Restructuring Orgs To Assess Risk and Manage Change


Risks abound in today's global business climate. Shattered investor confidence, slashed consumer spending and spiraling employee morale have all forced executives to take pause and reassess their organizations' business models and recipes for success. With this reassessment have come necessary changes, from widespread layoffs to drastically downsized budget allocations. The only problem? As these changes are implemented, oftentimes the big picture--that is, the business model and organizational structure--remains untouched, leaving it with gaping holes and broken connections.

Of course, a business model and organizational structure that resemble Swiss cheese don't reassure any stakeholder group that things will continue to run smoothly amid this economic roller-coaster ride. Thus, management teams are revising plans and restructuring departments to account for the extraordinary circumstances. For communications executives, that means all hands on deck to ensure that strategic alignment happens without any sacrifices to the brand, reputation or bottom line.

"Communications is the difference between a restructuring that is painful yet successful, and one that simply fails," says Reid Walker, vice president of Global Communications and Sponsorships at Lenovo. "Employees, shareholders, customers, suppliers and local communities all need to understand what [the company] is doing and why. They also need to understand how it plans to remain viable for the long run. It's really up to the communications professionals to be at the table insisting on that degree of transparency, and to ensure that the messages being delivered to every audience are consistent and complete."

Walker's vision of the role communicators should play in restructurings comes from experience in the trenches; his team is currently finalizing a reorganization that, while necessary, was anything but easy.

"We've made a careful examination of our operations globally and done a number of things to streamline our company, and to realign some functions and geographic areas," he says. "That has required us to make some tough decisions, in the words of our CEO Bill Amelio, that have resulted in cutting our workforce by 11%, including a number of senior executives."

Based on his experience acquired during Lenovo's reorganization, Walker helps identify the following best practices all communications executives should consider when undertaking restructurings, no matter how big or small their organizations might be.

If it ain't broke, don't fix it. Just because businesses across the board are struggling doesn't mean every company needs to restructure its operation. Before initiating any changes to the business model or organizational structure, make sure there is a definitive reason to actually do so.

"Organizations should not rush to change sound strategies or make decisions that focus only on the short-term situation," Walker says. "They should take the time to examine carefully how they can become more efficient today while still being in a strong position to compete tomorrow when the economic crisis is over. The last thing you want to do is sacrifice the future."

Conduct an internal audit. If you thought audits were just for accountants, think again. Auditing is an essential process that will help gauge the need for a reorganization.

"It's important that a company undertake this examination across its entire business and its entire global footprint in order to identify efficiencies that might not be found if you look at the business in either functional or geographic silos," Walker says. (For more on how to conduct an internal audit, see sidebar.)

Also critical during this stage is identifying the core business attributes that define the brand, as restructurings should never, ever involve changing an organization's identity. "It's important to remember the brand attributes that built your company and ensure they aren't sacrificed," Walker says. "For Lenovo, innovation is a hallmark, and we'll continue to invest in it despite the difficulties posed by the global economy right now. The same is true for quality. And we are sticking with our core strategy to focus on growth markets throughout the world, and to grow faster than the industry as a whole in those markets."

Proceed with caution--and confidence. If an audit determines that a restructuring is indeed required for the business to remain viable, then make the necessary moves with resolve. Expect resistance from all stakeholders, especially if changes involve staff reductions. Most important, be consistent with messaging, and always be sure you talk the talk and walk the walk. For example, Lenovo did cut its staff by 11%, but, "The remaining executives are taking significant reductions in their compensation," Walker says. "[You must] ensure that any pain is shared fairly by the top of the company as well as the bottom. That will be a vital factor in remaining strong for a recovery."

Honesty is the best policy. Be transparent in communications with all stakeholders, both internal and external. If messaging is inconsistent, it will come back to bite you. The only way to emerge from a reorganization relatively unscathed is to have stakeholders on your side throughout the process. If your communications strategy involves smoke and mirrors, you might as well jump overboard now, because that ship is going to sink.

Remember why there is such a thing as a communications department. The PR and communications disciplines developed out of the need to protect an organization's most important asset: its reputation. Always use that as your guiding light.

"Your calling card should be the responsibility you have for maintaining the company's reputation and brand image," Walker says. "There will be a lot of other players advocating for decisions to be made in certain ways, but they may not be considering--or even have the skills to understand--how those decisions will affect the company's reputation. It's your job to keep executives apprised from the beginning of not just how to communicate their decisions, but how to consider the communications implications before those decisions are made." PRN

CONTACTS:

Reid Walker, reidwalker@lenovo.com; Paul Argenti, paul.argenti@dartmouth.edu





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