Analog Angle Blog

The re-org pendulum swings again, and along with it, the axe

You may have seen the news that industry giant Hewlett-Packard is going through some serious challenges; they even fired their relatively new CEO recently (don’t cry, he got a great golden parachute), replacing him with Meg Whitman.

She's looked over the business and is making plans. Of course, one of the first is the “reorganization”, or re-org, as we call it. Sure enough, it starts with the classic swinging of the centralize/decentralize pendulum. I'll quote from The Wall Street Journal article “CEO Whitman Tells H-P’s Workers ‘Everything Is on Table’ in Overhaul“, where it says “The Palo Alto, Calif., company also said it would centralize its marketing and public-relations efforts…” [Sorry, the article may be behind a subscriber paywall, but no matter, you get the point without it.]

This centralize/decentralize oscillation is very common in all organizations and industries, and the rationale for going either way is almost always the same: “centralize” for greater efficiency and avoid overlaps and redundancies; “decentralize” to put employees closer to the frontlines and eliminate bureaucratic layers. It's all sounds so simple.

[An aside: when H-P decided to spin off its test & measurement business to what is now Agilent Technologies in 1999, I was among the pundits who said, with self-assuredness and certainty, that H-P would do well, but poor ol' Agilent would struggle and be a lost soul. Well, we know how what turned out…it's been a humbling lesson to me, and a constant reminder that most punditry is no better than Madame LaRue and her crystal ball, just dressed up with a little more “class”.]

Reality is that there are times when a company needs to change its organizational structure, as markets, technologies, and circumstances change. A structure that works at one time may not be right for another time. Change is part of the business cycle.

But the problem is that the swinging of the re-org pendulum (usually with a roughly five-year period, I estimate) is often just a cover for getting rid of folks, or giving the appearance of doing something tangible when you are not sure what to do. It's too bad that the re-org itself usually lags the market need for it, and is almost always out of phase with the need, so it may be unproductive.

Plus, it inevitable distracts the remaining staffers, who are trying to figure what they should be doing, who they report do, who they work with, and related internal issues. Result: they have little time and energy left to deal with their primary roles.

I once talked to an experienced business consultant, and this subject of re-orgs and “best structures” came up. He made a good point: almost any structure will work, as long as it is executed effectively. In other words, the execution is more important than the org chart, although a better structure helps, of course. But the ongoing re-org to find that “better structure” can sap organizational energy and focus, and thus inhibit better execution of your goals.

Readers : have you ever been involved in a re-org? As victim or implementer? Was it productive or counter-productive? Or was it just “window dressing”, to create the appearance of change and, thus, the illusion of progress? ?

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