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[Guest Post] Fearless Confessions: How to Approach Company Restructuring

Welcome to part two of the Fearless Confessions series, where PivotDesk and Justworks help entrepreneurs tackle the more difficult aspects of leading a business through insight, ideas, and inspiration. You can check out part one here with David Mandell and Isaac Oates.

As Heraticlus wisely stated in 500 BC, “Nothing endures but change.” The same holds true for businesses today. As the needs of companies grow and change, organizational restructuring becomes necessary.

Unfortunately, restructuring can also bring an air of uncertainty to employees’ roles and team dynamics. So how do employers manage the shift and ensure they’re making the right decisions?

CEO of Justworks, Isaac Oates shares his thoughts on company restructuring — along with the benefits, pitfalls, and hard talks that come with it.

Q: What is your approach to team and company structuring?

You have to organize against the task at hand. So there isn’t one structure that is the one. But at any given time in the life of the organization, there are ways to organize so you’re best equipped to handle challenges that are currently coming in front of the company.

Organizations are good at perpetuating themselves. Unless you actively structure it to change, it’s just going to stay the same. People can be resistant to change and the organization will become outdated if you don’t drive change.

Q: You’ve spoken before about the organizational idea of “pods,” where people work in small, autonomous teams. Can you talk more about that?

In general, people like to feel like they can do things. It depends on the department, but for product development, team members among all disciplines are required to launch products.

We have generally organized our teams and product development around the specific problems we’re trying to solve as opposed to organizing based on the function of the team.

So a pod will have front-end, back-end, design, and whatever it takes for the team to fulfill its function. It’s empowering for the team because they control their own destiny. We do the same for certain sales and operations teams. In general, we try to have smaller teams where people can make more decisions lower in the organization.

Q: When you’re deciding to restructure the makeup of a team, what is the process for your decision making? Who do you consult and what steps do you take to ensure you’re making the right decision?

Basically, I look at what needs to happen — it’s really more about leadership than structure. I try to make sure that leaders and their strengths are matched against the task at hand, and the organization follows that.

I don’t think anybody wants to hear this, but deciding the makeup of a team can be really personality driven. If you had a different cast of characters, you would have a different organization. You’re trying to play to those people’s strengths. It’s really about identifying team members’ strengths and making sure you’re able to best capture them.

In terms of how I make the actual change, I talk to the leaders directly involved to make sure there’s nothing crazy I’m not thinking of. Then I make the decision and communicate it, so it’s really fast.

If you leave the decision open-ended, all work halts everywhere as certainty goes out the window. It’s terrifying for everyone. For the most part, I prefer to make decisions in the open and talk about it with the broadest group of people possible, but I’ve found that organizational change doesn’t lend itself to that approach.

Q: As Justworks’ team has grown and evolved, has your approach towards that changed at all?

When we were small, we didn’t make many structural changes because there wasn’t much structure. Now that we’re three and a half years in, we’ve added a second layer of management, which means most teams aren’t directly reporting to me. But with a second layer of management, you’ve got a lot more permutations and complexity. Then it changes. In the end, it’s still about the leaders and setting it up so they are able to accomplish our goals.

Q: Sometimes restructuring means changing people’s roles or even downshifting their prominence in the company. How do you approach those difficult discussions with the affected employees?

Changing people’s roles like that has only happened a few times, but it’s something that continues to happen in the lifecycle of the company. I don’t know if I have a formula — usually by the time it’s happening, it’s apparent it was going to happen at some point in time.

What’s difficult is people often view that kind of situation as a demotion. I reported to the CEO and now I don’t, I had access and now I don’t. For me, it’s about what the company needs at any given time. I’ve had the opportunity to work directly with a lot of people who don’t report directly to me anymore, and that was a great thing because I know them that much better and they understand me better.

Working with more people directly is one of the great privileges of building a company from the ground up. But change causes stress, and reporting changes cause immense stress. It’s a very emotional thing, and it’s hard.

Q: Have you ever had anyone resign or quit because of their discontent with restructuring? If so, how did that impact your decision making in similar situations?

Not directly. People have left because they and the job were no longer a fit for each other. But that is usually more mutual than anything — the job is bigger than what they’re able to do, or maybe they’re not willing to take a role that is a better fit. It has happened as a result of growth, but I wouldn’t say it has happened as the direct result of restructuring. It might someday, but I hope not.

When I do have to hire over someone, I am committed to hiring a leader who they can learn from.

Q: What advice would you give to a business leader who is looking into restructuring their company?

The biggest thing is not trying to build the “perfect” organization. Just build an organization that’s going to yield the best results for the next 6-12 months.

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