Often when I see top leadership succession within companies, there seems to be an incredible urge to immediately execute one, or both, of two destructive things: Rebrand and Reorganize. Both create internal commotion that distracts from outside focus and usually, the company does not recover to full efficient functionality until about two years after the fact. Let’s look at each of these scenarios.

Rebranding: Often the new leader feels that they need to take charge and make an impact immediately. Changing brands is one way to say, “there is a new sheriff in town with better ideas than the last yahoos.’’ They claim the new brand will impart momentum, freshness and add strategic clarity. In reality, it is a psychological way to ‘mark their territory,’ like dogs to fire hydrants. It establishes the new leader applying new “varnish” at the expense of momentum of the enterprise.

The fact is that the real brand loyalty for a service company is not a logo or a color or a symbol, but instead the identification to the individual company representatives the clients depend on. Take that representative away and those clients are more likely to follow that person to the next company, rather than ogle and admire the new brand. Brand changes don’t make new clients; in fact, they create uncertainty in the clients’ eyes that then needs to be overcome. Internally, brands are more sacred and emotional. Changing the brand usually comes with more employee criticism than praise for the wasted transition costs and distraction of attention to more pressing internal—and client—issues.

In the product industries, there are countless cases where a product-based company has changed brands without much negative impact. But service companies are people and they are different. Service companies are about the retention of the client servers, regardless of the company’s brand.

Employees are not stupid and they usually see rebranding as an ego-driven folly of the top leader. Thus, the client servers that usually think the change is a waste of profits often leads to breaking their loyalty, resulting in increased turnover. Client server turnover is a killer for a service company. Rebranding is usually not a necessity, but when it occurs, it creates a great deal of wasted money and internal emotion, sometimes resulting in the loss of the organization’s best client servers.

Reorganizing: There are a great number of very valid reasons to reorganize. Reorganizations can align the power structure to a new set of strategic initiatives. They can create enough people shuffling to reduce internal anti-bodies caused by personal ownership to allow necessary cultural change to occur more easily. Often reorganizations are only designed to reduce structural overhead costs (while falsely painting them as the better optics of ‘strategic alignment’). They also can be used to purge subordinates that may be more aligned with the last leader. But the important takeaway is that reorganizations also set the company back two years before new efficiencies set in. Doing it only for the sake of letting the new CEO “take charge” is a huge mistake.

Here is the cycle: Reorganization planning is usually leaked to the rank and file well before the actual announcement. This creates insecurity and counter-lobbying. Both are detrimental to an outside customer focus. When the new organization is announced, there are winners and losers in the power structure. Reporting structures are often disrupted, leading to unwanted turnover. Many times, the reorganizations are diagram boxes, reporting lines and named leaders without the hard work of detail decision design. As a result, the first 18 months of a reorganization is trying to figure out by trial and error, who has the power to make decisions on what issues on a situation-by-situation basis. Matrix organizations add an exponentially disproportional level of complexity and confusion. There are a huge number of calls and meetings just to figure out how the new organization makes decisions. Some managers freeze in uncertainty; some managers overstep their intended authority. It always takes time to work out the decision rules that were perfectly clear in the previous organization. This work-out period phenomenon distracts from the revenue and profit generating market.

It is my experience that reorganizations in a service company go through three stages:

  1. a period of decision-making chaos and confusion while facing high turnover;
  2. a period of re-establishment of an external orientation after backlog dangerously falls;
  3. a period of stability and efficiency of the original intentions.


The cycle takes about two to 2 ½ years to move to the last phase. I have seen companies in the middle of this cycle reorganize a second time to solve the unintended flaws of the original design, which starts the cycle all over again.

Due to the damage of a reorganization’s impact during the workout period, it is unwise to do a reorganization more frequently than six or eight years. Even then, count on: two years in turmoil, four years in efficiency and two years where the inevitable problems start to become apparent, but not cost-effective enough to start the re-org cycle over.

The worse reason for a reorganization is for a new leader to take charge and gain a sense of loyalty by shuffling the deck to get loyal subordinates who owe their job to the new boss.

So, if you REALLY want to cripple a company for two years, do a rebranding and a reorganization at the same time!

Finally, writing this on Memorial Day, I was taken by a re-quote of a Wall Street Journal editorial: “If none of us is prepared to die for freedom, then all of us will die under tyranny.” {Timothy Snyder}

We will always revere those generations of citizens that unselfishly gave their ultimate sacrifice for their country’s and family’s future. For me, on the several occasions each year that I visit the Vietnam Veterans Memorial in Washington, D.C., I reflect. The ground-depressed, V-shaped black granite walls list the 58,272 deaths and MIAs chronologically to their date of casualty. I always put my hands on slab 5-West, reflecting on my time there, and ask myself, “Why did fate spare me?” and “Did I do enough to keep some of them off of this wall?” From the beginning of hostile conflict, that is a combat survivor’s lament. They will always rest in honor.

© 2017 Robert Uhler and THE UHLER GROUP.  All rights reserved.