By Robbert van Os
Posted on 2023-03-11T00:00:00.000Z

Restructuring Your Tech Company in a Downturn

Learn how to successfully reorganize your tech company in the face of economic volatility with these actionable steps and considerations.

Strategies for tech company restructuring: thriving amidst economic volatility

As a leader in the tech industry, reorganization (reorg) is an unavoidable reality in today's business climate. Balancing short-term revenue goals and adapting to ever-changing microeconomic conditions is critical for success. However, reorgs must be conducted thoughtfully and empathetically to minimize the impact on employees and avoid unnecessary layoffs. With 25 years of tech industry experience, I've been involved in various reorgs, from driving them to contributing or simply observing. In this article, I'll share actionable steps and key considerations to guide a successful tech company reorg in today's competitive landscape.

Step 1: Identify areas of focus To begin reorganizing, the first step is to pinpoint the areas requiring immediate attention. Conduct a thorough analysis of revenue drivers and cost centers to determine these areas. Once identified, it's crucial to develop a roadmap of work and a plan of attack. In planning for the next 6-18 months, consider project-based and discovery-based work to determine the types of employees needed for each task. This insight enables finding the right people with the necessary characteristics to execute and achieve the organization's immediate goals.

Step 2: Determine team composition The second step is to decide on team compositions when building new team structures with existing employees. While cross-functional teams work well for startups, they may not be suitable during a reorg when there's a clear path to execution and roadmaps are already in place. You may need certain teams to focus on specific areas that bring the most value to the business in the shortest time possible. This doesn't mean that certain functions are less valuable. It's about maximizing the potential of existing employees to achieve goals quickly. It's crucial to understand what each team requires, as moving the wrong type of employee can be costly during a reorg. The composition of teams should align with the skills needed to achieve the organization's goals for a specific time horizon. Failure to do so can lead to the loss of talented employees, which can negatively impact the company's success.

Step 3: Communicate clearly and concisely For reorgs to be effective, leaders must create a clear, concise plan that is easily communicated to all parties involved. Thus, the third step is to communicate the plan transparently and thoughtfully to all employees, with consideration for their impact. Clearly state the reasons for the reorganization and the company's goals. Use simple, unambiguous language to ensure the message is easily understood. During critical times, it's essential to focus on the most important initiatives for the company rather than exploring new areas. Leaders should communicate regularly, allowing employees to ask questions and provide feedback to avoid communication breakdowns.

Step 4: Mobilize employees efficiently The next step is to mobilize employees efficiently with minimal churn. Reorgs can be met with resistance from employees, especially if it entails changes to their job responsibilities, team dynamics, or reporting structure. To overcome this, leaders should support employees, help them adapt to the new structure, and involve them in the process as much as possible. Leaders should listen to feedback but be clear on why change is necessary. Additionally, leaders must be mindful of burnout and stress that employees may experience during the reorg. Companies should provide support and resources to help employees manage their workload and maintain their mental and physical health.

Step 5: Monitor execution effectively The final step is ensuring effective execution, arguably the most crucial step. I've experienced multiple reorgs where the execution fell short. Some leaders consider reorgs done once the plan is on paper and communicated. However, as a leader, reorgs can only be deemed successful if you establish success criteria

Step 6: Create a change management plan Develop a change management plan that takes into account the impact of the reorg on employees, including their roles, reporting lines, and future career opportunities. This will help mitigate any resistance to change and ensure a smooth transition.

Evaluate and Iterate Regularly evaluate and iterate on the reorg plan to ensure it continues to align with the company's goals and that the execution remains effective. This step will allow leaders to make adjustments as needed and course-correct when necessary.

Leading with empathy during reorgs Reorganization is an unavoidable reality in today's business landscape. However, leaders must approach it with empathy and thoughtfulness, considering the impact on employees. By developing a clear plan, transparent communication, prioritizing employee well-being, and monitoring execution, reorgs can benefit both the company and its employees. As a tech leader, it's crucial to be aware of the challenges and proactively address them for a successful reorg that propels everyone forward in the right direction. Leading with empathy during reorgs demonstrates true leadership in the face of adversity.

Here are some practical examples and tips to succeed in leading with empathy during reorgs:

  1. Listen to Employee Concerns: Employees may feel uncertain about their future and may have concerns about their job security. Leaders should actively listen to employee concerns and address them with transparency and empathy.

  2. Communicate Regularly: Leaders should communicate regularly with employees throughout the reorg process. Provide updates on progress, changes to the plan, and any potential impacts to employees.

  3. Be Transparent: Transparency is key during a reorg. Leaders should be transparent about the reasons for the reorg, the changes being made, and how it will impact employees.

  4. Provide Support: Reorgs can be stressful for employees, and it's important for leaders to provide support during this time. This can include resources for mental health support, flexible work arrangements, and career coaching.

  5. Offer Opportunities for Growth: Reorgs can also provide opportunities for employees to grow and take on new roles within the company. Leaders should be mindful of employees' career aspirations and provide opportunities for growth and development.

  6. Show Appreciation: Lastly, leaders should show appreciation for employees' hard work and dedication during the reorg. This can include recognition programs, team-building activities, and other initiatives to boost morale and motivation.

By leading with empathy during reorgs, leaders can build trust and loyalty among employees and position the company for success in the long run.