Restructuring has become a common occurrence in the business world. Often seen as necessary to improve efficiency and competitiveness, many restructurings happen in reaction to reduce costs with the associated call for downsizing.
That’s because restructurings are often used to address mistakes that leave a company too bloated for the current environment, which leads to downsizing. Given people are often the largest expense category and viewed simply as component parts of the machine, the logical solution is to downsize.
As much as we try to make restructuring and the associated downsizing understandable and acceptable to employees, especially those who remain, it rarely, if ever, works. When decisions are made from the top as a fait accompli, people will experience lack of control over their lives and feel they don’t matter.
Restructuring and downsizing solve a short-term expense issue at the long-term cost of lower morale, productivity, and innovation.
There is a better way to address the needs of an organization to face sudden and unexpected changes. An approach that focuses on long-term growth and sustainability rather than short-term cost cutting. It requires shifting how we understand and view what an organization is.
The Living Organization® (TLO) View of Restructuring
The TLO framework shifts our view of an organization, or any collective, to see it as a living person. People are not simply component parts of a machine they are the living cells of the organization.
It recognizes that organizations are constantly evolving, that change is an ongoing part of the evolutionary journey of the collective. Implementing this view prepares people to accept change as part of their responsibility. They will be an integral part of formulating the change, not reacting to decisions made from above.
The TLO approach shifts the focus from cutting costs as a reaction to short term challenges to continually aligning resources to an ever-changing future.
When restructuring is seen as an evolutionary journey, change is viewed through the perspective of preparing for the future. Companies will invest in employees because that is synonymous with investing in their organization’s future. Employees will be open to change, see it as an opportunity for growth, be part of that process of realignment, and therefore remain engaged and motivated.
One of our clients was facing a major shift in their industry. A major part of their business was government contracts, and the government was cutting spending at the time. In addition, there was a global recession further impacting their industry. The natural tendency for the leadership team was to start cutting back on expense, which meant layoffs. Instead we advised to reposition the company and invest in people development.
You can imagine the CEO questioned our approach, since this was contrary to the way they have always handled such downturns. I asked if he bought up key pieces of capital equipment, when they experienced previous downturns.
“Of course,” he said. “We can often pick it up for half the normal price and then when the industry turns around, we have the capacity to take on new business. We have always benefited from such investments.”
“So, think of the investment in your people in the same way,” I said. “You are preparing the organization by increasing its capacity to take on new opportunities when the industry turns around.”
They did make the investment which not only lead the way out of the downturn faster, but they also had a workforce that knew they were cared about, which produced benefits in numerous ways well into the future.
Restructuring can be a cost-cutting reaction to a short-term problem, with the associated diminishment of the organization. Or it can be an ongoing process of continually realigning the organization to the ever-changing world it will face, with the associated enhancement and empowerment of the organization.
The choice is yours!
Contact us for an informal conversation how we can help your organization move forward.