Restructuring

Before deciding to change an organization’s structure, leaders must define the issue: What exactly is the organizational challenge at hand? Is communication ineffective? Have funding sources changed? Does the organization need to respond to changing legislation or policy? Are services not aligned with changing community needs? Are stakeholders dissatisfied with the organization? Ideally, there should be a consensus among all parties about challenges and needs. 

Once leaders understand the challenge, the next step is to determine the best way to address it. A reorganization may be a solution, but more effective and less disruptive options may be available. Streamlining work processes, engaging stakeholders to identify needed changes, or clarifying roles and responsibilities may be better solutions than a formal change to the organization. 

Especially in government contexts, there are myriad ways to organize functions and staff—good arguments can be made to organize around a certain policy area, service recipient, or business-side commonality. In any government reorganization, however, the desire for a more rational or policy-focused organization must be tempered by the need for continued and stable delivery of services. 

Reducing costs may be a motivation for reorganizing an organization, but leaders should think carefully about whether and when costs will decrease. Complex fiscal analysis is not always necessary. An organization can make educated guesses about how much time will be lost due to a reorganization and factor those losses of productivity into rough calculations of benefits and costs of a potential reorganization.

In state government, leaders must consider other factors, including related state and federal laws and civil service requirements.

• Changes to state statutes or rules. Some changes may be relatively straightforward, such as changing the name of an organization across multiple statutes. Other changes may require complex rule-making processes (with the attendant costs and time needed for public comment periods).
• Compliance with relevant federal laws or funding requirements. This is especially important in agencies that receive significant federal funding or have joint enforcement agreements with federal agencies. State agency reorganizations may require new arrangements with federal agencies, which could be straightforward or complex and time-consuming. 
• “Fair and equitable arrangements.” State law requires that “any restructuring of executive branch agencies must include efforts to ensure that fair and equitable arrangements are carried out to protect the interests of executive branch employees and to provide the best possible service to the public…”(Minnesota Statutes § 43a.045). In practice, this can mean that agencies make efforts to retrain current state workers to perform new jobs, or the state may take a phased approach to reorganization to minimize service disruptions.
• Collaboration with employees. Collective bargaining agreements covering many employees require that management representatives work with employee representatives for any planning process or management study that may result in layoffs.
• Implications of “bumping.” Layoffs or significant position modifications can lead to additional staffing changes as employees with more seniority “bump” less senior employees or accept voluntary demotions.
• Proportionality in staff and manager/supervisor reductions. Minnesota Statutes §43a.046 provides that agencies “with 50 or more full-time equivalent employees must reduce at least the same percentage of management and supervisory personnel as line and support personnel.” As with bumping, this requirement may not matter much, but in some situations, it may have a dramatic effect on organizational plans.

When a reorganization is the right solution to an organizational challenge, managers must be prepared to invest time and resources to make the transition. 

Prepare for the human side of structure change 

Redefine and clarify staff and management roles in the new organization: Who is responsible for what? Who is accountable? Who must be consulted or informed about tasks?

If possible, finish any downsizing before a reorganization so that remaining employees have a sense of security as they do the hard work of reorganization.

Include employees in the change effort. A good practice is to establish a working group to help shift tasks and people from the old organization to the new. 

Plan and budget for logistical changes 

• Get ready for changes to personnel and payroll systems and increases in human resources transactions, such as coordinating layoffs, retraining, severance pay, unemployment compensation, and movement of remaining staff. Consider that human resources transactions may take longer than usual as staff address the practical and emotional impacts of organizational change. 
• Identify and implement necessary technology system changes, such as networking processes, database integration, hardware needs, and revisions to existing service contracts. Ensure information technology staff have time and resources available to set up or adjust firewalls, build networks, and answer staff questions.
• Prepare for location changes by considering factors such as moving expenses, lease negotiations, and staff time spent packing or unpacking.

• Develop a plan for communicating with employees, explaining the purpose of the structure change, the timeline for implementation, and expectations for employees and managers.
• Plan and budget for communication with customers, clients, and other stakeholders. Communication about a significant change will require multiple messages to affected groups.
• Ensure existing informal and formal communication networks inside and outside the organization are supported or replaced. 

Managers must acknowledge that it will take time before a reorganization is complete. Office locations and organizational charts can change quickly, but changes in work and relationships can take years. If a reorganization is done for the right reasons, if employees and stakeholders understand those reasons, and if leaders plan and invest in change, then a reorganization can be successful. Given the challenges associated with a reorganization, however, public sector leaders should make the decision to reorganize carefully.