What really happens in an organisation restructure?

Prepare your people for success by helping them through the people selection steps

As the CEO of a film production company, the SAG-AFTRA strikes have had a significant impact on the business. It’s a story for another time, but with over six of our feature film projects being placed on hold, it allowed me to take a pause and think about the structure of our organisation and if we have this right to deliver on our strategy. These external market changes forced us to review our decisions on the digital division and bring forward the growth targets and changes for this division. With the strikes changing everything overnight for us, we also had to be nimble enough to turn on a dime and rethink our strategy. For us that meant moving quickly into inorganic growth. The appropriate strategy for us is the preparation for exponential growth in the digital effects.

The movements in the broader market are signalling an increase in corporate restructuring, more than what we’ve been seeing to date. Financial research data from AlphaSense in the 12 months to August 2023 is reporting a triple the number of mentions of reorganisation, reassignment or leading indicators signalling a restructure in the earnings calls of listed companies. That’s quite a significant shift that will lead to some internal destabilisation for many for some time, and those that are adaptable to the changes required will be able to weather the storm.

Deciding to restructure is never easy and the delivery is even harder, but when it’s done well, the results are transformative. The challenge is that statistically 70–75% of organisation restructures fail. There are over 800 Harvard Business Review articles on this very problem. The list of academic articles written about this dilemma is longer than I am tall, yet the problem repeats and organisations go through the cycle of re-alignment and re-organisations to either meet their strategic or financial requirements. I am not going to solve this problem in this article, but I do want to get you thinking about one of the core reasons why organization restructures fail. People. How not keeping or letting go of the right people can rapidly derail even the best reorganization strategy.