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Elad Blog: How To Do A Re-Org
source link: http://blog.eladgil.com/2018/04/how-to-do-re-org.html
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How To Do A Re-Org
When I was at Google, it grew 10X from 1500 or 2000 people when I joined to 15,000+ people when I left 3.5 years later. My startup MixerLabs was acquired when Twitter was ~90 people, and I left Twitter 2.5 years later at 1000+ employees. 90% of the people at Twitter had not been with the company just 2.5 years earlier, and Google added 13,000 people in a little over 3 years.
If your company is in hypergrowth,
you will be doubling the team every 6-12 months on average. At that pace you
could go from 20 to ~300 people in 2 years and to 500 or 1000 people in 4 years.
You will be adding new functions rapidly (finance, HR, legal), potentially
expanding internationally, while product roadmaps will expand and new areas
will be launched or acquired into the company.
You will effectively be working at or
running a different company every 6-12 months, with most of the people at the
company having joined in the last 12 months.
As the company scales and increase in complexity you will
also need to change the organizational structure of the company to reflect new
executives, new functions, more employees, and changing alignment against your
market and product. In other words, re-orgs will
occur at the company frequently.
Early on many of the reorgs will
be at the executive level and then cascade down. As you add more functional areas,
there will be finer division of executive roles. If you add a CMO or other
CX-level person then some of the executive roles may consolidate under that
individual.
FREQUENT RE-ORGS SHIFT FROM COMPANY LEVEL TO FUNCTIONAL GROUPS AT 500+ PEOPLE
Once you hit 500 to 1000 people,
you should expect fewer company level re-orgs and many more interfunctional
re-orgs. For example a change within the structure of the sales team, versus
changes across all teams simultaneously. Some teams such as sales are more
likely to re-org frequently at that point as they scale, while others like
product and engineering tend to be more stable. Part of this has to do with
where head count grows and needs change most rapidly in a company as it
switches from being solely product-centric, to focusing more on go to market. The
biggest cross-company re-orgs later as the company scales will occur when
changing product/engineering/go-to-market simultaneously, adding new product
areas or acquisitions, if a company flips from a matrix to business unit-like
organization, or flips between centralized and decentralized
internationalization.
Early on, you as CEO will need
to be adept at re-orgs. Later as re-orgs shift more frequently to functional
organization, you will need to make sure your leadership team knows how to
approach them. Most companies and new managers screw up their first re-org or
two, causing unnecessary pain in the organization. Below is a simple guide to
re-orgs.
HOW TO DO A RE-ORG
1. Decide why you need the new org structure.
Determine what the right structure is and the
logic for why this is better then before. Do you need renewed focus on a
specific area? Are there collaboration issues? Has the team grown
dramatically and now needs additional management? Has something changed
in your market that means you need to re-align
functional priorities or the set of people working together?
Spell out to yourself the logic of why you need to re-org first, and then think through the leadership and org structure that works best.
2. Org structure
is an exercise in pragmatism.
Who on your leadership team is overloaded and
who has bandwidth? Who is building out a great management layer?
What areas would fit well together? Sometimes, there is no single
right answer, and you need to balance managerial bandwidth with the logic of
the situation.
As you determine who needs to work on what,
and the proper reporting structure, remember that nothing you come up with will
be 100% perfect and that is OK.
Should you have cross functional product and
eng organizations or verticalized product units? Should international be
distributed or centralized? These sorts of questions come up all the time
as companies grow, and some companies flop between structures over time (Oracle
supposedly flips its international org every
few years).
Relatedly, reporting is an exercise in tie
breaking - i.e. you want people who are likely to disagree to eventually report
in to a single tie breaker (this may be the CEO, or it may be someone lower
down in the org).
3. Get buy in from the right people before
implementation.
If possible, you should consult with a handful
of executives whose functions would be most impacted by the change. They
may have good feedback about how e.g. changing the org in
your function impacts their own functional area (e.g. changing the org structure for product may impact how engineering and
design are structured).
Re-orgs should never be open conversations with the whole
company (or a functional area) about what form the new organization structure
should take. This only opens you up to lobbying, internal politicking,
and land grabbing. It also prolongs the angst - re-orgs
should happen swiftly and with as little churn as possible.
4. Announce and implement the re-org soup to nuts in 24
hours.
Once you have decided what form the new
organization will take, discuss it with your reports in their 1:1s. Your
executives should have a clear plan for how and when to communicate the changes
to their team members. If there are key people deeply affected or likely
to be unhappy with the change, you or one of your reports can meet with them
either right before or right after the announcement to hear them out and re-affirm the logic for the changes.
You should never drag out a re-org or pre-announce it. E.g.
don't announce "this week we will re-organize
product, and next month we will change engineering". If possible, all
elements of the re-org need
to be communicated and implemented simultaneously. If you pre-announce a
portion of the re-org, that
team will not get any work done until the re-org happens. Instead, there will be hushed
conversations in conference rooms full of gossip and speculation, crazy
rumor-mongering, and executive lobbying.
5. Every person on the leadership team
should be briefed on the re-org and
be ready to answer questions from their team about. If the re-org reaches or impacts enough of the company, the
executives of the company should be briefed ahead of time. Write up an
internal FAQ if needed and circulate it.
6. Remove ambiguity. Know where ~100%
of people are going.
Don't do a partial re-org. When the re-org is announced, you should know where ~100% of people
are going if possible. The worst possible situation for people is to not
know what their future entails.
Make a list of the people most likely to be
unhappy with the change and reach out to them quickly after the announcement,
or speak to them before the change if necessary. Make sure to later
be accessible to these people so you can explain the reasoning first hand.
7. Communicate directly and clearly, and
compassionately.
Don't beat around the bush when doing
the re-org. Explain in
clear language what is happening and why. Listen to people's feedback but
be firm about the change.
There will always be people who are unhappy
with the shift in org structure. They may
feel passed over for promotion or demoted, even if this is not the case.
Listen carefully and see if you can meet their needs in the future.
However, keep backtracking to a minimum. You are making this change
for a reason, and if you start making exceptions to the squeekiest wheels you
may reverse the whole reason you are making the change, as well as show people
you are open to being politicked.
Just like letting people go, a re-organization can be unpleasant. There will undoubtedly be people disappointed by their new role or diminished responsibilities. If done right however,
your company will function more effectively and be aligned to win. Re-orgs have
to occur for the long term success of the company.
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