Change Management – Restructuring

Change Management – Restructuring

Chasm of Change – Restructuring – The Goliath of Change

By: Rick Johnson

Richard L. Daft one of the country’s recognized academic leadership experts raises the question, “What kind of people can lead an organization through major change?” A Turn-A-Round restructuring qualifies as major change and requires transformational leadership. Daft points out that this type of leader is characterized by the ability to bring about change through innovation and creativity. This type of leader motivates people to not only follow their lead but to believe in the vision of corporate transformation, the need for revitalization, to sign on for the new vision and to help institutionalize a new organizational process.” Daft points to four principles in discussions about leading an organization through major change. These four principles are the foundation of the restructuring Turn-A-Round process.

1. Create a compelling vision
2. Create a new organization
3. Mobilize commitment, Empowerment
4. Institutionalize a culture change

Caution – Beware of the Dip
A “Transitional Performance Dip” is common when introducing major change accompanied by a culture shift. Performance most commonly gets worse before it gets better. There are four phases of the transitional dip with associated cause. They include:

  • Denial – Confusion exists, feelings of being overwhelmed, acting like nothing is different & checking out are common employee reactions in this phase. Communication and sharing of information is critical to overcoming this type of employee reaction
  • Resistance – Complaining, blaming others, spreading rumors, frustration, anger and erratic performance are common employee reactions. Again, communication, understanding and listening skills are critical during this phase of the transition. 
  • Acceptance – Renewed energy starts to become evident, optimism appears and doubt begins to dissipate. Excitement and risk taking become evident. This is when the vision must be restated and shared with every employee taking the time for full explanation and answering all questions.
  • Commitment – Discretionary energy is released. Employees become action oriented toward new goals. Ownership of the vision is now company wide. Rewards and reinforcement are essential during this stage.

The length of time or “depth & width of the dip” depicting this phenomenon cannot be accurately predicted due to the complexities that determine it. Factors contributing to the length of time before the change efforts begin to show improvement can be impacted by the following factors:

  • Magnitude of the structural changes
  • Success of the communication to all employees
  • External environment factors
  • Critical mass of the company itself
  • Competency of the middle management group and their experience with structural and cultural change
  • Competency of the executive staff and their people skills
  • Effectiveness of leadership at all levels
  • Severity of the financial crisis or level of financial success
  • Timing

Change Process
The restructuring change process begins with the strategic restructuring of the organization, which is required to “Stop the Bleeding.” This process starts with the immobilization of the old culture. This is mandatory, as introduction of change into any existing culture is difficult at best. Introducing change into a losing or stagnant culture is almost impossible. This change must deal with organization theory, social psychology and business history. It must be dynamic and include the introduction of fresh new
leadership. This is a behavioral process. People can create change but people also resist change. The change process introduced must answer the question, “How do we get from here to there?” The answer to that question is your new vehicle for success.

This vehicle includes the restructuring plan, individual one-year departmental plans and every strategic initiative developed by the new management team. Most importantly, this new vehicle is submerged in the empowerment theory releasing individual employee initiative. The plans must be unified, simple, consistent and universally understood by everyone. Most of the change that has been introduced must be induced change versus autonomous change. Autonomous change has a life of its own. It proceeds due to internal dynamics and follows its own course. It is not easily controlled as it forms its own dynamics. Induced change is calculated and planned. It can be controlled if buy in is generated through sincere communication and employee involvement. Each step along this path will be accompanied by distinct challenges. As questions arise, management must be prepared to answer openly and honestly. While the old culture is suspended, change can thrive under the right circumstances. It is the responsibility of the executive team to insure that these circumstances exist. The primary ingredients that create the right circumstances include open honest communication, empowerment, risk taking, acknowledgment and reward.

Organizational Behavioral Process (OBP)
This is basic to creating change, and it becomes an important part of the new vehicle for success. OBP may be described as the wheels of the new vehicle. This process will carry the organization on to new heights, new accomplishments. Organizational behavior has its roots in organizational theory and group dynamics. People are the most important ingredient to every organization and the organizations behavior. People and how they are treated will reflect the organizational characteristics, the way it acts and interacts with its own people.

Empowerment, the decision making process and the communication channels are examples of how the organization interacts with its people. Organizational behavior is not easy to change. That is why it is so important as mentioned earlier to immobilize the old culture to introduce change. (E-mail rick@ceostrategist.com for a list of immobilizers) The behavioral process of the organization can withstand personnel changes. In other words, changing out management does not guarantee change in organizational behavior. You must take proactive steps designed to create new organizational behavior. The new vehicle is part of that. It includes, focused specific objectives, open channels of communication, empowerment and a sincere respect for the individual employee and his contribution to the organization.

