Why executives order reorgs

In my job, a reorginization kills my productivity for months and directly hurts my pocketbook. After a reorg, I’ve got a new team that doesn’t know how to work well together, a new boss who doesn’t know me or how to make my life easier (or how hard I’m going to make their life), and now the developers, testers, business customers, and operations people I’ve built good working relationships with are all replaced with new versions who I need to start over with. Often, everyone now has to work two jobs half-time, supporting whatever they used to be doing and trying to pick up their new jobs.

I don’t do my job really well until months after a reorg. This means for those months, the company isn’t getting as much out of me for what they’re paying, and that’s a poor choice. My annual review will then include a period of months where — despite my best efforts — I wasn’t as good as I normally was. And if my review goes:
Q1: Star
Q2: Good after a period of largely ineffective
Q3: Outstanding, getting back to stardom
Q4: Good but not particularly effective

There’s no way I get the “star” review score (and raise, and bonus). And it’s the best people, who invest in building relationships and doing the best work, who are inordinately hurt. Someone who’s just okay and goes through two reorgs is going to look fine. Someone great through a similar wringer will look erratic.

Every reorg costs every top-quality peer-level person in the company thousands of dollars. And there’s never any attempt made at compensation, either directly (“We know this reorg’s going to hurt your review scores, so everyone gets an extra 1% on their bonus”) or indirectly (“Review scores will be based on months unaffected by the chaos of the reorg”).

At each level, the pain is lessened, both by having broader goals and by the ability to have those goals thrown out. For instance, when I was at AT&T Wireless, when the company would post horrible results that missed goals, the board would lower those goals so that the executive leadership could get their bonuses and millions of low-priced stock options. The grunts, of course, didn’t get comperable treatment.

No wonder people on the ground level have such negative views of these things.

For managers, it’s a little better. Since they’re not held to the kind of “get x features into production” review standards a grunt is, and their networks wider, they’re better adapted for change. A manager who works on, say, the retail line-of-business applications and gets moved into working on customer-facing applications is going to find far more of their immediate contacts stay the same compared to a grunt-level worker.

However, managers get hit when the people who work for them change. People with a new boss are reluctant to rate their boss highly, especially on qualities that take a long time to establish (“My boss is honest with me…” and so on). And conversely, it can help mitigate bad scores for bad bosses, since employees are reluctant to rate a boss extremely badly if they’ve only worked for them for a month or so.

The more they’re evaluated on their ability to manage their employees, the more they’re harmed by reorgs. And even if they’re not, they’re still far less effected compared to an exec.

Soon, you’re at the level of the vice president of IT, and you have entirely different motivations. Your goal for the year isn’t “ship x widgets” though you may have some high-level initiatives you’re charged with getting out the door. It’s more likely “address supplier concerns” and the goal’s met if the suppliers rate the IT organization is “responsive or highly responsive” on the year-end survey, a dramatic improvement from “sometimes responsive”.

From your perspective, it makes total sense to order a reorganization around suppliers. Each supplier now gets their own team, with dedicated resources, and they’ll all do the projects that supplier wants! Ad-hoc teams will form around releases for each product! Sure, there’ll be a few months of depressed productivity, but after that, it’ll be great!

It works. The supplier’s overjoyed that you’re willing to go through this to better serve them. They understand that it’ll be tough at first, and you get a pass. During that initial honeymoon, as their new dedicated teams start to fight, the supplier’s going to be happy — look at the little ants go at it! They’re so cute, and the red ones are fighting for me!

The “highly responsive” box gets filled in. As the VP of IT, this stunning success gets you a huge bonus and a pat on the back.

When the annual employee survey results come out, and morale is down, people are mad about how bad communication is, express frustration with the direction of the company, with the competence of the leadership, there’s a ready excuse for you: the grunts are understandably frustrated because they’ve had to switch teams and bosses, and things will look better once they’ve settled down.

Then your boss realizes that actual productivity has ground to a halt because every team’s fighting every other team. Your reorg doesn’t get blamed — you get a new goal for next year, to streamline planning and build a unified build platform, or some such thing.

That clearly requires a reorg.