CLC - Diagonising the need to restructure

Diagnosing the Need to Restructure
Questions for Line Leaders
™
Overview:
This diagnostic helps HR partner with line or functional leaders to identify the root cause of business performance challenges or clarify opportunities before
beginning a restructuring initiative. Ultimately, it will help HR determine if a new structure is the right solution to achieve business goals.
Why is this important?
Only 16% of restructuring initiatives succeed in reducing costs and only 19% yield increased revenues. Furthermore, less than 40% of new structures improve
an organization’s ability to deliver products or services or expand into a new market.1
These failures often stem from the fact that restructuring is not the right solution to achieve business goals or overcome challenges. Therefore, when business
leaders propose restructuring initiatives, it is HR’s job to consider changes to other factors such as strategy, talent capabilities, reward and recognition program,
and business processes that may prove more successful.
Who should we interview?
HR should use this guide to interview functional and/or business unit leaders who have insight into organizational and business unit goals and challenges. The
interviewees should also be familiar with strategy, talent capabilities, reward and recognition programs, processes, and structures within their business unit or
group and the organization as a whole.
Tips for Scheduling and Holding Interviews:
 Tell the interviewee that you want to hear his or her candid feedback on what works—and does not work—in order to improve the effectiveness of the
business unit/function and organization.
 Call the interview a “discussion,” “conversation,” or “feedback session” in order to make the interviewee feel more comfortable sharing information openly.
 Encourage the interviewee to talk about challenges relating to their function or business unit—including difficult or cumbersome processes, mis-aligned
strategies, low value activities, etc.
 Provide as much background as possible regarding why you are holding the interviews, without alarming the interviewee.
 Assure the interviewee that his or her responses will be kept in confidence and used in combination with feedback from others.
Background
The questions included in this diagnostic are based on Jay Galbraith’s star model for organizational design. The star model identifies the following five factors
that influence organizational performance—structure, strategy, people (talent capabilities), rewards, and processes—and in turn, should influence the decision to
restructure.2
For additional resources on Galbraith’s model refer to the Council’s event replay on Designing Matrix Organizations that Really Work and the
executive brief Frameworks for Organizational Design.
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This diagnostic helps HR and line stakeholders assess which of five root causes—structure, strategy, talent capabilities, rewards, or processes—should be the
focus for performance improvement.
Identifying Current State of Performance
1. What are the most difficult-to-solve business challenges that your organization or team is facing?
2. Who is asking for your help in addressing these challenges (Who are the internal customers)? (This could include the CEO, business unit
leadership, functional heads, employees, etc.)
3. What is the goal of addressing these challenges (What does success look like)?
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4. What are your proposed solutions to these challenges?
5. What happens if we do nothing?
Identifying the Root Cause of Performance Challenges
Strategy
6. Does the organizational strategy currently in place support the realization of your overall goal? (e.g., cost reductions, enhanced customer service)
 Has leadership defined a clear strategy for the organization or the business unit to facilitate achievement of business goals?
 What elements of this strategy are most clear? Which are unclear?
 Do you feel like you have the resources necessary to execute on this strategy?
 Does the strategy differentiate the organization or business unit from its competition? If yes, how?
 Does the strategy capitalize on our core sources of competitive advantage? How?

Business Processes
9 Do the critical business processes in place support the realization of strategy?
 Which functions or departments in your business area will need to collaborate more closely to support future business strategy?
 Which business processes no longer support future strategy?
 Which processes do you consider overly cumbersome or difficult to execute? Which processes are the most time consuming?
 Which processes are currently not supported by enough staff to realize needed goals? Which processes have too many contributors, such that efficiency
or quality decreases?
Talent Capabilities
7. Do the current talent capabilities of the organization/team support the realization of strategy?
 Do senior leaders have the right capabilities to support future business strategy?
 Does your business area require new leadership capabilities that currently do not exist in the organization?
 What talent capabilities do we need to reduce, eliminate, or change substantially to succeed in the future?
 What capabilities (that were not critical to success in the past) do we need to build to be successful in the future?

Structure
10. Does the organizational structure in place support the realization of strategy?
 Which roles within your business area no longer align with the organization’s strategic objectives or seem redundant?
 Which functions or teams no longer align with the organization’s strategic objectives or seem redundant?
 Which new functions or departments will your business area need to create to support the strategic objectives?
 How do you plan to allocate decision making authority to ensure that strategy-impacting decisions are made within the right functions/ departments and at
the right level of the organization?
Analyzing Results:
Use the responses given by line leaders to identify specific challenges that undermine performance, focusing your attention on whichever of the five areas
seems most pressing. If structure is impeding performance, HR should focus on the restructuring process. If one of the other four areas is impeding
performance (strategy, talent capabilities, rewards, or processes), use the action plans below to address the following barrier(s):
 Strategy Action Plan—Focus on creating business unit strategy aligned to the corporate strategy and assess budget and communication needs to support
the strategy. For a detailed action plan, see page 17 of the hyperlinked document.
 Talent Capabilities Action Plan—Identify the critical skill-set for your organization or business area and focus on development and retention of those skills
within your organization. For a detailed action plan, see page 18 of the hyperlinked document.

 Reward and Recognition Action Plan—Design a reward and recognition program comprising of monetary and non-monetary rewards as well as formal
and informal recognition. Effectively communicate the program within your business area and organization and establish accountability for program
implementation. For a detailed action plan, see page 19 of the hyperlinked document.
 Business Processes Action Plan—Define process maps for existing business processes and analyze maps for inefficiencies. Redesign inefficient
processes to eliminate unnecessary activities and minimize resource duplication. For a detailed action plan, see page 20 of the hyperlinked document.

1
Corporate Leadership Council, Organizational Restructuring: Survey Results, Washington: Corporate Executive Board (2009).
2
Corporate Leadership Council, Frameworks for Organizational Design, Washington: Corporate Executive Board (2009).
NOTE TO MEMBERS: This project was researched and written to fulfill the research request of several members of the Corporate
Executive Board and as a result may not satisfy the information needs of all member companies. The Corporate Executive Board
encourages members who have additional questions about this topic to contact their research manager for further discussion. The
views expressed herein by third-party sources do not necessarily reflect the policies of the organizations they represent.
PROFESSIONAL SERVICES NOTE: The Corporate Leadership Council (CLC®) has worked to ensure the accuracy of the information
it provides to its members. This project relies upon data obtained from many sources, however, and the CLC cannot guarantee the
accuracy of the information or its analysis in all cases. Furthermore, the CLC is not engaged in rendering legal, accounting, or other
professional services. Its projects should not be construed as professional advice on any particular set of facts or circumstances.
Members requiring such services are advised to consult an appropriate professional. Neither Corporate Executive Board nor its
programs are responsible for any claims or losses that may arise from any errors or omissions in their reports, whether caused by
Corporate Executive Board or its sources.

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