Leadership

Are retrenchments and restructures the hallmarks of lazy leadership?

Peter Shields /

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Corporate Alchemy founder Peter Shields. Source: Supplied.

Restructuring is so common in both the private and public sectors that many workers will experience one after the other, in an ongoing series of upheavals.

Can this really be good for business? What impact is the constant threat of restructuring having on employee wellbeing and workplace culture?

This year has seen restructuring and layoffs within many large organisations, including the ABC, Fairfax, Myer and IAG. According to the Hays Salary Guide, more than half of employers were restructuring in 2017 to stay competitive in a rapidly changing business world.

In a recent report, the Committee for Economic Development of Australia (CEDA) predicted more than five million (40%) of Australian jobs are likely to disappear in the next 10 to 15 years due to technological advancements.

Times of great change call for great leadership — and the best leaders understand the perpetual tension between managing and leading. Your ability to get the balance right could be the difference between a company that thrives on change or one that falters.

Managing doesn’t work for complex adaptive systems

The notion of management relies on ‘the manager’ knowing the answer or holding the solution and telling people what to do to achieve it. It’s invaluable at times, but mostly overused.

The decision to restructure is almost always a financial one. KPMG’s 2017 Evolving Deals Landscape survey reported 67% of businesses planning restructuring initiatives in the next three years were focused on active cost reduction.

But is this purely financial approach a symptom of over-management? Where does leadership come in?

In the Harvard Business Review, leadership luminary Ronald Heifetz observed: The single biggest failure of leadership is to treat adaptive challenges like technical problems.”

Leaders who are too focused on fixing the technical problem will miss the adaptive challenge: the cultural side of the equation. Modern organisations are not linear beasts, so why prescribe organisation-wide change solely from a technical or financial perspective? Overlooking your people and culture is dangerous.

A recent study reviewed the results of 57 restructures and found despite the significant resources and time invested, less than one-third led to improved performance.

Managing change with a technical fix is understandable. The solution seems straightforward. But the easiest solution rarely suits the complex challenge of leading a large group of people through rapid change.

Deciding on a restructure and round of redundancies because it’s the easiest option is, at best, lazy, and at worst, reckless.

Getting technical help for a business problem should complement a raft of adaptive changes that re-establish business vitality.

Leadership in the 21st century an age of rapid change

Semco’s Ricardo Semler inherited his father’s $5 million business and transformed it into one of Brazil’s most successful companies. Semler wanted to empower others and couldn’t accept the top-down management structure he inherited.

Today, Semco only employs makers and sellers. Other roles, including security, HR and quality control have been removed where possible. Managers don’t exist and team members take turns representing their team at meetings. Employees set their own salaries and work hours.

There’s no mission statement. No org chart. No written policies. Employees can attend board meetings. Everyone has access to the financial reports.

In Semler’s words: “We said, let’s give these people a company where we take away all the boarding school aspects of, this is when you arrive, this is how you dress, this is how you go to meetings, this is what you say, this is what you don’t say, and let’s see what’s left. The question we were asking was, how can we be taking care of people? People are the only thing we have.”

Semler created an industrial democracy, enabling his team to self-organise to achieve profit and client satisfaction. By dismantling the hierarchy, he removed the individual temptation to apply technical solutions to complex, multi-faceted problems.

Could this self-organising business model help businesses get off the restructure and redundancies merry-go-round?

When it comes to change, restructuring is the easy way out. To achieve sustainable change, bring your leadership into the 21st century. Allow your employees to own the problem and the solution because management is dead. Leadership is the new normal.

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Peter Shields

Peter is the founder and executive leadership consultant at Corporate Alchemy and the author of Leadership Alchemy.

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