The Way Great Teams Work

Why Good Leaders Canít Follow Good Advice [PDF]

Why Corporate Democracy Fails

Communications Requirements For Productive Systems Analysis

The Management of Reorganization

Don Rossmoore, Ph.D.

Susan Nero, Ph.D.

Part I: The Manager as Architect of Morale

In recent years, we have observed a series of large-scale reorganization efforts in a variety of high technology organizations. In all cases we have found that the most crucial factor in determining the ultimate success or failure of the reorganized unit is the skill with which the top manager takes charge early in the reorganization.

Even under the best conditions, errors made by people at the top of organizations are far-reaching--continually magnified and replicated at every level downward. However, during a time of reorganization, the responsibilities of leadership are heightened dramatically, not unlike the change in responsibilities of a military commander moving from peacetime to war conditions. As risk and danger increase, so do the demands on top management. In the final analysis, reorganization is a test of leadership.

Most top managers initiate a reorganization by addressing business, structure and technology. However, we believe managers must enlarge the vision of their role to include the construction of the social and emotional architecture of the new organization. This is reflected in the quality of good will, team work, and communication that develop under their leadership. The first necessary step is for the manager to own full responsibility for creating the social and emotional infrastructure. Then, the manager must accept three mandates to guarantee that this infrastructure will be healthy and will support the new business and technical requirements.

The Three Management Mandates for a Successful Re-Organization:

Building morale is at the top of this list because we find it is often the most deficient and yet most crucial aspect of skilled leadership in organization transitions. In other papers we will present discussions of power and credibility. What follows in this paper is a short field manual, an architectural blueprint, for building organizational morale. Our goal is to help managers who are responsible for reorganization efforts: first, to recognize important issues that they may not immediately think about; second, to clarify their own role and responsibilities; and, third, to identify opportunities to be more effective in building the morale of their organization.

The First Mandate: Make Morale A Priority

Carl von Clausewitz, the great nineteenth century Prussian philosopher of war, states that morale is the most important element of military strategy, and that when all other factors are approximately equal, morale will be the decisive factor in determining the victor.

We see a parallel in reorganization strategy. During times of reorganization, human emotions come to the forefront. The process of reorganization unleashes fears and anxieties, as well and excitement and hope. It raises frustrations, shortens tempers, leads to loss, grief and guilt, and it may disrupt long-standing friendships and alliances. Even the people who are generally calm and rational in the face of conflict act in unusual ways during a reorganization.

The dictionary defines morale as "the moral or mental condition with respect to courage, discipline, confidence, enthusiasm, willingness to endure hardship, etc." Everyone's morale is precarious when a large entity reorganizes.

Whoever is in charge needs to assess the subtle shifts in morale from the very earliest stages of the reorganization, keeping track of all the players and how they are responding to the ripples of change as they occur. A first step in tracking morale is keeping the "reorganization scorecard."

The Reorginization Scorecared: Winners and Losers

No matter how great an effort is made to avoid it, there will always be "winners" and "losers" when there is a reorganization. Winning and losing result from redistribution of valuable organizational commodities. There are many such commodities in every organization. We will discuss several which we have found to be key in determining the identity of "winners" and "losers":

Valuable Organizational Commodities

All parties to a reorganization are aware of who gains and loses these commodities, and everyone is highly sensitized to the casting of "winners" and "losers". There is an invisible scorecard which tracks all such events. Here are some scorecard entries we have observed:

Before a reorganization the manager of a hardware group was able to approve expenditures up to $200K without notifying her boss; after the re-org, the manager needed approval to spend $50K. The manager lost discretionary decision making authority, an important organizational commodity.

In another instance, before the re-org a marketing manager could recommend new product performance specifications and features to engineering. Engineering had discretion to design to these specifications or not. After the re-org, the marketing manager decided what specifications and features engineering had to design. The discretionary decision making authority formerly given to engineering was lost to marketing, which was then clearly the "winner".

Another important organization commodity is access to valued resources. In one company, before the reorganization, the test organization reported to engineering. After the re-org the test organization reported to marketing. In another company, two R&D units competed to be the first to produce a new material. Before the re-org, one unit "owned" and controlled access to all reactors needed for production. After the re-org half of the reactors were "owned" and controlled by the competing unit.

