which were both helping to drive the pace and scale of change within organisations, argued consultants ER Consultants.

"Business models are switching at a pace that renders the traditional piece-meal approach to organisation design and restructuring untenable," said principal consultant Panos Sakellariou.

"The successful organisations are developing new skills and capabilities to handle the design and implementation of new organisational architectures," he added.

"HR, with its understanding of people and organisational issues, is best positioned to lead this change. Whether HR will rise to this challenge remains to be seen," he warned.