Corporate Restructuring has no place in the Post-Covid World

Imagine your own casually dysfunctional family. At home you have high-performers and low performers, people who are more detail-oriented and those who prefer to see the big picture. There are some who don’t quite fit the group culture and some that are visibly more engaged than others.

As your family’s CEO (or CFO, depending on your role), you decide that, taking stock of your extended family of eight individuals, there will be a reformation of the family structure resulting in a net reduced headcount of three. That sort of thinking is a fast track to the intervention of child protective services or a good divorce attorney.

The “reorg” is a passive aggressive firing spree that a company engages in when it wants to trim the fat, reduce costs and “go lean”. Generally, it starts with a small, select group of individuals deciding, behind closed doors that There Shall Be a New Structure, a mass reshuffling of pieces on the chessboard, with new titles, promotions and demotions as per a certain date. Teams are broken down, reformed, relocated and nice charts are created with boxes and arrows.

The New Structure is then given a cool, snazzy brand (NExxT, OrgPlus) and is rolled out by leadership as a New Direction, a Better Future. Announced with fanfare at a townhall or as a series of chipper, chirpy newsletters. An exciting change that will reveal new opportunities and efficiencies for all.

The New Structure may reduce the total workforce by, say, net 20%. About 50% of the workforce is informed that they will need to apply for their own (slightly altered) or entirely new position within the New Structure. They can apply for as many positions as they please, or leave. If they do nothing, their contract simply ends and they can pack up their plants and go home.

The resulting weeks and months devolve into a whirring game of high-stakes musical chairs. Employees dance and spin, attempt to psych each other out, game the system, gossip and actively undermine each other in the runup to the deadline. Team members who were once results-oriented project partners are now in a shark tank with their colleagues.

During this time, no work gets done. Letters and CVs are polished, lunches and friendly coffee meetings are held to gather the facts. Much is read between the lines. Information is scarce and contradictory. Leadership often refers to the impending reorg as though it were an act of God; a flood, a hurricane, a pandemic. As if they had nothing to do with it, and no responsibility for the poison suddenly coursing through the body.

The day comes when the organization switches over to the New Company. Winners are announced while the losers have 30 days to wrap up their projects and write their automatic replies.

Coincidentally, the names who are not included in the New Company frequently happen to be those easiest to fire; the ones who had contracts running out anyway, recent hires, expats, externals and contractors. The ones that remain have decades-old permanent contracts that make them unshakable fixtures; too expensive to pay off, too entrenched to budge.

The company becomes a semi-detached Lego house turned upside down and shaken. The little yellow guys whose feet were stuck to the floor remain in place. Whatever isn’t nailed down – people, coffee cups, picture frames and ergonomic chairs – flew off and return to the universe. Back to the plastic tub in their component parts.

Long after the reorg has come and gone, the atmosphere remains toxic and dysfunctional. The lingering ghosts of 20% of the staff can be found everywhere. As new teams settle into place, the “forming-storming-norming” cycle occurs as multiple teams work out their personality issues and find their groove.

The reorg is the coward’s way out; allows management to get out of that icky feeling of having those difficult, necessary conversations. The reorg allows leadership to feign indifference to who fills which role, a “fake fair” process. But at the same time clearly actively engineering the new culture.

Letting underperformers go or cutting staff is an unavoidable fact of working life. No one should have to live with team members who are disengaged, difficult to work with or don’t follow processes. Management is perfectly capable of identifying these individuals and well within their rights to let them go for any reason, at any time. Provide severance, be transparent, be fair, be firm. But above all, own it. Explain why it isn’t working out. Employment is a privilege, after all; not a right. Respects the dignity of all parties and allow everyone else to get on with the job.

Our Post-Covid world has no room for this ultimately destructive corporate behavior. News and reputations spread faster these days – with the world at their fingertips and opportunities anywhere in the world, no one needs to wait for the annual game of company musical chairs, but can find positions in truly human-centric organizations.