A third valuable commodity is markets to compete in . A recent example we observed is of a server group which could only sell into niches already occupied by the high performance desktop group. After the re-org, the server group was free to sell into any niche it thought would produce an acceptable return on investment.

Access to the "powers that be"is always strongly desired. In one company, a veteran manager reported directly to the CEO and a more recent hire at the same level reported to a senior VP. After the re-org, the scorecard changed. The veteran reported to a senior VP and the newcomer reported directly to the CEO.

The last organization commodity worth mentioning here is the opportunity for upward mobility, as illustrated by a senior VP who managed the biggest revenue generating product group in his company, which was also the traditional stepping stone to CEO. After a re-org, he was assigned a senior staff position, known to be the graveyard for senior managers. He was relegated at once to the "loser" list.

When a reorganization begins, the "winners" and "losers" are apparent immediately. Generally, it is most comfortable for people to publicly ignore this new reality in order to minimize the social stigma of the "losers". For many people, this will be the easiest way to help the "losers" save face. However, we feel it is important that the manager overseeing the reorganization not succumb to this collective "white lie". In order to manage the morale of the organization, the manager needs to acknowledge the truth of the situation and act accordingly.

A skilled manager in this situation recognizes immediately that the "winners" will generally support the re-organization, and that the "losers" are more likely to resist the change and create problems. In fact, "losers" may oppose or even sabotage the new organization, and then camouflage their actions. Often, the emotional charge of the resistance draws so much of the organization's attention, that the most important concern of the moment--the successful building of the new organization--is overshadowed. Managers must be prepared to work against opposition when it occurs, no matter how emotionally painful the prospect is both for the victors and the vanquished.

At such times, the greatest temptation for management is to decrease the emotional discomfort by minimizing the discrepancies between the winners and the losers. However, the greater the effort to avoid creating winners and losers, the more likely it is that the reorganization will result in a Rube Goldberg creation -- lots of complexity, lots of effort and expenditure of resources, with marginal improvements. Rather than decreasing emotional discomfort, management's responsibility is to create a resilient emotional framework to support the harsher realities of the reorganization.

Building A Resilient Emotional Framework

We have found that managers who take charge of the emotional parameters of their newly formed organizations, need to address three key tasks:

Three Key Tasks for Building the New Organization

Selecting Key Managers Rationally

The toughest decisions during reorganization are in personnel selection. Choices often impact old, established relationships. The manager may be easily influenced by fear of offending, hurting feelings, or provoking anger. In one re-org intended to improve an organization's marketing capability, the President forced a restructuring of the entire marketing organization, but left the Senior Vice President of marketing in place. The direct reports of the marketing VP referred to him as the "black hole of Calcutta" because once something landed on his desk that was the last time it was seen. The President referred to the marketing VP as his "oldest drinking buddy." He often said that if it wasn't for the marketing VP, he would never have become President. It took three painful months for the President to find the courage to fire his VP. Then within the first quarter, the performance of the marketing organization improved dramatically.

This is not an unusual event. In our consulting practice, we have seen management begin a reorganization purported to increase cooperation and coordination by filling a key position with someone universally known as competitive and uncooperative. We have also seen management select a conservative, risk-aversive manager when the stated purpose of the reorganization was to promote more risk-taking and entrepreneurship. In these cases, the leadership allowed emotional concerns to pre-empt rational selection, thereby undermining the credibility and legitimacy of the reorganization. From a distance, it is mind-boggling to imagine how such irrational personnel choices might be made.

However, upon closer scrutiny, it becomes apparent that a factor we call "emotional distance" often complicates important personnel decisions during a reorganization. The longer individuals have worked together and the closer their reporting relationship, the closer their "emotional distance." The closer the "emotional distance" between the personnel decision maker and those in the selection pool, the more difficult it is to override an emotional response in favor of a wise choice. Courage is required. The less courage the manager can muster, the more fear-driven the selection is likely to be--and the greater the threat to the re-organization. Unfortunately, decision makers frequently are unaware of acting upon an irrational, emotional response such as fear of hurting feelings or provoking anger. They may believe with real certainty that their choices are rational and then construct a false rationale to cover their true motives. When this happens, there is seldom a way to reverse the decision, and the decision makers may never understand the nature of their mistake.

