U.S. Markets closed

Don’t Fear the Reorg

Spencer Rascoff

Originally published by Spencer Rascoff on LinkedIn: Don’t Fear the Reorg

“Reorganizations” are part of growth, ensuring companies align the right people in the right team to the right problem as dynamics and needs change. Any company that wants to stay competitive should constantly be looking at how to best optimize their resources as their workforce expands and diversifies in skills and experience; those who fear the reorg will be disrupted by a nimbler competitor. But reorgs have a negative connotation, as they are often associated with firing management, shutting down entire functions, hemorrhaging top talent and losing momentum; it can get ugly, but it doesn’t have to be that way.

A well-executed reorg has a great potential to reenergize your existing workforce and help you focus on a new strategic direction. We’ve acquired 12 companies since Zillow’s founding in 2006, and our aggressive acquisition strategy means we’ve had to manage cultural integration, reorganization and leadership changes more than most companies our age. Here are a few things I’ve learned about what to do (and what not to do) when managing through a reorg:  

Give your best people a new challenge

New functions don’t always mean new faces. Reorgs are a great opportunity and forcing mechanism to reinvigorate your top people who may be getting disengaged with the monotony of their role. Just as the best leadership team to run a high-growth company isn’t necessarily the best team to run a mature one, sometimes top performers at a certain level need a new challenge that caters to their strengths – to what made them a top performer in the first place. Even President Reagan reorged during his term, stunning officials by having his White House chief of staff, James A. Baker III, and the treasury secretary, Donald T. Reagan, effectively swap places. He told the press, ''This particular change will allow them each to meet new challenges and will bring renewed vigor to their respective responsibilities while it gives me and the public the benefit of the continued service of two extraordinarily talented individuals.'' Like a great coach, Reagan saw an opportunity to bring fresh perspective to two highly influential positions without losing top talent.

Last year we reorganized our biggest sales team at the company. It was a positive change for our customers and our employees, but it was a big change for the leadership landscape within the sales floor. We pounced on the opportunity to give one of our top sales leaders a new challenge. He’d been with us for many years and had built a really successful sales org in one area of our business. Now we needed someone to do the same thing in another area. We didn’t find someone new; instead, we moved this tried-and-true top performer into a new challenge, and he was totally re-energized by the change.

Communicate the “why” with the “what”

Mandates from on high are often received poorly, especially with today’s millennial-dominant workforce whose members are programmed to question and challenge. Leaders can’t just say “This is happening” without an explanation. Communicating the “why” with the “what” helps employees understand that the reorg was carefully thought out and their concerns and opinions are heard.

At Zillow Group, employees always know they will get an explanation with a big change. Our leadership team doesn’t hide behind closed doors; we know that if we don’t tell our employees what’s going on, they’ll demand it anyway because that’s the culture we’ve built. But in doing this, we’re able to foster two-way communication about changes, preserve engagement and address any flare-ups quickly.  Communicating the “why” builds trust, and it also sets the precedent for future leaders of your organization.

Make it personal

Great managers inspire loyalty from their teams. When a reorg separates a manager from his or her team, there is always a risk of losing the team members. It is critical that the affected team be dealt with directly, learn of the change before the broader organization and feel empowered to explore what this change means for their career paths within the company.

A friend of mine recently went through a reorg at another high-growth company. She showed up one day to learn that her manager was asked to move into a new department. She had a lot of loyalty to this manager, and even though he told her before the news was shared broadly, she didn’t agree with the changes the company was making and didn’t understand the implications for her role. She considered leaving. I have no doubt the company had the best intentions with her manager – who was a top performer – but the way they communicated to him and to the team really botched what could have been a great opportunity. She told me, “The way the leadership team handled the reorg really made me wonder whether this was still the same company that I was so personally attached to.”

Communicating in a direct, personal way with the team gives them steady ground through change in management. If there is strong loyalty, engaging with the team early and, most importantly, with an explanation is the best safeguard to prevent losing good people in a transition.

Take it slow

The best reorgs are the ones that, when they are finally announced via email, everyone says, “Oh yeah, I knew about that; in fact, I thought we had already made those changes.” Ideally, email is the very last step in communicating a reorg, not the first. Make sure that all of the key stakeholders, and as many of the “culture carriers” as possible, know about the reorg ahead of time and understand why it is happening.

Reorgs, done properly, can be great for companies. They can reinvigorate leadership and teams, and can better align the company for the challenges it faces. But done poorly, they can be a disaster.