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Blog: The Business of Management
 

June 27th, 2008

Boss Basics: When in Doubt, Reorganize

There are certain basic qualities to leading and being a boss, and I’m tackling these in an ongoing series of blog posts.

The first one, in case you missed it, was on how it pays for the boss to set a good example.

Today’s installment of Boss Basics comes from a different place, and it takes me back to a lesson I learned at a big company in my past: When in doubt, reorganize the staff.

This company was famous for moving people to various offices, and the best thing you could do as a manager dropped into a new location was simple: reorganize the staff, fire a few people, and show that you are “making the tough choices.” This played to the organization’s cultural bias that something always needed to be fixed, and that getting tough and making changes was always the best way to do it.

This is complete and total nonsense, of course. John Wooden, the famous UCLA basketball coach, once noted that you should “never mistake activity for achievement,” and he’s absolutely right. Making changes—like firing people and reorganizing the staff—certainly gives the illusion of change because it makes it seem like something is happening. But as Wooden notes, it’s just activity, not real achievement, and that’s where the flaw lies.

But, reorganizing the staff when there’s heat on for big change is a time-honored Boss Basic. And not surprisingly, it’s going on right now at Yahoo.

As The New York Times notes, “Under pressure from many shareholders for its poor performance and for its failure to complete a deal with Microsoft, Yahoo is doing something it has done several times before: reorganizing itself.”

Advertising Age (a sister publication of Workforce Management) points out that this is the fourth reorganization at Yahoo in the last 18 months, and that “It’s hard to find a company that reorganizes more than Yahoo.” The Times story also notes “analysts were skeptical that reorganization would be any more effective than any of the previous ones at restoring Yahoo’s fortunes.”

“It changes nothing,” said Benjamin Schachter, an analyst with UBS Securities. “Companies that are doing well generally don’t do reorgs. They significantly impact morale and show that the crux of the problem is the lack of execution. This is a management team that has not been able to execute.”

Yahoo has made some dumb moves recently, and this reorganization seems to be the latest. I doubt it will do much except stress out its workforce while giving the illusion of change and movement.

Change for the sake of change rarely works, and sometimes the need to reorganize and change pushes organizations to do really stupid things, as we have seen at Circuit City. But, I truly doubt this is really about change or making the company better. It’s simply taking a page out of the management playbook that all bosses seem to get — making a change to buy time and perhaps make some people think that there is something bigger and better going on.

This kind of flawed strategy rarely works. It didn’t work for Circuit City and I doubt it will for Yahoo. It’s simply activity without achievement, as John Wooden would say, and although it is a standard practice taken right out of the boss playbook, it is flawed and foolish. And, it may be the last big move the current Yahoo management team gets to make.


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Comments

I couldn’t agree more with Mr. Hollon.\

Your article, and in particular Benjamin Schachter’s statement, rang very true for me!
I worked many years (15) for a government-run casino and over time, was impacted by a couple of re-organizations and its subtle cousin; applying for your own position (one day your position disappears, only to be replaced by one with the same job description but a different title)
I tried to understand the motive behind these moves but could never come up with a plausible reason. I did see and feel, first hand, the ramifications of such moves….low morale, distrust, us-against-them attitudes, etc.
Perhaps a defender of this type of strategy, reading my comment, might say a re-org is a chance to move talent around (good for the company, good for the employee)…or to inject new blood into areas that need rejuvenating…or to save $’s; these are valid reasons. But as Mr. Schachter said, if your organization keeps relying on re-orgs, it’s not getting it!
I often wondered…was a re-org an attempt to move people out of positions where management wasn’t happy with their performance? If that was true, then shame on them! As managers/leaders, it is our obligation to manage our areas/companies….and be honest about it. Shuffling people out of positions should be replaced by timely performance reviews, realistic goal-setting, regular feedback and when warranted, corrective action. Re-org’s should be used as a last resort, if at all.
I left my previous employer 3 years ago and can say they still resort to these tactics in managing their business. It’s too bad….it’s a good company, with loads of good people.
Lu


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