Often we are asked to assist in the selection of key personnel, and we encounter many managers at risk of making irrational personnel decisions. As far as we can determine, there is only one safeguard against such errors. Especially when "emotional distance" is an issue, management is likely to make a fear-based personnel decision unless this safeguard is put in place:

The Safeguard of Sound Personnel Decisions

Articulate criteria for selecting all new leaders early on in the reorganization process.

Once articulated, management then must be prepared to hold to these criteria. Our experience in high tech organizations has lead us to identify three types of criteria which are essential in the rational selection of leaders. These are: good enough interpersonal fit, a demonstrated history of producing, and sufficient technical competence.

Critical Factors For Selecting Leaders

First, the selected manager must demonstrate good enough interpersonal fit. By this we mean that the manager's communication/ cooperation skills and style must result in productive relationships with key direct reports in the new organization, as well as key cohorts across organizational boundaries. Productive relationships are demonstrated by a willingness, within each relationship, to give and receive useful criticism, and to surface and resolve disagreements so they remain resolved. This does not mean that individuals must like each other -- sometimes liking each other is a barrier. However, it does mean that those who are selected into leadership positions need to be able to form productive working relationships with bosses, colleagues and subordinates.

One example of this is the line and staff structure created at General Motors in the 1920's by Pierre duPont and Alfred Sloan. It worked brilliantly only because those in top management roles enjoyed superb interpersonal fit. Members of each of the key committees disagreed on important issues in the strongest fashion, yet they were able to make sound decisions that were not political compromises. Also, they were able to implement their decisions successfully, without harming ongoing interpersonal relationships or the effectiveness of any of the committees.

In contrast, during the 1960's, the demise of the great Wall Street banking house of Kuhn, Loeb resulted from the loss of good enough interpersonal fit . When personal animosity among members of the management committee developed, it undermined the committee's ability to resolve issues of compensation and strategy. These failures resulted in the forced sale of the firm.

Second, the selected manager must have a demonstrated history of producing the most important performance characteristics required by the new position. For example, a key purpose of one re-org was to improve the company's time to market. This required a senior manager for software who had a demonstrated ability to deliver product on time. In another company, a primary intent of a re-org was to improve customer relations. This required the manager of an important technical unit to have demonstrated experience in establishing and maintaining good customer relations.

Finally, the selected manager must have sufficient technical competence to provide informed leadership. In the re-organization of a group developing UNIX products, a new manager with vast UNIX development experience was named. However, the position required supervision of not only development managers, but also of the marketing organization responsible for defining product specifications. The reorganized unit failed to make money. When this manager was replaced by one who had sufficient development expertise as well as sufficient marketing expertise, the group became profitable.

However, there is a danger here. The need for technical competence, which is relatively straightforward to assess, is often over-estimated at the expense of interpersonal fit, which requires attention to less obvious information. Technical competence by itself is never totally sufficient for creating effective management. Interpersonal fit and other performance characteristics must be present. This was the case with Pierre duPont who was a novice in the automobile industry when he assumed the presidency of General Motors in 1921. However, he succeeded because he was an expert on building organizational structure and processes--which is what General Motors required at that historical moment.

When these three criteria are used, the quality of personnel decisions is greatly enhanced and a good cornerstone is set for the reorganization effort. However, the entire process by which the new leadership is chosen requires close attention. Selection criteria alone will not assure successful performance. We suggest an approach which reinforces rational decisions and which is put in place by top management at the very beginning of the reorganization. The process we are suggesting allows management team members to exercise their judgment in determining the make-up of their team.


In this approach, as each member of the leadership team is chosen, that member must offer input into the selection of the rest of the leadership team still to be chosen. Here are some guidelines we have found useful:

Guidelines for Selecting the Leadership Team

Dealing With The Losers

A rational personnel selection process, such as we have suggested here, goes far to build morale and good will in a reorganized group. Managers who hold to these processes find respect for their decisions and wide support at all levels. The demonstration of rational leadership is sure to provide great relief and comfort--except to one small sub-group: those who are now clearly marked as "losers."

