Company reorganizations are never pleasant. The managers who need to communicate with affected employees feel anxious about the pending communication. Rumor mills within the company start churning as employee’s whisper about who will be terminated and when the day of reckoning will occur. In my experience, there is usually a sense of dread hidden just under the surface of daily activity across the organization.
One of the quandaries that executives face in this situation is how to best communicate the reorganization. Should they announce ahead of time? Will that only increase the sense of anxiety among employees and decrease productivity? Who should be brought “into the tent” early regarding timing and people affected?
I’ve been through these questions many times (unfortunately) and have learned the hard way what usually works best.
I once was involved in a small reorganization of departments where we were consolidating all activities of a particular function to our San Francisco offices. I use the word “small” not to discount the enormity of the decision to those impacted, but to frame it relative to other company-wide reorganizations. This reorganization required closing one office located in New York City, and offering those employees the opportunity to move to our San Francisco location. It also required eliminating a role located in another location in upstate New York.
Together with the VP of Human Resources, I worked with the two VP’s responsible for the employees in New York City and the upstate NY location on planning the logistics of the reorganization to affected employees. Both VP’s reported to me and we ultimately decided that I would be present in New York City to deliver the news with the on-site VP while the other VP would deliver the news to the impacted folks in upstate NY.
We had a vigorous debate about the proper communication strategy. One of the VP’s advocated for transparent and quick communication to the organization, while the other preferred a more graduated approach – communicate to other leaders in the organization after the event and wait a few weeks before communicating to the broader organization in order to give the affected employees in New York City time to decide whether to move to San Francisco. I decided to go with the latter strategy of a more gradual communication thinking that it provided more respect to the team affected in New York City.
Spoiler alert – wrong move.
We communicated with the impacted employees at the end of the week and the following Monday, I had my weekly leadership team meeting where I intended to share the news with my other direct reports. Before I could even begin, the team started peppering me with questions about the reorganization, asking me why they were not told ahead of time, as word had immediately spread throughout the organization. The team had been fielding questions from their direct reports without knowing how to respond. It didn’t take me long to realize that I had made a mistake and apologized. By the end of the day, we had an announcement about the changes sent out to the entire organization.
What did I learn? When you are going through a reorganization, discuss with your direct reports and other appropriate functional heads what is going to occur before the actual event. Depending on the circumstances, it may be the day before or much earlier. It depends on how much the event will impact other areas and linkages. In some cases, other department heads may need to discuss how their teams will be working with your newly configured organization. This requires planning ahead of time. Also, make sure to have an announcement for the greater organization ready to go immediately following the specific conversations with affected employees.
The question of whether to announce a reorganization ahead of time depends on several factors. If you are part of a public company and the CEO/CFO needs to make it public for shareholder purposes, then you will obviously align an internal announcement with the external communication. If it is more discrete in scope, you may want to wait until afterward rather than raise alarms throughout the entire company. However, if the reorganization is wide reaching and will impact many different departments, it makes sense to announce broadly.
The more people pulled into a conversation about reorganization, the more you should consider announcing ahead of time. I think the “two pizza rule” applies here too. If you can feed the people who know about the reorganization with two large pizzas, get your announcement ready. Otherwise, word will leak and two things will happen. Employees will develop a mistrust of senior management and people will fear the worst possible outcomes. Neither is helpful in driving performance.
When in doubt, share the bad news.