Don't restructure: Reflect!



(MoneyWatch) I sit on the board of a company whose CEO is convinced of the need to restructure. I'm not so sure. The more he talks about it, the more I'm reminded of software engineers who always imagine that, if they could just start again from scratch, this time the code would be bug free.

Restructuring is very expensive. It isn't the layoffs that prove so costly -- although they often do. The big cost is in lost focus, attention and commitment. One senior leader I discussed this with estimated that each restructuring costs 12 months in lost creativity, innovation, momentum. This is a sobering thought when you consider that Cisco and Microsoft tend to reorganize themselves every year.

In the case I'm working on, I think that restructuring is really a scapegoat for the leader's indecisiveness. The company doesn't need reorganizing but the CEO does. Priorities aren't clear. It takes too long to get things done. Staff turnover is high. Innovation is trivial. Customer commitment is well nigh non-existent. I can't see how a new structure will change this but I do know it will introduce fear, distraction and disruption into the business.

It's the easiest thing in the world to imagine that if you were to start from scratch, you could design the perfect company, with all the right people in all the right places on an immaculate org chart. The reality is harder to face: It's more likely that the leader needs a clearer sense of priorities that everyone understands and supports. With that, you can achieve most things -- but without it, the more perfect structure on earth won't deliver.

One executive I know described restructuring as "letting air into the heating system. With each one, you lose progressively more heat." It's the perfect image. You can't see the damage but eventually you'll feel the heat disappear.

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    Margaret Heffernan has been CEO of five businesses in the United States and United Kingdom. A speaker and writer, her most recent book Willful Blindness was shortlisted for the Financial Times Best Business Book 2011. Visit her on