Simon Terry

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Do you Lead People or Fiddle with Structures?

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The problem with hierarchy is that it validates the illusion that restructures are valuable management work. Let’s lead people to create potential and better ways of work instead.

Restructures are a Joke

An old joke about management hints at the role of restructures in management life, an opportunity to avoid leadership. In the joke, a CEO is left three numbered envelopes by a predecessor. Each envelope is only to be opened only when the CEO’s job is threatened by a crisis.

At the first crisis the CEO opens the first envelope and it says ‘Blame your predecessor’ and it works. At the second crisis, the second envelope says “Announce a restructure’ and it works.  At the third crisis, the CEO eagerly tears open the envelope to see it says “Fill out three envelopes…”

Time for New Options

Leadership is how we realise human potential in real people. Leadership is not the management of the ideal hierarchical structure of fungible full-time-employee equivalents (FTE). The latter is avoiding the real work of leadership of people.

No human potential has ever been realised in an organisation by a restructure. Restructures may create short term value by reducing the cost of people in an organisation, but without leadership no value is created. Without a change in processes or the patterns of interaction that create culture, the structure change amounts to little. The old culture will take over the new structure. Either cost drifts back because the work processes have not changed or worse the reduced workforce has impacts internally on people and externally on customers. 

Sadly leadership often disappears in restructures. Mostly restructures involve an evident loss of human potential. Because many managers view their people as a fungible resource, the costs of human and social capital lost in restructures can be missed. The loss of tacit knowledge and capability is often evident immediately after a restructure as people struggle to make processes work and newly clarified roles fail to cover the inevitable areas of whitespace. The loss of social capital can be seen as new jobs in new structures force people to build new relationships of trust and collaboration internally and externally. Engagement and trust both need to recover. 

A focus on structures of fungible people lets managers avoid the hard work of leadership. Poor managers use restructures to force people to “remove resources”. They hope that with less people, the remaining staff will find creative ways to improve, often without any support from leadership. Poor managers also use restructures to address the lack of skills and underperformance of their people that they have been avoiding. In both cases would we not create more performance, more potential and less anxiety if we took on the leadership work to engage people directly?

Don’t Restructure. Become Responsive.

The pace of change requires organisations to be more agile with their processes and organisation than a traditional restructuring process allows. One of the reasons traditional organisations now feel like they are in a process of continual restructure is the need to keep up with external change. No organisation can afford to stand still to sort out its structure while more agile competitors continue to move forward.

Leaders need to create organisations, teams and processes where change in work is responsive to the demands of customers and the external market. Large scale shifts in hierarchies are irrelevant when the organisation learns to continuously adapt to the needs of work, supported by leaders focused on creating the right culture and realising more performance through helping people to realise more human potential.

A continuous process of small adaptations in agile teams across the organisation is far safer and far more productive than large restructuring efforts. This process will best leverage the networks in the organisation and employees understanding and engagement. Each of those adaptations brings the organisation closer to better performance for its customers and gives the people a say in how to make their work better and how they can contribute more.

The cost of this change in approach is that the work and power of leadership must change. Adopting a responsive culture requires leaders to step away from their power to periodically fiddle with organisational charts. A responsive culture requires leaders to step up to engage, enable and empower their people to change they way the organisation works every day. The new work of leadership is to create the responsive culture and an organisation that supports individuals to make their work better for customers, employees and the community. 


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