Point Lookout: a free weekly publication of Chaco Canyon Consulting
Volume 13, Issue 12;   March 20, 2013: The Restructuring-Fear Cycle: I

The Restructuring-Fear Cycle: I

by

When enterprises restructure, reorganize, downsize, outsource, spin off, relocate, lay off, or make other adjustments, they usually focus on financial health. Often ignored is the fear these changes create in the minds of employees. Sadly, that fear can lead to the need for further restructuring.
A diagram of effects illustrating these two loops in the Restructuring-Fear Cycle

A diagram of effects illustrating these two loops in the Restructuring-Fear Cycle. View a larger image. The turquoise ovals represent quantitative amounts. For example the oval labeled "Need for Restructuring" represents a measure of the perceived need for a restructuring exercise. The oval labeled "Health of Relationships" represents a measure of the relative health of interpersonal relationships in the organization. An arrow connecting one oval to another indicates that an increase in the first quantity contributes to an increase in the quantity it points to. Thus, an increase in Health of Relationships contributes to an increase in Results. An arrow bearing a red circle indicates a negative relationship. Thus, an increase in Risk Confusion contributes to a decrease in Healthy Risk Appetite.

Following the arrows around any loop in such a diagram, if we encounter an even number of red circles, such as 0, 2, 4, and so on, then that loop represents a positive feedback loop, and the quantities in that loop can "run away" unless Management (or the laws of economics, psychology, or physics) somehow intervene. This diagram, which illustrates only some of the phenomena affecting the Need for Restructuring, has two such loops, which implies that there are two pathways that can cause a runaway need for restructuring.

Decisions about restructuring usually depend on models that show how different approaches might affect the enterprise, by projecting the values of organizational attributes such as net income, market share, or shareholder value. Although these projections rarely include attributes like employee anxiety or fear, such factors are truly important. They help to determine productivity, voluntary turnover, the workload of the people in Human Resources, and many of the attributes that the experts do model, albeit indirectly.Two of the loops contributing to the Restructuring-Fear Cycle

Most important, restructuring-induced fear can create a need for future restructuring, through a variety of paths, some of which are subtle and rarely identified. Here's Part I of an exploration of some of the less obvious mechanisms by which restructuring-induced fear creates a need for future restructuring. Refer to the accompanying diagram of effects, which displays these dynamics graphically. [Weinberg 1989]

Degraded and disrupted relationships
When we relocate people, eliminate positions, or merely change reporting structures, we disrupt relationships between people. Those who formerly relied on each other for advice, instruction, or services must sometimes find new contacts. Even the relationships that aren't totally eliminated can be degraded by restructuring-induced fear, in the form of competitive attitudes that can take hold when people come to believe that further restructuring is possible, and that everyone is in competition for a declining number of jobs.
Although relationships between and among employees are valuable organizational assets, the value of these assets doesn't appear on financial statements. Unaware of the amount of these assets lost to restructuring, the depressive effects on results seem surprising to planners. The unexpectedly disappointing results can sometimes lead to further restructuring.
Risk aversion
When people believe that their When people believe that
their jobs are at risk,
their appetite for risk
in general declines
jobs are at risk, their appetite for risk in general declines. In effect, some people have difficulty keeping separate their own personal risk profile and the risk profile associated with their job responsibilities. This can affect the necessarily subjective judgments people make as part of their responsibilities, which creates a risk aversive approach to operating the enterprise.
After experiencing several serial restructuring events, people in organizations that formerly had a healthy approach to risk can find themselves being overly conservative in their strategies and tactics, because they have begun to confuse their own personal risk experience with the risk experience of the organization. In this way, the organization can become so risk averse that it is no longer capable of accepting the levels of well-managed risk that are so necessary in today's market environments. These organizations then find that they can innovate only by acquiring innovative organizations, which is an expensive method for attaining market leadership. The resulting high costs and low yields sometimes lead to further need for restructuring.

Next time we'll explore three more pathways by which restructuring-induced fear leads to restructuring addiction.  The Restructuring-Fear Cycle: II Next issue in this series  Go to top Top  Next issue: The Restructuring-Fear Cycle: II  Next Issue

52 Tips for Leaders of Project-Oriented OrganizationsAre your projects always (or almost always) late and over budget? Are your project teams plagued by turnover, burnout, and high defect rates? Turn your culture around. Read 52 Tips for Leaders of Project-Oriented Organizations, filled with tips and techniques for organizational leaders. Order Now!

Footnotes

Comprehensive list of all citations from all editions of Point Lookout
[Weinberg 1989]
Gerald M. Weinberg. Quality Software Management Volume 1: Systems Thinking. New York: Dorset House, 1989. Order from Amazon.com. Back

Your comments are welcome

Would you like to see your comments posted here? rbrenyrWpTxHuyCrjZbUpner@ChacnoFNuSyWlVzCaGfooCanyon.comSend me your comments by email, or by Web form.

