Unwillingly, in recent years, numerous organisations have fallen victim to a self-inflicted form of totalitarianism – restructuring. In a fervent battle for survival, they launch batteries of restructuring initiatives, plunging themselves into a chronic state of flux, and leaving their members disoriented, frightened and, most worryingly, obedient.

When ones own job may fall prey to the axe, one is unlikely to speak up and challenge at a meeting, or to refuse an instruction – may it violate ones ethics or personal dignity. After all, the family wants to be fed, the mortgage people need to be satisfied, and at dinner parties being unemployed does not fly either.

When Pope Francis spoke in Strasbourg at the EU parliament, he criticised the EU for reducing its citizens into “mere cogs in a machine” by sternly focusing on financial outcomes. Independently of ones spiritual views, one can’t help but sympathise with the sentiment.

Hidden Costs

For the organisation itself, restructuring comes with a price tag, higher than what is measurable initially – caused by the destruction of social capital. Existing organisational knowledge gets lost, social networks are being severed, and each time someone keeps their head down, out of fear to lose their job, a vital exchange of information is inhibited, and the organisation becomes a little more inefficient.

Several studies have shown, that ‘survivors’ of a restructuring process experience an increase in pressure and burnout, and a decrease in trust in management and colleagues, as well as the breakdown of communication. (Appelbaum, et al., 2003; Cameron and Smart, 1998; Cascio, 1993)

The overall costs of restructuring can even outweigh its financial benefits:

Appelbaum, Patton and Shapiro (2003) emphasise that failing to consider interdependencies, the importance of key competencies, retention of skills, and preservation of organisational memory, is likely to impact the results of restructuring and downsizing negatively. Williams (2004) argues that downsizing and restructuring not only eliminate knowledge and experience, but also break down crucial relationships between employees and with external stakeholders. He concludes that such a breakdown can impact the organisational culture, cohesion, cooperation and knowledge drastically.

As social capital gets destroyed and knowledge lost, the organisation is worse off than it was before. Initial savings are soon overtaken by decreased efficiency and performance as the organisational culture suffers.

Similar to a virus that paralyses its host’s immune system, opening the doors for further microbial assault, fear cripples an organisations’ vitality. It stifles pro-activeness and leads to reactionary passiveness, delays decisions, inhibits learning, torpedoes trust, sabotages relationships, clouds judgment, reduces individual and group intelligence, and feeds into undifferentiated black & white thinking.

Restructuring might sometimes be a life-saving surgery, but it leaves behind a weakened body.

In an attempt to dampen the organisation’s inflammatory response, senior managers often withhold critical detail information, only to make the situation worse. As the created vacuum wants to be filled, Chinese whispers begin echoing in corridors and through informal channels, myths and fantasies snowball into an ever-increasing cacophony of sluggish, nervous congestion.

For senior management, finding the right balance between doing what is necessary economically, while being mindful of ones fellow brothers and sisters, and managing the process in a way that ensures long term success is not an easy feat, but it is possible.

So what does a successful transition need?

Best practices for restructuring strongly suggest the active inclusion of staff in decision-making processes, combined with an open two-way communication (Appelbaum et al., 1999; Appelbaum et al., 1997; Cameron et al., 1991).

In my own experience of working with leaders and employees going through restructuring, nothing causes more damage than a sense of being helpless and victimised. Often, this attitude is fuelled by a lack of transparency in the organisation’s internal communication, and the employees’ inability to influence the process.

Because humans have a need for meaning, acknowledgment and involvement, ignoring those needs calls for trouble; disorientation, resistance and disengagement are often the result. Hence, it is crucial that the leaders of restructuring initiatives clearly communicate WHY it is happening, HOW it is intended to happen and WHAT contributions/activities are required. Many organisations don’t get this right, with tragic consequences. And even if they do, it is only a necessary, but not a sufficient condition – what is really needed is a systemic employee participation in the process.

Actively involving staff allows individuals to develop a deeper insight into the issue and their role in it. It also builds trust, cooperation and cohesion among those who stay with the organisation. Initially, it requires a bigger time investment, but it helps the transition run smoother and more effectively overall. Employees need opportunities to voice their concerns upwards, as well as support with managing their personal change process. Inclusion fosters a climate of dignity and respect.

Finally, training and development opportunities can be highly beneficial for helping staff deal with the change at hand, and to prepare for transitions into new roles inside and outside of the organisation. (Appelbaum et al., 1999; Appelbaum et al., 1997; Cameron, 1994; Cascio, 1993; Kozlowski et al., 1993)

Putting theory into practice

Here are 4 practical tools than can help an organisation pull through this difficult process constructively.

