Re-Orgs Are Emotional

SARAH GREEN CARMICHAEL: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Sarah Green Carmichael. I’m talking today with Stephen Heidari-Robinson and Suzanne Heywood. Stephen served as UK Prime Minister David Cameron’s advisor on Energy and Environment. And Suzanne is a managing director of the EXOR Group. Both also worked at McKinsey & Company, which is the source of a lot of the information in their new book, ReOrg– How to Get it Right.

Stephen, thank you so much for joining us today.

STEPHEN HEIDARI-ROBINSON: You’re very welcome.

SARAH GREEN CARMICHAEL: And Suzanne, it’s great to have you.

SUZANNE HEYWOOD: Fantastic to be here.

SARAH GREEN CARMICHAEL: What are some of the things leaders can do to better deal with that human element and hopefully make people a little bit more willing to at least consider the idea, or at least address some of the things that they’re feeling?

STEPHEN HEIDARI-ROBINSON: I think there are a few things that leaders can think about. I think before I go through them, it’s worth reiterating the point that you made that, whether or not your reorg is about losing jobs, it’s about layoffs, or it isn’t– people assume that it is. So I think a lot of the problems that leaders have where they try and excite people about the three org.

And people just don’t get excited. There’s a dissonance between the leader being excited about how it’s going to improve ROI and people just hearing, I’m going to lose my job, or even that my job is not going to be as good as it was before. And that causes a lot of tension.

I think the most important thing that people can do is by actually planning their reorganization properly and trying to accelerate the time that it takes to deliver as much as possible. Because if you assume that people are going to be upset and distracted while the reorg is going on, you can minimize that, but it will happen. Then the amount of time that you spend being in that state is obviously going to cause more problems and more time that you’re doing it.

So if you accelerate the reorg, you actually minimize that period of disruption. And this is very counter-intuitive for people. I think many times in reorganizations, they think that, if we move slowly, if we sort of move in an evolutionary way, people will be less upset. And the reality is that they’re actually more distracted for longer, so the impact is worse. People try and do the right thing, but the outcome is not what they wanted. So that’s the most important thing, I think.

With regard to communication about what the reorg is about, I think it’s just transparency. People dislike negative impact from their jobs, so they dislike uncertainty even more. So I think, at the beginning of the reorg, you may not know exactly who might be at risk of their job. You might think that they may not be at risk, but you find out later.

So I think it’s important at the beginning to not try and excite people but just to say, look, this is why we’re doing it. Give a reason that people understand, not just x percent of ROI, which no one will understand what you’re talking about. Give a reason that makes sense for them, either the company is in problems or this great opportunity out there. Talk about what the reorg is going to take and when people are going to hear.

One of the biggest problems is that people just don’t know when we’re going to hear what it means for them. And if you say, look, we’re going to do some work at first, but in two months time we’ll come back to you and we’ll tell what it means for your team, at least they’re clear of when to care, when to expect news, et cetera.

And then I think it really is just face time with people, sending out emails or Q and A’s to managers and expecting that people will somehow feel reassured by this doesn’t cut it. You need to expect that your managers will actually go and speak to people and actually hear what their problems are and discuss it with them and then feedback to you what those issues are, then you could do something about it.

SARAH GREEN CARMICHAEL: One of the things I was wondering as I was reading the book was so much of our communication issues around reorgs, I think, seem to have to do with timing. When is the right point at which to communicate the plan to the leadership team, to the staff, to middle management? How much of the details do you need to have worked out before you start talking with people, because people do like certainty more than uncertainty.

At the same time, if you’re sort of having a long incubation period of discussion, rumors are going to start to leak out. And then people are going to start to freak out before they really know what’s going on. So I would love, Suzanne, if you could maybe just give us some insight into how do you schedule your communication process and plan?

SUZANNE HEYWOOD: So I think getting the communications right around reorganization is probably one of the most important things in terms of whether or not a reorganization is going to be successful. And a few things I would highlight that, the first one is, although you could have a little bit of time right at the start to do some thinking both about the overall schedule for the reorganization and the objectives of the reorganization and maybe a little bit of the diagnosis of what has gone wrong today, it’s very easy for leaders to kid themselves that the organization doesn’t know that that’s going on.

And very quickly news, leaks out that there’s something happening on the executive floor, there’s a little team there, and they’re going to reorganize us, and it’s all going to be a bit of a disaster. So assume that people know earlier than you think that they know. And it’s better to communicate proactively then for rumors to spread around the organization.

Now the usual response we get to that is, well, we can’t tell everybody because we don’t know what the answer is. But people are much, much happier if they know the schedule of when things are going to happen even if you can’t tell them the answer. So even if you say, look, we’re facing a market challenge or we’ve got a big opportunity, we’re going to go into a new country, or whatever the reason is for the reorganization, we started to think about it, we’re going to be coming back to you and telling you our thoughts, in the third quarter, you can expect us to have make conclusions by the first quarter of next year. At least people know the schedule of what’s going to happen. And that really does calm people down. We’ve seen a lot of evidence for that.

The other thing that we would really encourage people to do is to be honest. So if there is going to be a consequence for roles in the organization, don’t pretend that there aren’t going to be. Much, much better to be honest right from the start, if that’s likely to be a consequence.

And then the third thing is, it is important to explain to people why you’re doing the reorganization. But you shouldn’t expect people to listen that closely until they know what’s going to happen to their own personal roles. We’re all very concerned about what’s to happen to ourselves, which is completely understandable and completely human. So people really don’t listen to the wider strategic rationale of a reorganization until they know what’s going to happen to themselves.

