Reorganization vs. transformation – what is the difference between these two terms?
Both concepts are related to organization change, but each has its own implications and meanings.
Understanding that difference is useful for anyone involved in an organizational change project of any nature. But knowing the difference is critical for those involved in either business reorganization or transformation.
Reorganization vs. Transformation vs. Other Types of Change
Reorganization and transformation are two terms that refer to a type of organizational change. In change management, there are a few common terms used to describe the nature of such changes.
Let’s look at a few of those now:
- Organizational change is a generic term that refers to any type of change to an organization, an organizational function, a department, processes, operations, or any other facet of the organization
- Organizational transformation refers to a complete overhaul of the organization from top to bottom, which can mean changes to the organization’s operating model, its mission and vision, its culture, day-to-day workflows, the employee experience, and more
- Reorganization and restructuring, which are often used interchangeably, refer to a change in the organization’s hierarchy, jobs, roles, or even the underlying basis upon which the organization is structured
- Reconfiguration is a smaller-scale version of restructuring that involves recombining existing parts of the organization, such as roles, responsibilities, and business units, without altering the underlying structural archetype of the organization
- Organizational culture change focuses specifically on improving the climate, atmosphere, workplace, and culture of the organization, such as beliefs, attitudes, values, and social norms, all of which can improve employee engagement, employee productivity, and more
There are a few important points to keep in mind about any of the types of change covered here:
- One is that certain terms are used interchangeably by some people. Reorganization and organizational restructuring, for instance, are often used to mean the same thing.
- Another is that the nuances and specific implications of a term may differ from person to person. It is therefore important to clearly define those expectations and meanings whenever having a discussion about any change project.
- Finally, it is crucial to understand that one change often brings about another. Changes to business processes, for instance, can require new employee training programs – this change, in turn, may imply other changes to employee mindsets and the corporate culture.
Those should be kept in mind when developing a change management strategy.
Reorganization in Detail
Reorganization, as mentioned, can be either small-scale or large-scale.
The reassignment of existing teams, roles, and departments, for instance, would be a surface-level change, since it does not affect the way the business operates – it only impacts existing team dynamics.
A few reasons reconfigure an organization include:
- Optimizing business processes and workflows
- Realigning the business
- Reducing inefficiencies and bottlenecks
- Developing new business functions or departments
In some cases, business leaders may decide that these types of changes are not enough. A sweeping business transformation, as discussed below, may require a complete change to the structural framework that the business is built upon.
To illustrate what this means, let’s look at a few types of organizational structures:
- A hierarchical structure is the most common organizational structure, where employees are assigned to work under supervisors, often within functional units
- A functional structure divides the organization into specialties, or responsibilities, such as marketing, finance, and sales
- A divisional organizational structure “divides” the organization’s functions into units based on categories such as geography or product and service
- A flat organizational structure removes or reduces hierarchy, instead grouping teams into autonomous or semi-autonomous units that each have more authority and decision-making power
There are other types of structures, but this short list should be enough to illustrate the key point – namely, that a deep reorganization of the business involves making changes to these types of structural archetypes.
Transformation in Detail
Organizational transformation is, as noted, a major organizational change that alters the organization from top to bottom. Many people contrast this type of change with the term “organizational change,” while others view it as a type of organizational change.
Regardless of the semantics, most agree that transformation means making deep-rooted changes that can affect:
- The organization’s vision and mission
- The business model
- The operating model
- The organization’s structural archetype
- The organizational culture
A number of drivers can fuel such all-encompassing changes, from misalignment with the marketplace to major crises to technology-driven innovation.
Here are a few points to keep in mind when implementing transformation programs:
- Transformation efforts are complex endeavors that consist of multiple interdependent change projects
- The success of organizational change projects depends on effective change management – for transformation efforts, this is even more true
- Rapid changes and transformations can achieve substantial results when effective, but incremental changes that occur over a period of time can be easier to execute and manage
Perhaps the most important idea to keep in mind is that change management can make or break a transformation effort. By investing in a well-structured, sophisticated change program, business leaders can significantly increase the chances of success, improve outcomes, reduce business risk, and more.