Point Lookout: a free weekly publication of Chaco Canyon Consulting
Volume 13, Issue 13;   March 27, 2013: The Restructuring-Fear Cycle: II

The Restructuring-Fear Cycle: II

by

When enterprises restructure, reorganize, downsize, outsource, lay off, or make other organizational adjustments, they usually focus on financial health. Here's Part II of an exploration of how the fear induced by these changes can lead to the need for further restructuring.
A diagram of effects illustrating two more loops in the Restructuring-Fear Cycle

A diagram of effects illustrating the first two loops of the three loops of the Restructuring-Fear Cycle described here. View a larger image. The turquoise ovals represent quantitative amounts. For example, the oval labeled "Need for Restructuring" represents the perceived need for a restructuring event. The oval labeled "Credibility of Reports" represents the perceived credibility of reports about work underway in an organization in which people fear the consequences of reporting bad news honestly, or fear the consequences of failing to report good news with sufficient frequency. 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 Credibility of Reports contributes to an increase in Management Effectiveness. An arrow bearing a red circle indicates a negative relationship. Thus, an increase in Withholding Bad News contributes to a decrease in Credibility of Reports.

If any loop of this diagram contains an even number of red circles, such as 0, 2, 4, and so on, then it rerpresents 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, shows that there are two pathways that can cause a runaway need for restructuring.

The two loops shown correspond to Credibility Erosion and Getting Things in Under the Wire. Left as an exercise for you is the third mechanism, Roster Padding.

Last time we began exploring the Restructuring-Fear Cycle, which shows how the fear induced by restructuring can create a need for more restructuring. In effect, organizations can become addicted to restructuring. Here's Part II of our exploration.Two of the loops contributing to the Restructuring-Fear Cycle

Credibility erosion
When employees notice a pattern of restructuring, many assume that their own performance, and that of their business unit, will affect decisions about their job security. Correct or not, this speculation can lead to withholding bad news, or worse, creating fictitious good news. As status reports travel up the management chain, some recipients, anticipating this shading of the truth, doubt the veracity of the reports.
When what we say to each other becomes unreliable, managing the organization becomes truly difficult. Enterprise performance is at risk. In this way, restructuring events can degrade enterprise performance, which increases the need for further restructuring. Top-to-bottom management replacement, as in a spin-off or acquisition, is sometimes the only way to end this cycle.
Getting things in under the wire
Among managers who recognize that further restructuring lies ahead are those who undertake so-called game-changing projects that promise a brighter future. They're hoping, in part, to enhance their own job security. Because they typically believe that the opportunity for initiating new projects is short-lived, they tend to oversell the attractiveness of their initiatives by representing them as better developed, lower-risk, more important, and more urgent than they really are.
This dynamic can lead the enterprise to undertake too many new efforts, many of them too disconnected from its core mission. The problems inherent in development are often understated, and the downstream costs of supporting new offerings are often underestimated. Many of these efforts come to nothing. The resources invested are wasted, which leads to enhanced necessity for further restructuring.
Roster padding
Within most Among managers who recognize that
further restructuring lies ahead
are those who undertake so-called
game-changing projects that
promise a brighter future
enterprises, we can usually find a most-politically-powerful entity — a brand, a business unit, or a constellation of smaller entities exploiting a single market position. To employees who fear job loss as a consequence of restructuring, the most-politically-powerful elements seem like possible havens of job security.
Managers within the politically powerful elements thus sometimes experience a flux of jobs seekers from other business units. Before the restructuring began, some of these people would not have been obtainable at the rates being offered, or not obtainable at all. Some managers succumb to the temptation to make internal hires. When external hiring is frozen, but internal transfers are still permitted, politically powerful entities can find themselves bloated with employees and projects. Their expenses climb, and soon there is need for yet another round of restructuring.

I could go on, but I think you get the idea. Restructuring breeds fear, fear lowers margins, and the cycle continues.  The Restructuring-Fear Cycle: I First issue in this series  Go to top Top  Next issue: Toxic Conflict in Virtual Teams: Dissociative Anonymity  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!


[1] Quality Software Management: Systems ThinkingWeinberg, Gerald M. Quality Software Management Volume 1: Systems Thinking. New York: Dorset House, 1989. Order from Amazon.com

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:

Cheese and crackersWhen Naming Hurts
One of our great strengths as Humans is our ability to name things. Naming empowers us by helping us think about and communicate complex ideas. But naming has a dark side, too. We use naming to oversimplify, to denigrate, to disempower, and even to dehumanize. When we abuse this tool, we hurt our companies, our colleagues, and ourselves.
A brainWhen You Can't Even Think About It
Some problems are so difficult or scary that we can't even think about how to face them. Until we can think, action is not a good idea. How can we engage our brains for the really scary problems?
The Challenge vs. Skill diagram, showing the "Flow" regionTop 30 Indicators That You Might Be Bored at Work
Most of the time, when we're bored at work, we know we are. But sometimes, we're bored and we just don't realize it. Here are some indicators of boredom that might escape some people's notice.
An artist's conception of a planetary accretion diskWhy Scope Expands: II
The scope of an effort underway tends to expand over time. Why do scopes not contract just as often? One cause might be cognitive biases that make us more receptive to expansion than contraction.
Sen. Robert Packwood, Republican of OregonPatterns of Conflict Escalation: I
Toxic workplace conflicts often begin as simple disagreements. Many then evolve into intensely toxic conflict following recognizable patterns.

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.