Business Modernization: Innovative and Creative Organizational Restructuring

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Modernization is an effective approach to making existing mainframe and distributed systems more responsive to business needs. To meet the demand for business innovation and agility, organizations are looking to improve the structure, flexibility and re usability of their business.

An article written in the Harvard Business Review entitled, “Managing Professional Intellect: Making the Most of the Best,” provided reassurance that the problems faced by businesses in developed countries were very similar to the problems faced in third world countries today.

The points of leverage in organizations are the beliefs and worldview of their leaders and decision makers. The sense of purpose, vision and commitment of an organization’s leadership play a critical role in the results it can accomplish. However, it is essential to realize and accept the fact that if the organization is to survive it must change and evolve.

If an organization is going to develop, it must make many significant changes in the overall strategies, practices and operational tactics. And as it evolves, the leaders and the employees have to be able to align with the organizational changes or the restructuring process will not be successful.

To be quite simplistic, an organization has to be viewed as a dynamic system, and like any other system it will not work when all the involved components are not working together smoothly and efficiently. This basically means that any change to the organization must be mirrored by a realignment within the workforce. This is the only possible way to effect change successfully.

However, it is essential that modernization of any type has to be approached from a risk and benefits perspective. Another reason to modernize would be to reduce the overall support and operational costs. This is only justifiable if the savings from modernization exceed the cost of modernizing. Additionally, any change effected by an organization must include a carefully developed plan for enabling the human element of that organization to understand, be willing and able to implement the changes required. Otherwise the cost of the modernization will deliver no return on investment for the organization and may in fact, add additional costs to the initial investment.

When looking to identify where change needs to take place it is a fact that organizational restructuring can help management gain insight about the best ways to align the available human resources with the needs of the company to ensure the highest level of performance and thereby deliverable to better guarantee current and continued success, profitability and a strong a healthy future within the organization.

The ability to innovate and be creative in the use of knowledge and information to problem-solve has been cited many times as the key to competitive advantage in any organization. However, there is a difference in modernizing an organization that is relatively young and an organization that has been in operation for many years.

CAN MODERN PROBLEMS BE SOLVED WITHIN AGING ORGANIZATIONS?

Many organizations in the world today proudly announce, “We are in the process of restructuring our organization!”

I sometimes wonder if it wouldn’t have been more accurate for them to say, “We are in the process of creating a mongrel that will have no clear identity.”

Restructuring is a very stressful and time-consuming exercise the outcome of which will not take shape immediately. It is an activity that goes to the very roots of the organization, because it shakes the foundations on which the parent organization was built. It asks whether or not the assumptions made by the founders of the organization still hold. It asks uncomfortable questions about the optimal size of the organization. It questions the degree of transparency of the financial management of the organization.

When these questions are directed at management, who also happen to be the owners, things can become uncomfortable. When departmental operations are minutely scrutinized, many individuals can feel personally threatened. The level of discomfort is directly proportional to the intensity of hostility and resistance expressed towards the restructuring project as a whole.

Restructuring is such an ambitious and challenging undertaking, that it is impossible to examine all aspects of it in the context of this column. Changing the physical appearance and the interior design of the organization is costly, but easy because carpets, furniture, walls, and even the company logo are without feelings and have no voice. By far the most difficult aspect of restructuring is the part dealing with people. Their fears and insecurities surface during this process as never before. Everyone seems to be functioning on a short-fuse and voices and tempers are always on the rise.

Many companies still run on a strictly vertical structure and have a patriarchal management style.

Those who are used to this approach assume that this is something you accept as part of reality. You do the minimum, follow the rules, bow to authority, and forget about the whole experience when you step out of the company. Many owners of such businesses want to change because they see the writing on the wall very clearly: “adapt to the realities of the new millennium or die.”