Some, though not all, "losers" are likely to oppose the new organization. This is most difficult when they act covertly and camouflage their opposition. It is management's responsibility to deal directly with all such resistance to the reorganization. First, managers must pay attention to danger signs. They might notice that the behavior of a unit is not conforming to the requirements of the re-org. Or they may observe a "loser" publicly demonstrate lack of respect for some aspect of the re-organization or for a new superior. Once again the leadership must not let fear override the situation. If a manager chooses to cast a blind eye on oppositional tactics to avoid uncomfortable confrontations or to help the "loser" save face, most likely the result will be decreased morale and impaired functioning throughout the organization.

At such times it is necessary that managers be delegated sufficient power to protect the morale of their organizations. This means that they have been given unilateral authority to do some or all of the following:

We have described these commodities of power in detail in other writings (Levine and Rossmoore, J. Management Information Systems, Vol. 11 Number 3). Except when morale is excellent, and defined by either a profound sense of common predicament or opportunity, the use of power is needed to insure cooperation and coordination. To enjoy an opportunity to succeed, every unit manager must be delegated sufficient power in these three areas to insure needed cooperation.

Thus empowered, a manager's decisive, timely removal of one resistant "loser" is often sufficient to generate good enough cooperation from all other "losers".

In one recent example, we observed three senior vice presidents oppose successful completion of a strategic project which would have taken organization commodities from each. Once their resistance became known, the COO made explicit that the Executive Vice President's who was in charge of the project had unilateral authority to fire, re-assign and financially reward each of the senior vice presidents involved with the project. The Executive VP's unilateral authority was communicated in writing, e-mail, and face to face--iteratively, not just once.

Next the Executive VP sat down and made clear what she expected from each of the resistors. One of the three stopped resisting and began to cooperate. Next, the Executive VP fired the more senior and powerful of the two remaining resistors, much to everyone's surprise and relief. This was quite difficult for the Executive VP to do, but, as she reported after, she found it empowering and liberating.

Then, the Executive VP sat down with the remaining resistor and re-iterated what was expected of him. The third resistor cooperated and morale throughout the project improved significantly.

Back Channels Useful In Discovering Resistance

To identify possible resistance and sabotage, responsible managers must develop back channels of information to monitor how well the reorganization is working. The essential back channel is direct communication with reliable informants throughout the organization, at all levels. Informants are reliable if they are likely to generate valid, verifiable information about relevant activities. Once a manager is confident that formal channels are generating good and timely information, back channels can, and should, be dropped.

The Building Blocks of Morale

Many people whose daily routines and relationships are changed by the re-organization will be depressed by their losses. Others who want immediate results may be discouraged by obstacles and set-backs. Some may become cynical if the original plans are altered once the reorganization is under way. There are many aspects of an organization's morale, and they all require attention. This attention is the responsibility of top management and cannot be assigned to a mid-level manager--even one of high credibility and competence.

Morale is an immediate requirement. Building morale must be a top priority, reflected in the leader's daily calendar, public behaviors, and private reflections. Morale is built by innumerable small decisions and acts, all of which must "ring true" for those undergoing reorganization. It requires a level of mastery that unfortunately is not often discussed or promoted among managers. This mastery is "the moral or mental condition with respect to courage, discipline, confidence, enthusiasm, willingness to endure hardship, etc."--the morale of the leader. Cultivating this very personal morale, this self-mastery, is a continual process of experimentation and refinement. From our experience, we find that there are several building blocks which support truly expert, morale-generating leadership:

The Building Blocks of Expert Leadership

Top management inevitably sets the moral tone for the organization by personally embodying the values by which all will be held accountable. No matter how eloquent and pervasive the official rhetoric is, the new organization will reflect the leader's walk, rather than the leader's talk. Behaviors always speak louder than words, and the behaviors of the top leadership are open to scrutiny from all directions.

To the extent a leader is dissatisfied with the behavior of the new organization, it is likely that the leader's own behavior differs significantly from the rhetoric that is supposed to characterize the reorganization. Whenever the leader is dissatisfied, he/she must seek valid information to discover the discrepancies between his/her own talk and walk. And then the leader must correct for the discrepancies. The congruence between the leader's words and actions will be the most important determinant of goodwill and positive morale throughout the organization.

