Grand Central Train Wreck - If not done properly, centralizing environmental organizations can lead to a train wreck


I recently discussed the aftermath of two environment, health, and safety (EH&S) organizational restructurings with several senior professionals who were privy to the details. In one case, the vice president of EH&S was fired after the business units revolted. In the other case, the jury is still out and the internal politics and turf battles rage on. Both restructurings involved a radical shift to centralized control.

Restructurings are often painful, disruptive processes. In some cases, they may be absolutely necessary; all too often, however, departments or even entire companies are reorganized to merely demonstrate that “something is being done” to correct long-standing problems. “Indeed, generations of leaders have looked first to changing organizational structure as a way to improve business performance.”1 The real, underlying issues may never be addressed.

Reorganizations are so attractive, in part, because they can be done by decree from above: call a meeting, make an announcement, and issue the new organizational charts. Easy. If truth be told, most successful reorganizations do not happen that way. There is a famous Harvard Business School case study from the 1940s, The Dashman Company, which illustrates how a newly appointed vice president of purchasing obtained approval from the company’s Board of Directors to issue a letter announcing more centralized purchasing procedures. The result: the operating plants ignored the letter and continued on as before.2

Forbes, Fortune, MIT Sloan Management Review, and Harvard Business Review have published numerous articles over the years describing the way things really work inside organizations (several are referenced herein). The common theme is that there are always power and influence brokers within companies that really run the show and make the decisions. The CEO may be at the top, but there are key individuals that influence him or her. Organization charts only tell part of the story. “In every company, there is a parallel power structure that can be just as important as the one everyone spends stressful days trying to master.”3

“For most companies, organizational design is neither a science nor an art; it’s an oxymoron.”4 Comprehensive redesign is an intimidating and time-consuming process. The EH&S executives in the examples in the opening paragraph ignored the basics and assumed by their authority they could dictate how EH&S would be run in the future. They ignored the influence of the real powerbrokers in the organization.

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