Restructuring and downsizing - How not to fragment the networks?

The socio-economic impacts of COVID-19 impose restructuring and downsizing measures. They need to be addressed in a strategic way, less reactive and always trying not to fragment and weaken the networks, which are the real organizational pulse.

When well thought out and better conducted, those measures help to make organizations more agile, more competitive and less bureaucratic.However, it is common to observe negative effects in the short and medium term: 

  • The loss of talent and key employees not considered by traditional downsizing methods.
  • The famous “Survivor's Symptom” that drains the vital energy of those who stay, affecting the competitiveness and quality of the service, in addition to new cuts and withdrawals.
  • The subsequent search, hiring and training of new qualified employees in a market in which the attraction and retention of talents is increasingly oriented to the intangible values of the Brands.
  • Restructuring programs that take years to bear fruit, due to confusion in communication and the slow digestion of new roles and responsibilities.

If the benefits of strategic restructuring were already a difficult phenomenon to obtain during relatively normal economic cycles, imagine the disastrous consequences of hasty, reactive decisions focused on cost reduction triggered by COVID-19? 

In this context, we must highlight the current social isolation that has led millions of workers to exaggerate the trend of remote work, making the management and assessment of the team’s dynamics even more difficult. AQUI).

The fact is that almost no organization you know will escape the difficult decision to reduce or relocate the workforce, and this is happening in a massive way. Mostly in this difficult context, such a movement needs to be accompanied by rethinking the organization and measuring its ideal size in order to re-design the organization of the future. 

Below, I present how the downsizing process can be carried out minimizing the negative impacts of reactive downsizing and at the same time accelerating and deepening the organizational transformation process necessary to evolve and operate in high performance networks..

Mapping informal collaboration networks as part of smart restructuring  

The activities carried out in organizations are mostly done through their informal networks , which represent the daily relationship of mutual help, trust and empathy, much more than the formal networks anchored in the command and control relationships, and defined by the formal organization chart (image 1). 

Image 1. Formal Organization Chart and informal network - Two steps of organizational culture.

Therefore, if informal networks are the ones that make work happen on a daily basis, revealing them is essential to know who are the collaborators that, when excluded, may fragment the network, regardless of their hierarchical position.

The image below shows the informal communication network of a Brazilian company in the retail segment with 35,000 employees. Regardless of the formal organization chart, it presents the real communication dynamics in three key relationship dimensions: Cooperation, Energy and Innovation.

Image 2. Informal communication network in a Brazilian Retail Company with 35,000 employees. The colors represent the States and the links the connections of cooperation and knowledge exchange. Analysis performed by Tree Intelligence's LivingTeamwork® online platform.® da Tree Intelligence team.

This network was mapped by the Tree Intelligence teamapplying the Network Pyramid model® (HBR, García, 2011) and and using the LivingTeamwork network mapping platform®The Pyramid Model is based on the discipline known as Organizational Network Analysis (ONA) and is a diagnosis that reveals three dimensions of strategic relationship in every organization (image 3). 

As an X-ray, the mapping reveals who are the key employees in cooperation, knowledge exchange, energization/motivation and capacity for innovation. 

Image 3. Mapping model of (informal) networks (García, HBR, 2012). 1- Cooperation Dimension 2- Energy Dimension 3- Innovation Dimension Knowledge Network Communication Network 

How does restructuring impact the network?

Once the flow of informal communication is mapped and the key influencers in the cooperation, energy and innovation networks are clearly identified, it is possible to simulate, visually and quantitatively, what impact each employee's dismissal or replacement would have on the network.

Image 4 shows a part of the network previously displayed, in which a single employee occupies the center of the network. We call this employee a “hub”, or local influencer. When simulating his/her exit through the LivingTeamwork network mapping platform®, a rede se fragmenta.

A partir da análise minuciosa do caso, a recomendação foi descentralizar algumas das suas tarefas, delegando-as para outras partes da rede e, ao mesmo tempo, estimulá-lo a explicitar parte do seu conhecimento tácito,  que o convertia num gargalo, de modo a criar alternativas de conexão. A identificação deste líder informal não teria sido possível por métodos tradicionais de diagnóstico, o que poderia ter levado a perda de um recurso chave que fragmentaria a rede da área.  

Image 4. Simulation of the dismissal of a central employee in the networks. 

How can network-based restructuring prepare the organization for the future?

So far I have briefly demonstrated how managers can rely on mapping informal networks to make smart restructuring decisions, minimizing the negative impacts of reactive downsizing. But if along with the downsizing comes the organization's intelligent design based on network concepts, it will also be possible to accelerate the organizational transformation process necessários para operar em redes de trabalho de alta performance.

Chamamos esta etapa de Design of the desired networks,which allows: 

  • Design what the high performance network would look like in the current context.
  • Call on informal leaders who have the power to mobilize the network to be agents of change, energizing it.
  • Work with the strength of the networks to compose high performance teams and propose common challenges.
  • Encourage the mindset change oriented to the network.

In short, the positive consequences of contemplating the mapping of networks within the restructuring process can be summarized as follows: 

  • Less energy drainage from the teams, when making decisions that preserve the informal networks that are operational for day-to-day work.
  • Less communication noise,, when designing communication plans that use the power of informal networks to amplify key messages. 
  • Less hierarchy and bureaucracy, stimulating the horizontal trade of information and agile work modalities.
  • Aceleração dos processos de transformação digital e mobilidade do trabalho stimulated by the greatest social experiment in remote work that we are experiencing today.
  • Greater competitiveness, agility and capacity to adapt through culture change.
Image 5. Design of agile structures based on informal networks. García, 2019 (adapted from Kniberg & Ivarsson).

Finally, one should not see this difficult process just as a quick way to reduce costs and preserve cash flow, but as a great opportunity to design high-performance networks that your organization needs to evolve in a world that is ultimately hyper connected and under constantly adaptation.   

Saiba como a Tree Intelligence pode ajudá-lo a preservar e desenvolver as suas redes de trabalho!

About the author: Ignacio Garcia Zoppi is an organizational and digital anthropologist with over ten years of experience in the application of Organizational Network Analysis aimed at mapping and developing human networks in the digital age. Tree Intelligence team, columnist and key speaker. 

ignacio@treeintelligence.com
LinkedIn: ignaciogarciazoppi/

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