In one company where re-organization was intended to de-centralize authority, the President made a decision that was no longer his to make -- it had been delegated to an Executive VP. As soon as the President announced his decision, his direct reports became discouraged and lost confidence in the President's commitment to de-centralize. However, the Executive VP confronted the President with the discrepancy between his word and his deed. The President quickly acknowledged his mistake, rescinded the decision, and let his VP make it. Morale was restored to the new organization.

Leadership must cultivate exemplary characteristics

The leadership behaviors that most impact morale relate directly to the fiber and strength of the leader's inner character in the face of challenge. In our observations we have found that excellent leadership displays the following characteristics:

Integrity, which is the congruence between the vision and direction expressed in a leader's expressed intentions as compared to the vision and direction expressed in a leader's observable actions walking the talk.

Moral courage, which is measured by the leader's willingness to own responsibility for the organization's performance--both before his / her own conscience, and before all others in the organization.

Judgment, which is the ability to separate fact from opinion.

Character, which is the willingness to follow the facts wherever they lead, and to account for contrary opinion, no matter how repugnant that opinion, or the source of that opinion, may be. The President in the last example demonstrated integrity, courage and character by acknowledging and correcting the discrepancy between his walk and his talk.

Concern for the well being of one's followers, demonstrated in ways valued by those followers.

Holding each sub-manager responsible for the morale of her/ his own unit and for demonstrating the same characteristics.

Leadership must attend carefully to communication

Communication plays a crucial role in building morale. The most effective way to address the substantive, practical concerns which impact the morale of individuals is for the leadership to communicate and discuss thoroughly--not just once, but repeatedly--each of the following:

  1. Future direction, including opportunities and risks inherent in that direction.
  2. Expectations that must be satisfied to exploit the opportunities.
  3. Dependencies that must be satisfied among various functional organizations.
  4. What is most likely to go wrong, and what should be done when those things go wrong.
  5. Most important issues to manage well and how they will be managed.

Leadership must study morale and its implications

Good morale tends to be maintained as long as people have confidence in the integrity and efficacy of the effort. Once people doubt either one, their morale will decline. In one re-org which was supposed to improve internal cooperation, morale declined dramatically when a manager known for his selfish behavior was promoted to a key position.

Conversely, in the example above, when the Executive VP fired a VP reporting directly to her, morale improved dramatically once the firing was announced. People finally believed their leader had both the authority to lead the project successfully and the courage to use that authority.

Declining morale is a good barometer of problems not yet detected or resolved. When leadership establishes channels for tracking morale throughout the organization, it can use that information as an early warning about possible implementation set-backs. The Executive VP decided to fire the VP after her back channels informed her of ways the VP was still acting unilaterally rather than collaboratively.

It is foolish to minimize or explain away a reversal in morale without close investigation. During the time when the President failed to fire his drinking buddy, morale declined, as well the credibility and moral authority of the President. For a time the President discounted the negative reactions of the marketing group. Once he accepted the validity of their concerns, he found the courage to fire his friend. Dismissing or discounting opposition without giving it adequate consideration is never helpful, and usually leads away from comprehending the truth. When a manager pays attention to the shifts in opinions and reactions, especially when they are unwelcome, that manager can have a profound and immediate effect on an entire organization, making it easier for everyone to act with courage and integrity.

In Summary

In hind-sight, after consulting in a variety of reorganizing units, we have begun to identify errors most commonly committed by those in leadership. Most often, these begin with the intention of minimizing emotional discomfort and then are compounded by avoidance of the most important, and often threatening, issues.

Key elements to avoiding these errors include the willingness of leaders to own responsibility for the success of the reorganization before their own consciences and their superiors, peers, and subordinates. This means taking responsibility for building a productive emotional and social environment for the emerging organization--attending to the many subtleties of morale.

It is necessary to assign morale and rationality a higher priority than one's own emotional comfort. Reorganization is more likely to succeed when leaders seek out relevant facts regarding the reorganization, including the relationship between their own words and deeds. Attending consistently to morale of the organization, following the facts--no matter where they lead--these are the critical responsibilities and contributions of effective leadership in a successful reorganization.

article - Copyright 1997 Don Rossmoore





Copyright © 2004-2012 Don Rossmoore