Organizational behaviors become generalizations. They are discovered from observations of everyday work habits and they have no independent existence apart from the work processes in which they appear. They are difficult to identify but they are extremely important. They affect the form, the substance and the character of the work processes themselves. They actually affect the way the work process is carried out. They are different from culture because they represent more than just values and beliefs. They actually are involved in the sequences producing work. The decision making process is a major characteristic of the behavioral process. The decision making process is a much studied process beginning with the studies of Chester Barnard and Herbert Simon who argued that organizational decision making was a distributed activity, extending over time and involving a number of people. In other words, decision-making is not the personal responsibility of a single manager but a shared, dispersed activity that they only need to orchestrate and lead. This is still a surprising and often unaccepted theory of managers today.

The Eight Road Blocks to the Change Process

1. The lack of a sense of urgency
2. The lack of buy-in, a coalition of support
3. An unclear vision
4. Failure to communicate the vision
5. Failure to provide resources and remove obstacles
6. Not systematically planning and creating short term wins
7. Declaring victory too soon
8. Failure to anchor change in the culture as it is occurring

Sense of Urgency
Success at anything requires a sense of urgency, a commitment to accomplishing something. If employees don’t have this sense of urgency, complacency can become an issue. To meet difficult challenges, to excel at anything, to create competitive advantage it is absolutely essential that employees release their discretionary energy toward achieving company objectives. Discretionary energy is that extra that you can’t ask an employee to give but is automatically given by those employees that have a sense of urgency. Of course, no employee will release that discretionary energy for a leader that has not earned their trust and their respect. A leader will not be respected by the employee until he shows respect for the employee. A leader will not be trusted by the employee until he shows trust in the employee.

Forming a Powerful Guiding Coalition:
Success is not an individual accomplishment. Initiating change requires buy in and agreement. A group of believers, achievers and team players must be assembled to not only support the change process but to drive the process. The group must function as a unit showing unilateral support of the change process. Examination of market and competitive reality is part of the challenge as well as identifying and discussing potential crisis, critical constraints and major opportunities.

Creating a Vision:
Success at initiating change starts with the creation of a compelling vision that provides a roadmap for the change. This roadmap clearly answers the question “What’s in it for me”. WIIFM. The vision is supported by the development of strategy and action planning to achieve the vision.

Communicating the Vision:
Success requires leadership and leadership without communication is like a gun without a bullet. It looks impressive but it can’t do anything. A specific communication strategy must be outlined and acted upon to insure that all employees are aware of what the vision is and how it is expected to be accomplished including defining individual roles and contributions. It’s about buy in.

Empowering Others to Act on the Vision:
When critical constraints or roadblocks are identified, they must be removed or overcome quickly. This means allocating resources accordingly. Systems or structure that can undermine the change must be eliminated. Empowerment involves trust and allowing people to use their initiative and creativity.

Planning for and Creating Short-Term Wins:
Milestones need to be set up to mark progress and allow victory celebration along the change path. Success breeds success and excitement breeds’ excitement. Create that success and excitement by setting interim goals that can be achieved and celebrated. Recognize and reward employees accordingly that are part of the accomplishments.

Declaring Victory too Soon:
Interim success and short term victories are important but don’t spike your own Kool Aid. Be realistic and keep your long term goals in sight. Consolidate those short term improvements to produce continuing change. Use increased credibility to change systems, structures, & policies that don’t fit the vision. Hiring, promoting, & developing employees who can implement the vision is essential to continued success during a major change effort. Reinvigorate the process with new projects, themes, and change agents.

Institutionalizing New Approaches:
Success must be anchored as it occurs and then built upon by articulating the connections between the new behaviors and corporate success. Leverage this success to ensure leadership development and succession.

Make no mistake, effective leadership is about creating change. This is true in every circumstance, whether a company is facing restructuring or dealing with the challenge of accelerated growth. Change is the defining moment that identifies true leaders from imposters. To become an effective leader, understanding change, creating change and most importantly managing change is the first prerequisite.

Author Bio
Dr. Eric “Rick” Johnson (rick@ceostrategist.com) is the founder of CEO Strategist LLC. an experienced based firm specializing in Distribution. CEO Strategist LLC. works in an advisory capacity with distributor executives in board representation, executive coaching, team coaching and education and training to make the changes necessary to create or maintain competitive advantage. You can contact them by calling 352-750-0868, or visit http://www.ceostrategist.com for more information.

