Change within organisations is often pertinent to the growth and success of a business, but a full restructure of a company can lead to its downfall.
At the heart of organisational change and staff retention, is the company values and whether the work brings meaning to the employees.
Gerard Daniels Board and Executive Leadership Global Partner Barry Bloch said people thrive by having meaning in their life and their work.
“Honesty and meaning are the two biggest potential leadership tools we have,” he said.
“If people can actually see why the organisation has to change and how that may add meaning to their work, they’re more likely to stay.
“We need to have a deep culture of positive leadership, adult-to-adult conversations, high transparency and ongoing meaning from work.”
The good and the bad of restructuring
It can be difficult to measure when structure change will be beneficial and when it could be detrimental to the health and prosperity of an organisation.
When a new leader comes on board, companies often feel the urge to restructure to reflect the change, but it is important for organisations to avoid jumping the gun.
“New leaders should be learning as much as they can to begin with,” Dorado Property Co-Founding Managing Director Thomas McClung said.
“They definitely shouldn’t be unnecessarily making wholesale changes at the outset just to make their mark, however someone new can bring fresh energy and ideas, and companies should benefit from that.”
There’s nothing inherently negative about structure change but it can be done incorrectly, which is when it has a negative outcome.
“The biggest negative in structure change is seeing it as taking an easy and quick-fix option.”
“It can make some management teams look like they’re doing something but, in reality, they’re not tackling the real issue," Mr Bloch said.
“So, structure change may often not solve the organisation’s real problem.”
Another adverse aspect is when structure change affects employees’ perceptions of the workplace.
“Structure change can create uncertainty in the mind of employees,” Mr McClung said.
“They can also start creating their own stories if communication isn’t clear.”
Despite the negatives, Mr Bloch and Mr McClung said restructuring could be positive when businesses need to reinvent themselves and refocus to ensure the survival of the organisation.
“If it truly gives the organisation a chance to refocus, then it’s a good thing,” Mr Bloch said.
“If it’s just a tick box or a rubber stamp, or an easy way to look good as management, then it’s never positive.”
Often staff movement and resignation comes with restructuring but, according to Mr McClung, it shouldn’t.
He said change was a long process and often necessary, but staff retention didn’t need to come at its expense.
“In terms of staff retention, at our organisation, a lot of it is genuine authenticity,” he said.
“You need to have values that aren’t just buzzwords, rather they are values which you can use to help with difficult decisions being made – values you look to when you’re intending to make changes.”
Mr McClung said giving staff opportunities to discuss how they felt was important to the issue of retention, as was looking after employees’ psychological safety during a restructure and ensuring their opinions weren’t seen as complaints.
“People with opportunities for dialogue will actually tell you how they feel,” he said.
“They won’t withhold, and that can be one-on-one or in a group forum.”
“It is also crucial not to go into a conversation with a preconceived perception.”
Losing staff through redundancy and retrenchment should be the last resort when restructuring, with Mr Bloch saying that cutting jobs is not a tool for achieving growth.
“It’s a tool for basic viability and it’s important for organisations to be honest about that,” he said. “You cannot cut your way to greatness.
“There is a lot more return on investment through shifting revenue models, transforming operating models and organisation design through true market-based and facing innovation than there is by changing cost structures.
“So cost restructures is a last resort, not a first resort.
“That said, if it is truly the only way for the organisation to survive, then you’ve got to do it.”
Leadership through change
With employees naturally looking to their leader at any sight of change, what can really define restructures and successful change is how the leader handles it.
Mr Bloch said once a strategic choice was made, leaders needed to help and support all of their people to psychologically move with, or respond to, the change.
“We all do some changes really well – we are change-oriented as human beings – but where we go wrong is if we try and take the individual on a change without giving them any involvement in, or any understanding of the change,” he said.
“If we treat the adult as a child, we will inevitably fail at change.”
Mr Bloch said there were three real levers for change.
“The first is we need to be prepared to have endless conversations – we need to keep talking with our people and these conversations need to be consistent, honest and genuine,” he said.
“Secondly we need to make sure all of our conversations go viral, and that we’re involving as many people in the conversation as we can so that people gain across the organisation gain a true understanding of the why, what and how of the change.
“The last is we don’t always have to do it as a separate change – we can have what we call Trojan horses.
“We don’t have to have a new change program to achieve shifts in organisations, so let’s use our existing change programs and our existing organisational systems and processes to achieve greater positive change strategically, as opposed to adding another one on, resulting in people having change fatigue.”
Mr McClung said Dorado Property was experiencing a season of change currently, which had led the company to explore the value stick – or Better Simpler Strategy – which they have used to involve their employees in decisions of change.
“For the last 14 years, we’ve had a planning day every six months, where everyone from the entire company attends,” he said.
“In August we explored the Better Simpler Strategy concept.
“We ran through the exercise with all of the staff.
“You look at your employees and ask them what their key value drivers are and what’s important to them.
“Flexibility was number one, followed by work aligning with purpose, growth, compensation, autonomy and trust in leadership.
“Once we defined their values, we asked how we – as a company – ranked out of five, and then we could see where we had deficiencies.
“Any strategy you come up with should focus on those findings and everyone is involved in the process.
Another framework to consider strategy through is scenario planning.
Mr McClung became aware of the concept and took AIM WA+UWA Business School’s Scenario Planning and Strategic Conversations course.
He then decided to implement it in the business where it is now being used for the third time, utilising the uncertainties around inflation and interest to create four alternate worlds.
“Change should be incremental, not a huge step that would turn a company upside down, and that is the fundamental premise of exploring possible scenarios your business could find itself in and considering how you would not only respond and survive but also thrive, as well as what the opportunities might be,” Mr McClung said.