HOW TO: Make your restructure worth it
Restructures are one of the most expensive organisational changes you'll go through as a leader, but surprisingly, one of the changes that is least measured in terms of ROI (or Return on Investment). There is often a financial benefit driving an operating model change, so properly understanding the importance of ROI and what you can do to maximise it in your restructure is crucial. This article will give you 3 thought-starters to consider, and expand your mindset on what you need to manage as a leader during this change.
Restructures can become one of the most complex and one of the most expensive organisational changes that you'll ever do, because there's so many costs involved. There's so much focus on the new structure itself that additional costs don't really get factored in! There's a lot of risk involved and it’s always a big decision. Other big business decisions so clearly define what the return on investment or financial benefit is going to be. So it’s surprising that there’s so little literature and research on the true cost of running a restructure. If the bottom line is not factored in, then, why would you run such a risky and expensive change?
I'm Lata Hamilton, the Founder and Head Coach of Passion Pioneers. I'm an accredited Change Manager, NLP Practitioner, and Career Change Coach. And this is the seventh article in our 15-part Reimagine Restructures Blog Series. Today will be three tips to pinpoint the ROI of your restructure.
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IDEA #1: Account for ALL the costs
It can be easy just to focus on how much you're providing to people who might be on redeployment or redundancy. But you really do need to factor in ALL the costs. And this includes your permanent staff whose time, effort, energy is being sapped up into your restructure. You should, of course, be factoring in:
The cost of redundancy
The cost of redeployment activities
The cost of coaching and training
The cost of consultants or support
But what about the cost of lower productivity during that period of flux and complex change? What about the cost of your HR team and your HR leaders? You are paying them, and if they are spending their time on this restructure, instead of other projects that could be either generating profit or saving money. You need to make sure that your restructure is properly factoring them into the finances, too.
And that also goes for all the other leaders who are part of the restructure - their time is being used on this. So you need to make sure that their time is actually worthwhile and have a really clear picture in your head on all the costs. And on top of all this, there might be industry-specific or company-specific costs for you. What we’re listing here is just thought starters on what this whole thing is truly costing you, because without a comprehensive and accurate picture, you don’t know what to compare against when you want to measure ROI.
IDEA #2: Process improvement upfront
The second tip that I have for you is to simplify the processes that you have in your organisation, in your company, BEFORE the restructure. Don't wait until the new structure is in place! Often you end up with:
different team structures
and there's a real period where those teams struggle to operate at the same level of performance prior to your announcement. A lot of teams end up completely burnt out after a period of 3 to 6 months. And they hire previous team members or roles you had cleared out as part of the restructure.
So do the work before the restructure:
What are the processes?
How can you make them more efficient?
What are the people and the resources that are needed to support those processes?
And then build the new structure off the new processes, NOT the other way around. It means people are really clear moving forward into the new structure that actually it's going to work for them. You get a better level of buy-in and you get less of a performance or productivity dip through the organisational change and after.
IDEA #3: Quantify engagement in dollars
And finally, put a dollar figure on engagement and measure it. They say what doesn't get measured doesn't get managed, so put a dollar figure on engagement. The unconscious mind works in symbols, and a powerful business symbol that’s easy to understand is $.
Engagement does equal the performance of your team, and what they can achieve, and essentially the output of your whole company. Measure engagement:
Before the restructure
During the restructure
After the restructure
Notice any trends or changes. If you see that engagement is taking a big dive, more than expected or more than your tolerance or buffer, then you can start to put more programs or support in place to help bring that back up again and make sure you’re not wiping out any benefits you should be getting from your restructure.
Restructures cause a whole lot of heartache and a whole lot of expense - so you better make sure it’s worth it!
Lata Hamilton is the Founder and Head Coach of Passion Pioneers. To find out how we can help your team through your next restructure, operating model change, or transformation, contact us via our website: www.passionpioneers.com.au