About Point Lookout

This article in its entirety was written by a 
          human being. No machine intelligence was involved in any way.Thank you for reading this article. I hope you enjoyed it and found it useful, and that you'll consider recommending it to a friend.

This article in its entirety was written by a human being. No machine intelligence was involved in any way.

Point Lookout is a free weekly email newsletter. Browse the archive of past issues. Subscribe for free.

Support Point Lookout by joining the Friends of Point Lookout, as an individual or as an organization.

Do you face a complex interpersonal situation? Send it in, anonymously if you like, and I'll give you my two cents.

Related articles

More articles on Emotions at Work:

Capitol Hill at nightThe Slippery Slope That Isn't
"If we promote you, we'll have to promote all of them, too." This "slippery-slope" tactic for winning debates works by exploiting our fears. Another in a series about rhetorical tricks that push our buttons.
Scones and coffeeNever, Ever, Kill the Messenger
If you're a manager in a project-oriented organization, you need to know the full, unvarnished Truth. When you kill a messenger, you deliver a message of your own: Tell me the Truth at your peril. Killing messengers has such predictable results that you have to question any report you receive — good news or bad.
ScissorsThose Across-the-Board Cuts That Aren't
One widespread feature of organizational life is the announcement of across-the-board cuts. Although they're announced, they're rarely "across-the-board." What's behind this pattern? How can we change it to a more effective, truthful pattern?
A visual illusionScope Creep and the Planning Fallacy
Much is known about scope creep, but it nevertheless occurs with such alarming frequency that in some organizations, it's a certainty. Perhaps what keeps us from controlling it better is that its causes can't be addressed with management methodology. Its causes might be, in part, psychological.
Henny Youngman in 1957Quips That Work at Work: I
Perhaps you've heard that humor can defuse tense situations. Often, a clever quip, deftly delivered, does help. And sometimes, it's a total disaster. What accounts for the difference?

See also Emotions at Work and Emotions at Work for more related articles.

Forthcoming issues of Point Lookout

A white water rafting team completes its courseComing December 11: White Water Rafting as a Metaphor for Group Development
Tuckman's model of small group development, best known as "Forming-Storming-Norming-Performing," applies better to development of some groups than to others. We can use a metaphor to explore how the model applies to Storming in task-oriented work groups. Available here and by RSS on December 11.
Tuckman's stages of group developmentAnd on December 18: Subgrouping and Conway's Law
When task-oriented work groups address complex tasks, they might form subgroups to address subtasks. The structure of the subgroups and the order in which they form depend on the structure of the group's task and the sequencing of the subtasks. Available here and by RSS on December 18.

Coaching services

I offer email and telephone coaching at both corporate and individual rates. Contact Rick for details at rbrenyrWpTxHuyCrjZbUpner@ChacnoFNuSyWlVzCaGfooCanyon.com or (650) 787-6475, or toll-free in the continental US at (866) 378-5470.

Get the ebook!

Past issues of Point Lookout are available in six ebooks:

Reprinting this article

Are you a writer, editor or publisher on deadline? Are you looking for an article that will get people talking and get compliments flying your way? You can have 500-1000 words in your inbox in one hour. License any article from this Web site. More info

Follow Rick

Send email or subscribe to one of my newsletters Follow me at LinkedIn Follow me at X, or share a post Subscribe to RSS feeds Subscribe to RSS feeds
The message of Point Lookout is unique. Help get the message out. Please donate to help keep Point Lookout available for free to everyone.
Technical Debt for Policymakers BlogMy blog, Technical Debt for Policymakers, offers resources, insights, and conversations of interest to policymakers who are concerned with managing technical debt within their organizations. Get the millstone of technical debt off the neck of your organization!
Go For It: Sometimes It's Easier If You RunBad boss, long commute, troubling ethical questions, hateful colleague? Learn what we can do when we love the work but not the job.
303 Tips for Virtual and Global TeamsLearn how to make your virtual global team sing.
101 Tips for Managing ChangeAre you managing a change effort that faces rampant cynicism, passive non-cooperation, or maybe even outright revolt?
101 Tips for Effective MeetingsLearn how to make meetings more productive — and more rare.
Exchange your "personal trade secrets" — the tips, tricks and techniques that make you an ace — with other aces, anonymously. Visit the Library of Personal Trade Secrets.
If your teams don't yet consistently achieve state-of-the-art teamwork, check out this catalog. Help is just a few clicks/taps away!
Ebooks, booklets and tip books on project management, conflict, writing email, effective meetings and more.