How do you reorganise a company now that the future is more uncertain than ever? If you want to get through the coronary crisis, you need to have a wide range of tools at your disposal.
In this particular crisis, companies seem reluctant to reorganise. Yet it is important, even in uncertain times, to ensure that you are future-proof.
Crucial tip: don't just cut staff, but dare to keep investing in talent.
Beer brewer Heineken is going to reorganise its head office. In the metal and engineering sector, FME expects a third of its members to have to reorganise. ING is cutting a thousand jobs.
Certainly, some cuts are already being made, but quite a few companies are putting off the necessary reorganisation. This is the conclusion reached by Jos Zandhuis, a partner at the management consultancy Boer & Croon. Because of the government's support measures, they are keeping a close eye on things. Zandhuis says: "We are doing very well this year, achieving higher turnover, but the number of pure restructuring orders is less than last year. And that's no different at my competitors.
Short-sighted and unwise, judges Harm Tunteler, director of JBR Interim Executives, about companies pretending there is little to worry about. 'There is a major economic impact. As a company you have to face the consequences and organize yourself accordingly.'
Anyone who reorganises should do so with policy. Companies want to reorganise in a different way', notes Jan Kwint of assessment agency LTP. The world is changing so fast, and as a company you have to be able to anticipate this. According to him, mass redundancies are not a good thing in the long run. You cut back on jobs and FTEs, instead of identifying and developing employees with the power to change: your talent for tomorrow. In fact, such a measure completely paralyses the company.
Covid-19 can also help a company. Working from home, further digitalisation: all kinds of things are gaining momentum. It is important to continue with a structural, pioneering, strategic movement," says Véronique Pauwels, senior partner at Bain & Company.
But how do you reorganize a business knowing that the future is more uncharted than ever?
Five tips with five surprising tools.
Since the outbreak of the coronapandemic, managers have had their hands full with the day-to-day operations. How do you keep your liquidity in order, how do you respond to new government measures, how do you ensure that your employees and customers stay healthy in the one-half of a century society?
'It's not high-level strategic management, but things you just have to do,' states Harm Tunteler. 'It comes down to finding out now what the corona crisis is going to mean for your company and industry in the long run.'
Take the binoculars out of the drawer and peer into the distance. Develop a vision and set up the organisation accordingly. You have to accept the uncertainty. You have to reorganize based on the fact that you don't know how long it will take," says Tunteler.
The questions that determine strategy remain the same: what do customers want, what is your place in the market? Véronique Pauwels, senior partner Bain & Company
'It's not that hard', Pauwels puts it into perspective. A vision and a strategy are based on looking ahead, but also on looking back. In her consultancy practice, the corona crisis does determine parts of the agenda, but: 'The questions that determine the strategy remain the same. What do customers want, now and in the future? What is your place as a company in the market? That's no different than before the virus outbreak.'
However, certain trends are being accelerated, such as e-commerce, digitisation of activities and supply chain re-evaluation', she continues. According to Pauwels, companies are more aware than ever before of 'the importance of a dynamic strategy in order to be able to respond quickly to external turbulence'.
It is the phrase of the year 2020: upscaling and downscaling. Anyone who takes on more staff will scale up. Anyone who sends them packing, puts them on the back-burner or downsizes in some other way, downsizes. For years, reorganization was synonymous with downsizing. It was a matter of mathematics: X% less work means Y% less staff. Put it in a reorganisation plan, make it known to the employees and the trade unions, take it to the UWV and that's it.
'This really only works in a standardized environment: in production work or in execution,' says Jos Zandhuis about this approach. 'But we have far fewer of these types of activities in the Netherlands now than we used to. Organizations have become more high-tech and innovative.'
Should the axe be necessary, the same principles still apply: use a sharp one, don't wait too long, and take the pain all at once. And be honest about the reason. You need to explain your plan well,' says Tunteler. 'In fact, there is an implicit demand behind it: if you have a better solution, you should say so.'
The automotive sector is struggling in the corona crisis. Nevertheless, some companies are doing better than others. Zandhuis is a supervisory director at Bosal, an international supplier. Bosal made a profit this year. The company had already gone through a difficult period and therefore got used to being able to respond very quickly. Bosal can, for example, deliver small batches very flexibly, something that the market needs in these times of disrupted supply chains.
Innovations also pay off. You have to keep busy and not just sit in your attic,' says Zandhuis. If you do that now, you will make a difference.
Reorganisation is mainly a question of further adaptation. Companies were already working on becoming more agile, on making the organisation flatter", says Véronique Pauwels. They were already moving away from the classic top-down organizational structures and responding to digitization, artificial intelligence and other trends. The corona outbreak only makes this more urgent and therefore faster. Things that were seen as sacred cows for a long time are now easily sacrificed. Take doctor's visits in the pharmaceutical industry: these are now taking place online and will largely remain so.'
Talent is at the top of the agenda and is also necessary for future growth', Jan Kwint observes at his clients. Anyone who reorganises must have a good insight into the capacities of their staff. No function remains the same as it once was; you have to learn to learn.
No job remains the same as it once was; you have to learn to learn' Jan Kwint, Director LTP
This learning can take place outside the company, as proven by KLM stewardesses embarking on a career in healthcare. But it can also be done within the company. To cite an example: people have the impression that data science is a complicated field. But if you have the talent, you can learn it within three to four months', is Kwint's conviction. Just cutting FTEs is old school reorganisation. It's about mobilizing the power to change', he says.
Jos Zandhuis warns the business sector not to skimp on talent development. There is a great temptation to do this first when making cuts. Invest in people, involve them,' he says. It's not smart to cut back on training and education now', Kwint agrees.
Think through all the aspects of the reorganization, put all the scenarios on the table, calculate all the consequences. But before you reach a decision, another hurdle has to be taken. In addition to reason, you also have to rely on your gut feeling,' says Harm Tunteler. You have to make a decision rationally, but you also have to ask yourself: how does it feel, good or bad? Experience shows that if it feels good and the ratio confirms it, you have made the best decision.'
'Experience shows that if it feels right and the ratio confirms it, you have the best decision to make' Harm Tunteler, director JBR Interim Executives
Pauwels fully agrees with this. For her it is proof that formulating apurpose is not a useless exercise. A company must be able to make clear why it is on earth, other than just to increase shareholder value. With apurpose you directly address the underlying emotion in the decision-making process'.
During a reorganisation, cut the fat, not the muscle, is Pauwels' firm belief. After all, the muscles must make the company stronger. The basis of your company will not be doing well as soon as you start cutting back on the muscles. Go on your intuition, that is certainly as valuable as benchmarking and analysis.
More information and contact details
Wondering what JBR can mean as a partner for interim management? Then please contact us.