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About Granger Whitelaw

Granger Whitelaw founded the Rocket Racing League along with partner, Peter Diamandis in 2005. See more information at http://www.grangerwhitelaw.com/blog and http://grangerwhitelaw.brandyourself.com View all posts by Granger Whitelaw

15 responses to “Change Management – Restructuring

  • Marc

    Management is really important not just on business but also to other thing like just time management, school management, study management, hobbies management and et cetera. I like Daft for pointing out that this type of leader is characterized by the ability to bring about change through innovation and creativity and it is really a great help in informing us to this one.

  • Summer

    This is such a quite informative article and I agree that management is really an important thing and should be lead by of course a very good leader and I read the kinds of leader that is best suited for this job and only seldom people are like that. Thank you also for sharing the four principles the creation on a compelling vision, creation on a new organization, mobilize commitment, empowerment, institutionalize a culture change.

  • Marin

    I totally can relate to the restructuring change process begins with the strategic restructuring of the organization, which is required to “Stop the Bleeding. It is like you are wounded the first thing that comes in our mind is to stop the bleeding, no matter what happen the blood is the most important we should stop it first and then after it, we can then analyze the problem and the main solution.

  • Vanes

    I learned also a lot of knowledge here just like you guys and also I want to add what I have learned from other website that restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs. So I think that’s it, thanks for letting us read your article freely.

  • Rosario

    I would like to state a comment over this “Milestones need to be set up to mark progress and allow victory celebration along the change path”, it is true to always measure our progress so that we can know what we are on the current situation and we can see freely our improvement and we can always adjust what we want to adjust and what should be adjusted. Milestones are good in every ways.

  • Selina

    Change of management is quite a huge and bulky job to do and I have experience that once too when I was having my on job training with a company whom I really like. They really change their management but they took months before having a stable company and stable management because you know there are lots of things to do and there are lots of things that will be affected if management will be changed and of course there are people that will be transferred or may be out because of this.

  • Jashana

    Structuring and Organizing well is one of the tips of improving your management and surely will add some benefits to you if you really did well and also an organizational structure consists of activities such as task allocation, coordination and supervision, which are directed towards the achievement of organizational aims. It can also be considered as the viewing glass or perspective through which individuals see their organization and its environment. It is beneficial if you will really do it properly.

  • Samuel Haston

    From a website that I found change is “Verb
    Make or become different: “a proposal to change the law”; “beginning to change from green to gold”.
    Noun
    The act or instance of making or becoming different”
    It is quite very hassle to accept change but it is really the thing that you can control. Change is always happening and it is said that the only thing that is constant is change because it always exists and no matter what you do with that, it always appears from nowhere are somewhere else because that is its nature.

  • Jexi

    Just a short line yet very full of meaning and full of experience “The restructuring change process begins with the strategic restructuring of the organization, which is required to “Stop the Bleeding.””, I like the way of this stop the bleeding and I think it is very logical to change process to stop the bleeding and to heal the hurt that your company has maybe been experiencing. It’s just like a first aid in one’s hurt and illness or a temporary wound.

  • Chan2

    If an organization needs to undergo significant change, that’ s a leadership issue, right? Old dogs will learn new tricks when the lead dog- or ape, or penguin, depending on the management fable of the moment -shows them off. Leaders need to craft compelling elevator speeches, relentlessly deliver the message of change, and above all, walk and talk.

  • Jastin

    This is also usually happens in some private companies “Confusion exists, feelings of being overwhelmed, acting like nothing is different & checking out are common employee reactions in this phase”, it is hard to handle this type of happening in our company and it takes a lot of experience to handle this one. There are trainings and seminars to handle this type of situation in our company and we should take the training and seminar.

  • Den Ray

    I think I will have a comment to this one “That is why it is so important as mentioned earlier to immobilize the old culture to introduce change.”, it is true for me also because we have to really read the whole history of what we want to change before implementing the change. It is hard to take or have a change over matter but sometimes there are things that we have to change in order for us to gain more and to develop more.

  • Jelly

    With this Acceptance “Renewed energy starts to become evident, optimism appears and doubt begins to dissipate” it explains a lot of things and really it has been always preferred to always embrace and adopt change since change is the only thing that is constant. However, there are many factors that you need to have before engaging into change and some of it are been described here in your article which I find great. Thanks for sharing to us that one.

  • Joros Terry

    I agree to this article. Most of the time the people composed in an organization resist to change but one should cope with it. Example is the changes brought by technology this is not gradual and so leaders and managers should know how to handle their subordinates to overcome this changes for the better of the organization.

  • Rasella

    I agree to this one “Daft points out that this type of leader is characterized by the ability to bring about change through innovation and creativity”, it is hard to find a good leader but it is nice to have a leader in your company that can bring the change into your company and that is a good change. I also read some newspapers about happenings in a company where it is been upgraded because of its good leaders and it is really amusing how things works good up with just good leaders.

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