Leading Change: Making the Most of Restructuring and Centralization

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The Restructuring of your business can be a painstaking event in the life of an organization, yet many times a necessary component of a fast-changing and competitive world. Like it or not, when company-wide change needs to occur, it’s often on the structural level. When the time comes, many opt for a centralized approach, which is certainly useful but can actually be detrimental if not properly executed.

What is Centralization?

Centralization is likely already familiar to you; in short, centralization is the consolidation of decision-making responsibility to a key leadership position while also consolidating implementation responsibilities towards in-house team members, away from outsourced workers or vendors.

The most common reason to move toward centralization is to lower operating costs. Additionally, centralization allows for objectives to be set and met more quickly. That said, in order to be effective and efficient, a centralized organizational structure requires decisive, clear, vision-oriented leadership. With that in mind, here are a few tips for successfully leading a change towards centralization.

1. Make Sure Leadership is Ready

Leading change toward centralization is no easy task. Centralization tends to produce greater diversity in every function of an organization; diversity of ideas, cultures, and geographies. Such a wealth of diversity demands leaders and managers who are competent in the increasingly complex global organizations of this century.

Effective leaders of centralized organizations don’t just set goals and budgets, they inspire their teams to reach those goals. Leaders do this by continually articulating the vision while communicating the benefits of living in this brighter and better future. A well created and clearly articulated vision simplifies hundreds, if not thousands, of decisions and motivates people to act in the right direction. Leaders become living, breathing signposts pointing others towards this clearly defined destination. They remove barriers in the way allowing opportunities to be seized and small wins to be championed. Keep in mind, leaders and managers who may have thrived in a decentralized organization may not find the same success when the structure moves inward. Make sure your leadership team is ready and clearly aware of their roles to lead the change; the transition period is always the hardest, but it can be mitigated by leaders who prepare their organization for change and help them cope as they struggle through it.

2. Get Ahead of any Negative Impacts

The dark side of restructuring and centralizing is that downsizing is inevitable. Streamlining your organization and improving efficiency will create redundancies. The result is that, if not adequately managed, those unfortunate costs of organizational progress will inspire distrust and suspicion among your team. This can lead to a negative feedback loop where anxiety hampers productivity, which damages morale, which creates anxiety, and on and on. The best way to get out in front of these possible negative side effects is to direct management and leadership to articulate the big picture, the “What” and “Why” to their teams that creates a compelling picture of their future state of affairs. A place of greater value and clarity than they are presently experiencing. Over-communicating the vision should be the rule.

How will the coming changes improve the work environment and functioning? What opportunities will the same changes open up for the business and all its employees? These are questions you should try and anticipate and answer before your team brings them up.

3. Allow Everyone to Have Skin in the Game

Cross-functional or interdepartmental collaboration isn’t likely to occur organically in the centralized business. That sort of interconnectivity, however, is crucial to maximizing your organizations’ potential. If different teams or departments are aware of the sort of challenges their peers are engaging with, they are better situated to prepare for what’s coming down the pike, or even to help that team reach their goals. But beyond fostering a culture of collaboration, the most important thing to do is invite everyone into this new undertaking created by the shift. Let it be known that successful change can’t be achieved through the efforts of the senior leadership team alone. Make it clear that their participation is vital! Invite them into the adventure. Allow them to have skin in the game of creating lasting change. Let it be known that without their talent, their creative ideas, and their steadfast commitment, real, lasting, change won’t be achieved.

Change isn’t easy, especially when restructuring your organization. Change can be a high-risk, high-reward gambit. But, just because it’s hard, doesn’t mean it has to be scary. Change can be managed if leadership sets the stage correctly and when it comes to centralization, managed change comes from solid leadership.