Restructuring with purpose
As we come out of the first phase of this pandemic, a long period of recession seems increasing likely. This means that many organisations are cutting costs - but if you need to restructure and make redundancies, it is important to be really clear-sighted about why you are making the decisions you are making. Taking time to think carefully - and strategically - about your structure will help you make better judgements, and you’ll be able to tell a clear story about the choices you have made.
Use tangible data
We’ve got more data than ever at our fingertips, but leaders still fall into the trap of restructuring based on ‘gut feel’. If you are putting people at risk of redundancy or making cuts, it’s important that you have a strong and logical case to back up your decisions. Every organisation has internal myths and biases which creep up over time, so get back to the data to inform your thinking at the start (not just to back up the arguments you have already made!). Financial data is an obvious starting point, but can you analyse your People data to understand which areas are more or less lean already? Analysis of your current structure (e.g. understanding how cost is spread across the organisation, looking at 'spans and gaps', using job evaluation data if you have it) can provide really useful insights beyond the P&L.
Focus on value and purpose, not just cost
If you focus solely on cost reduction and 'efficiencies', you run the risk of throwing the baby out with the bath water. If you are crystal clear on your purpose as an organisation, and what you need to deliver it, you can make sure you don’t cut away what makes you successful. For instance, let’s say innovation is a key driver for your business. Cutting back on new product development now might make sense from a purely financial point of view, but it’s likely to have a much more detrimental effect longer-term. Aligning your plan clearly with your organisational purpose and value proposition is vital in allowing you to recover more quickly in the future.
Plan to build back better
With any change, you have an opportunity to revisit some of your existing ways of working so that you don’t just survive the current storm, but actively improve some of the processes or cultures that underpin your work. For future growth, organisations won’t just need a compelling product, but will need to respond to bigger societal questions – how do you treat your customers, how do you enable diversity and equality at work, how do you ensure you run an environmentally sustainable business? In cutting back, you’ve got a real opportunity to press the reset button and make sure you are focused on the right things when the current crisis starts to ease, and you might even be able to fix the issues that you might have been putting in the 'too difficult' box for too long.
And with all of the above, the way you act throughout this period will be how you are seen for years to come. You need to keep talking to your people and customers, asking for their input and thoughts, telling a clear story and leading with empathy. That’s easier said than done, but the leaders who can do this in times of trouble are those who will thrive in the future.
Brett Welch, Founder / Director
Devonpark Consulting
