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When not to change.

One of the trite subjects for a business article or speech is the matter of change. You've heard it a thousand times. "The only certainty today is change ... You must learn to cope with change ... The top manager learns to create change and not merely react to it ... We've gotta change just to keep even and change fast to get ahead."

CEOs of American companies--and particularly new CEOs--have taken this gospel to heart. With bewildering speed they change people, organization structures, strategic directions, incentive plans, computer systems, pricing policies, headquarters location, service agencies, and even the company name. As that great old song went, "There'll even be a change in me.!"

Bless my soul, I'm not against change. Far from it; I am a disciple of calculated, conscious, controlled, coordinated change. I am opposed, however, to knee-jerk change without full tailoring to your company and circumstances, and to "Steinbrenner" change, which blames scapegoats as opposed to fixing the system.

In this frenzy to change, there are places where I think CEOs too often move too fast or too frequently. Let's round up three of the usual suspects.

THE TOO-OFTEN REORGANIZATION

Here we go again. From a decentralized to a centralized structure. From a chairman's office to a vertical hierarchy. From a pyramid to a flattened roof. From a full corporate staff to a lean, mean do-without approach. And then, as soon as a couple of quarters go awry, a switch back in the other direction.

Such organizational change means getting used to new bosses, to new people in new jobs, to new ways of getting things done. The stress on senior managers is often unbearable and high turnover results. The stress on middle managers, if they survive, is equally severe and efficiency suffers.

The CEO is pleased as punch because he has shown himself to be a man of action and there is a created illusion of hustle and bustle around. The management consultants, the outplacement concerns, and the executive recruiters are thrilled. Meanwhile, the people suffer.

THE TOO-FAST LATERAL TRANSFER

Like doting parents, many companies spoil those whom they hold in highest regard. The fine young product manager, plant head, profit center supervisor, or international trainee is rarely given more than two or three years in his or her job before being uprooted and sent off to have another broadening experience. It is usually too soon to find out whether the moves they made and the actions they took during their management tenure were sound or not.

The rising young stars know this game well and act accordingly. So long-term payout programs get sloughed off while short-term, high-risk projects are eagerly embraced.

"But," you say, "unless we move our cameras quickly, they will leave us." Maybe. It's worth a shot, however, at trying to work out special five-year incentives or simply having the top brass give special attention to this problem.

One reason for all this lateral transfer stuff, anyway, is to allow the brightest and best young managers to learn from their experiences so that they will be better qualified to accede to the highest managerial posts in the corporation. I submit that both the young manager and the corporation will learn far more from five-year terms than from the quickie two-year terms that seem to be in vogue.

THE TOO-SOON STRATEGIC PLAN RE-DO

Everybody knows that many of the details of a corporate strategic plan are obsolete by the time tomorrow's Wall Street Journal comes out.

But that doesn't mean that the basic plan has to be changed into scrap paper. Time frames can be adjusted and tactics modified, but the strategic goals may stay substantially the same.

Nor does it mean that every new CEO should be honor-bound to come up with a new long-range plan during his first year in office. If the ship is moving along in the water, the new CEO may be better off, at the outset anyway in fine-tuning the process versus changing the direction.

Under any circumstances, a radical change in strategy is a wrenching event at a corporation. It usually involves major financial and organizational restructuring, acquisitions and/or spinoffs, and many nervous people.

When the crisis is at hand, or when the CEO is brought in to achieve a turnaround, then the need for change is real and is welcomed by the shareholders, the board, and the employees.

As often as not, the best team is one that has learned to play together, has a clear understanding of its goals and objectives, and is in the process of receiving rewards for achieving sustained, profitable growth. When you find yourself in that happy condition, keep making changes, but make |em with great deliberation.

Formerly the CEO of F.&M. Schaefer (1972-1977), Robert W. Lear teaches at Columbia Business School, where he is Executive-in-Residence. He is an independent general partner of Equitable Capital Partners and holds directorships with Cambrex Corporation Inc.; Crane Company; Scudder International and Scudder Institutional Funds; Korea Fund; Medusa Corporation; WICAT Systems Inc.; and Welsh, Carson, Anderson, Stow Venture Capital Co. His lates book is How to Turn Your MBA Into a CEO.
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Title Annotation:Speaking Out; planned reorganization
Author:Lear, Robert W.
Publication:Chief Executive (U.S.)
Article Type:Column
Date:Nov 1, 1991
Words:856
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