Harrison Owen’s Open Space Technology is a powerful technique with a lot of supporting evidence and case studies for its effectiveness. It provides space and focus for large groups of people to reflect, discuss, innovate and share information around a central theme.

It is particularly useful when the stakes are high and the guiding theme is of urgent importance. But caution is advised! Open Space Technology only works, if a solution doesn’t already exist and new areas can be ventured into. This requires the organisations’ leadership to let go of some control – which can be frightening for some. But on the positive side, this process generates heaps of energy, commitment and ownership, a (re-)vitalisation that one could only dream to achieve by dishing out top-down instructions.

This user’s guide on the background and the ins and outs of running Open Space Technology gives practical instructions on how to plan, run and integrate this great tool.

Action learning was developed by Reginald Revens and brings small groups of like-minded people together to support each other in solving individual issues. If done right, this process can be immensely effective at creating solutions as well as contributing to a rich exchange of information, uncovering unexpected synergies and building trust.

In a recent workshop, in which I ran an action learning inspired process, one participant had attempted to change his role for quite some time. He was trying to combine his specialisation with a more strategic function, but by now, had become so disheartened that he was considering leaving the organisation altogether. Another participant revealed, that she had connections to a department that was dealing precisely with what he wanted to do, and they were currently looking to expand their team.

This might sound like a lucky coincidence, but these kinds of serendipities happen with great frequency during action learning. The more openly participants voice their concerns, and the clearer they are about what they need, the more often beneficial ideas, resources and synergies are being generated.

In change processes this kind of group work can be incredibly helpful for teams and individuals – practically and emotionally – as it reconnects people and generates practical solutions.

Mentoring – having a senior ally, outside of a line-management responsibility, is also an important asset in restructuring processes. The mentor and the mentee can exchange important information that is unique to their situation and position. A mentor can help the mentee with the transition into a new role, open doors across the organisation, and prepare them for a new role even outside of the organisation. In addition, the intimacy of a well-function mentoring relationship can alleviate stress by providing a safe haven.

Learning and development – in times of downsizing and restructuring many organisations are hesitant to invest into their social capital – at a time when it’s needed the most. Learning and development initiatives can provide immense benefits, as long as they are well-targeted and aligned with the needs of the participants and other stakeholders.

To benefit individuals and the organisation alike, initiatives need to make space for dialogue about current challenges, and provide relevant skills and behavioural development that supports participants with these challenges, such as decision making, leadership, conflict handling and communication skills. In addition, workshops that equip employees with specific role related technical skills and information, prevent the systemic loss of organisational knowledge during the restructuring process.

From the cog in a machine to an active player

In conclusion, whether restructuring turns out to be a poisoned candy, or a bitter pill, depends on the willingness and courage of an organisation’s leadership to openly communicate throughout the organisation and to invite (genuine) participation and dialogue. Employees need to be valued as actors rather than handled as obstacles and passive recipients.

The restructuring processes will remain difficult and unpleasant at times, but by marrying transparency with involvement, the organisation can protect its social capital as well as looking after the well-being of their employees.

 

 

 

Appelbaum, S. H., Delage, C., Labib, N. and Gault, G. (1997), “The Survivor Syndrome: aftermath of downsizing”, Career Development International, Vol. 2 No. 6, pp. 278-291.

Appelbaum, S. H., Everard, A. and Hung, L. T. S. (1999), “Strategic downsizing: critical success factors”, Management Decision, Vol. 37 No. 7, pp 535-552.

Appelbaum, S. H., Patton, E. and Shapiro, B. (2003), “The early retirement incentive program: a downsizing strategy”, Journal of European Industrial Training, Vol. 27 No. 1, pp. 22-35.

Cameron, K.S., Freeman, S.J. and Mishra, A.K. (1991), “Best Practices in White-Collar Downsizing: Managing Contradictions”, Academy of Management Executive, Vol. 5 No. 3, pp. 57+.

Cameron, K.S. and Smart, J. (1998), “Maintaining Effectiveness Amid Downsizing and Decline in Institutions of Higher Education”, Research in Higher Education, Vol. 39 No. 1, pp. 65-86.

Cascio, W.F. (1993), “Downsizing: What do we know? What have we learned?” Academy of Management Executive, Vol. 7 No. 1, pp. 95-105.

Williams, S.M. (2004), “Downsizing – intellectual capital performance anorexia or enhancement?”, The Learning Organization. Vol. 11 No. 4/5, pp. 368-379.

© Ragnar Speicher