Now the owners want staff to take on more responsibilities, manage as if the company belongs to them, etc… But these employees have been conditioned to a completely different set of values and practices. They are paralyzed if they do not receive clear instructions or ‘do/don’t do’ directives. The frustration on both sides mounts. The owners begin to hire new-blood as a way of breaking the inertia of dependency exhibited by older staff.

The new breed of employees may have a foreign education, has 2 to 8 years of work experience outside the organization; probably have not lived the culture existing in the organization; have taken for granted a certain type of organizational structure and working relationships related to it, and are comfortable with ‘high-tech’ information processing in decision support systems, communications and transportation. These individual run the risk of acting with an air of superiority towards the organization and towards the people in it.

Visualize the two categories of employees facing each other within any organization you care to imagine. Think of how individuals will feel: jealousy, resentment, anger, fear, frustration, intolerance and even active hatred will surface. Add to this volatile mixture the strains and stresses of restructuring the organization and you have a good idea of what to expect when you launch such a process. So what do you do? Avoid it? Postpone it? You cannot, so what do you do?

First, you prepare yourself for the worst. Second, you recognize the fact that you will be making some of the toughest decisions of your whole business career during this period. Third, you brace yourself to cope with unusually high stress levels for the coming two to three years. The worst period will be during year one. You will also need to face the fact that you will not be seeing significant, tangible rewards in the immediate future and that you may have to rethink and change course several times during the process as you test things and people out. You simply cannot forecast the impact on human chemistry in different sections of the organization.

So what can an organization do to facilitate the change necessary to sufficiently and effectively modernize itself?

Recruit the best: “Venture capital firms, recognizing talent and commitment as the most critical elements for their success, spend as much time selecting and pursuing top people as they do making quantitative analyses of projects.”

“Force intensive early development:… for most professionals the learning curve depends heavily on interactions with customers, where they work under the watchful eye of an experienced coach.”

“Evaluate and weed. Professionals like to be evaluated, to compete, to know they have excelled against their peers. But they want to be evaluated objectively and by people at the top of their field.”

“Boost professionals’ problem-solving abilities by capturing knowledge in systems and software. Electronic systems replace human command-and-control procedures. They also can eliminate most of the routine jobs, free up employees for more personalized or skilled work, and allow tasks to be more decentralized, challenging and rewarding.”

“Overcome professionals’ reluctance to share information. Information sharing is critical because intellectual assets, unlike physical assets, increase in value with use.”

These points offer a brief glimpse of many valuable insights shared in the HBR article. It is well worth looking for the issue and reading the entire piece.

What are the symptoms that organizational restructuring is necessary?

* The morale of staff is deteriorating.
* Workforce productivity is deteriorating and/or stagnant (staying the same).
* Customer satisfaction is declining and/or fewer new customers are doing business with the organization.
* Employees performance shows increased mistakes or gaps when trying to meet customer requests.
* New competencies (skill sets) are needed to meet organizational and customer expectations and requirements.
* There seems to be confusion in what individuals, departments, teams, etc… are responsible for and what these groups or individuals will be held accountable for.
* Deliverable results seem to be unclear.
* Departments, functional areas or parts of the organization are significantly over or understaffed and may not have sufficient resources to meet organizational requirements.
* Performance appraisals are somewhat biased.
* Communication channels within the organization are inconsistent, inefficient or entirely too cumbersome to be reliable.
* Technological changes required by the changing markets create resistance and/or barriers to the workflow.
* The turnover rate is increasing.

These are just a few examples of symptoms that may point to an urgent need to restructure parts or all of the organization.

However, it is very important to understand that restructuring without a well thought out, well designed plan will, in most result in larger and more dangerous problems than are currently be experienced.

An organization may have great business strategies and ideas but not have a clearly defined plan on how to effect the organizational restructuring process. It is essential to design and facilitate a clear definition of the different roles, showing what is required from each individual, the inter dependencies and channels of communication that will be implemented during and after the restructuring process. This better ensures that all investments made to facilitate the restructuring will deliverable a measurable return on investment.