The hardest conversations in a restructure are rarely the redundancy conversations. They’re the performance conversations that never happened, writes Elliot Royce.
It’s not uncommon for organisations to undertake a restructure, only to find themselves restructuring again a few years later to solve the problem they thought they’d solved last time.
Transformation has become the default response to underperformance and misalignment, with billions invested every year. Yet McKinsey research shows fewer than one in three transformations sustain the improvements they promise – a statistic that should trouble any board, New Zealand’s included.
Why do so many find themselves starting another transformation a few years later, to fix a problem that looks remarkably similar to the last?
After 20 years working across executive leadership, organisational transformation, complex M&As, billion-dollar mega projects and, more recently, founder-led businesses, I’ve become convinced the answer lies in something organisations rarely measure.
Transformation debt
Software engineers call this technical debt – every shortcut taken today slows progress tomorrow.
Organisations accumulate something similar – every restructure and half-completed initiative leaves behind diminished trust, fragmented memory, leadership fatigue and capability that’s hard to rebuild.
Elliot Royce …What’s rarely measured is the cost to an organisation’s social architecture
Like financial debt, it compounds, each transformation adding to a legacy of lost trust and confidence.
The immediate costs of change are visible and carefully modelled: consulting fees, redundancy payments, technology spend.
What’s rarely measured is the cost to an organisation’s social architecture – relationships and informal networks that don’t appear on a balance sheet but determine whether a strategy survives once the programme team has gone home.
Amy Edmondson’s research shows teams perform better when people feel safe to speak up and learn from mistakes. Repeated transformation erodes that safety – not through open resistance but quiet compliance and a reluctance to invest discretionary effort.
Most programmes, meanwhile, are judged only on time, budget and milestones, measures that say nothing about whether the organisation is any more capable than before.
Two problems, one programme
Looking back across two decades of organisational change, restructures were usually not the problem, more often they revealed problems left to accumulate for years.
One pattern showed up so consistently it changed how I think about transformation. The hardest conversations weren’t the redundancy conversations. They were the performance conversations that had never happened.
I’ve worked with talented leaders who cared deeply about their people but, like all leaders, faced competing priorities, and difficult conversations were quietly deferred until a better opportunity that often never arrived.
Frustrations were aired privately instead – everyone understood the problem, yet very little changed, until months became years and the organisation restructured.
What struck me wasn’t that some of those people eventually left, but how often the issues resolved through the restructure had actually predated the programme – settling years of deferred leadership decisions dressed up as strategy.
Many restructures are quietly asked to solve two problems at once…
Many restructures are quietly asked to solve two problems at once: one strategic, positioning the business for changing markets, and one behavioural, accountability for performance issues built up over time.
These need different solutions but get bundled into a single programme, and organisations credit the new structure with improvements that actually came from leadership decisions they’d been avoiding.
When the underlying behaviour doesn’t change, the same issues resurface – reporting lines shift, titles change, teams get reorganised, but the difficult conversations still don’t happen.
The organisation accumulates debt again, not because the restructure was poorly run, but because the behaviour that made it necessary was never addressed. Organisation charts don’t create accountability. Leaders do.
Diagnose before you operate
If transformation debt builds up because organisations keep prescribing structural fixes for behavioural problems, the question is how to diagnose better.
A surgeon doesn’t operate simply because a patient looks unwell – symptoms trigger investigation before intervention, because diagnosis determines the solution.
Too often, organisations reverse that order: declining profitability becomes a restructure, disengagement prompts a cultural programme, and the symptom becomes the diagnosis.
The most overlooked question in leadership may be the simplest: what problem are we trying to solve?
It’s harder than it sounds, because organisations often inherit a solution before they’ve understood the problem, and under pressure, activity looks like progress. But decisive action and effective action aren’t the same thing. The most disciplined decision isn’t deciding what to change – it’s deciding whether change is required at all.
Doing nothing is still a decision
There is always another option: do nothing. That’s not an argument for complacency; it’s an argument for discipline.
Boards routinely weigh investment options before committing capital, and transformation deserves the same rigour – yet organisations often evaluate only the proposed transformation itself, dismissing options like holding course or fixing leadership behaviour first, without properly considering them.
Every transformation consumes trust, attention, knowledge and discretionary effort – finite resources deserving the same scrutiny as financial capital.
Some organisations will still need to transform: markets move, technology advances, expectations change. For New Zealand businesses, in a small, connected market, getting this right matters even more – word travels fast when change is handled badly.
The real measure of transformation
Perhaps the better question for every board is what each transformation left behind: a stronger organisation, more capable of solving harder problems, or one still leaning on the next restructure to fix what leadership avoided fixing this time.
The true measure of transformation isn’t whether an organisation changed – it’s whether it became capable enough to stop solving the same problem twice.
Elliot Royce is founder and director of Beyond Potential, where he advises ambitious founder-led businesses on strategy, leadership and governance. He has held executive leadership roles spanning a Fortune 500 company, complex M&A integration, billion-dollar mega projects and independent governance. His aim is to provide founders and boards with the clarity and confidence to navigate growth, complexity and transition successfully.
Main photo by Tanja Tepavac on Unsplash
