Reorganization

By almost any measure, reorganizations fail. Stock price, productivity, loyalty, even overall costs, are more likely to head in the wrong direction after a significant reorganization.

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Research shows that significant reorganizations are bad for business: a 24% drop in customer satisfaction and a 22% reduction in customer loyalty is typical. What's worse is that 50% of organizations report overall costs as unchanged.

There are beautiful exceptions. Some companies have achieved remarkable post-traumatic growth by tackling the challenge of reorganisation through a different lens.

How to upgrade when you downsize

Reorganization - an overview:

The attrition rate of merged firms over non-merged firms is twice as high, even nine years later.  That’s a lot of time, money and talent wasted. Most of these issues are put down to unproductive management behavior and poor attitudes of employees.

 

 

 

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The silver lining:

The good news is that bad attitudes and unproductive management behavior are solvable problems, as two UK retailers who worked with Mind Gym have demonstrated. In both cases, despite losing between 15% and 40% of roles, employee engagement and customer satisfaction went up – in one case to the highest level for 21 years.

Evidence in research:

A recent study focused on hospitals that had recently downsized.  The researchers found that showing consideration for employees’ morale and welfare during the downsizing was linked to a positive financial performance afterwards.

How to apply it:

For the reorganization to work, leaders need to focus their energy and conversation in the right way. During periods of intense change, leaders tend to obsess about the company, the leavers, the gloom and the other elements on the left of the chart below. For an organizational change to succeed, they need to create a much more balanced blend by giving far greater attention to the ingredients on the right.

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