So usually what we advise to leaders is do communicate that up front when you’re going to explain what’s happening with the reorganization, but expect to communicate it several times. And only really expect people to listen to the detail of what’s going on once they know what’s going to happen to their own roles.

SARAH GREEN CARMICHAEL: That’s interesting. I wonder– there’s so many questions we get about dealing with resistance to change. It sounds like, though, that if executives were just to do some of these things there’d be a lot less resistance to change maybe at the outset.

I’m wondering, A, is resistance to change a big question that you both get or have gotten when you were working on these with McKinsey? And, B, if so, how do you suggest leaders go about addressing and mitigating resistance to change? And Suzanne, maybe, let’s start with you on this one.

SUZANNE HEYWOOD: So a big consequence that we found of reorganizations is that people change the structure of an organization. And then what actually happens is the following day everybody comes in to work and does exactly what they did yesterday. As we’ve pointed out to a number of leaders, the fact that your boss’s boss is now reporting to somebody else doesn’t mean that you’re going to come in to work tomorrow and do anything different at all. People have an amazing– you can call it resistance to change, you can call it inertia, but it’s very hard to get people to change what they do day-to-day.

The key thing that you have to do to get people to change is you have to think about all of the different elements of a reorganization. And it’s not just structure. In fact, I would argue that structure is an enabler, but it’s probably not the most important element of a reorganization.

Far more important than structure is to get the processes to be right, to make sure that you’ve got the right people in the right roles and they’ve got the right training and the right skills, and then, to get the story right so people understand what they’re going to do. And you get the structure in place as an enabler.

When you’ve got all those different elements in place and working together, then you get people coming in tomorrow and doing something different. And just to illustrate, imagine you’ve just reorganized the HR department of an organization. The HR department is now reporting to the CFO rather than reporting to the CEO.

That’s not going to change what I do tomorrow, if I come in and I’m reporting to the head of HR. If you change the way in which my talent process works, and all of a sudden my talent process is much more connected to my strategy process, and both are reporting into the CFO, that’s going to change what I do tomorrow because I’m suddenly going to find myself in different meetings and different discussions. We’re going to be bringing together those two processes in a wholly new way.

So that’s how you break down resistance to change. It’s about really thinking about all of the elements of a reorganization together and not just doing structure, which allows people to keep doing tomorrow what they did yesterday.

SARAH GREEN CARMICHAEL: That’s a really great example. Thank you. This raises an interesting question for me. If you worry that you might be that person, that you might be the person who is resisting change or is seen as resisting change, what can you do to make yourself more adaptable?

And I know the book is really aimed at the people designing the reorg, but I’m kind of thinking those people probably want their subordinates to act in a certain way. So how can the subordinates in this case make themselves more adaptable?

STEPHEN HEIDARI-ROBINSON: Yeah, I think so. I mean, as you said, it’s never that nice going through a period of change, I mean, I personally have just been victim to this. We’ve had something called Brexit in the UK. And I me and a bunch of people were enjoying our jobs, and now we’re not. And some other people are enjoying them instead.

So this is a process that we all at some point go through at different parts of our lives. I think the one thing I would say is, try to join in with the reorganization. I think there is a temptation, if you see all these consultants running around and people trying to change the reorganization, to just think, I’ll just get on with the day job and hopefully this won’t have much input come in, see it as something that’s external to your job and something that is a pain and in addition, that you’re going to keep doing what you’re doing and this thing is going to be loaded up on top of you.

I think it’s going to be far better if you actually participate in some of the discussions around the reorganization. If people are asking for volunteers to work on the reorganization, that you actually free up one of your own resources to work on it. Usually, we see people resisting that, say, oh, I’m too busy, you can’t have any of my people.

But if you yourself are personally involved, if you’ve got one of your people involved, you’re going to hear how it goes, you’re going to be able to input, and you’re going to be able to shape that reorganization. And it may not be exactly what you want, but you will have had some sway over which way it’s going.

And ultimately, if you find that it isn’t going the way that you like and you don’t like your new job– I mean, I’ve experienced this before where we had a reorganization where before we had business units where everyone owned everything. And we split those up into functions instead so people would do the planning of activity, the scheduling of activity in a different group, and then the actual management of people in a third group. And people really didn’t like that, they liked to own everything. They didn’t like being more focused on specialism.

Sometimes, then, it is the time to think, is there another part of the organization I should move to? People do start dusting off their biographies during reorganizations and it’s on the side of the person running the reorganization to try and reduce the amount of times that happens. But for the person who’s undergoing it, rather than getting upset and resistant, see what else is out there and judge the possibilities that you have versus ones you could have outside and come up with a kind of a genuine view of where it’s better to sow, better to go.

I think, as you said, the worst thing is to get sucked into a kind of this is happening to me type mode because that’s just not going to end up well for you or for the people around you.

SARAH GREEN CARMICHAEL: All right, thank you both. This has been really, really helpful. And I really appreciate your time today.

STEPHEN HEIDARI-ROBINSON: You’re very welcome.

SUZANNE HEYWOOD: Thank you very much.

SARAH GREEN CARMICHAEL: That was Stephen Heidari-Robinson and Suzanne Heywood. The book is called ReOrg. For more, visit HBR.org. And as always, you can connect with us on Twitter at HarvardBiz and on Facebook at Facebook.com/HBR. Thanks to all of you who have left reviews for us on iTunes. It really helps new listeners follow the show.