Departments slated for restructuring are kept on old tools and denied training for years, until their decline looks like an objective finding and eliminating them becomes an easy call.
An example
Four budget cycles in a row, the in-house creative and signage department of a grocery chain asked for new design software and print equipment. Each request was deferred: once for cost discipline, twice because growth functions came first, and once with a note that the department had not made a strong enough case. Its training budget was zero for three years. By the fifth year, store openings were waiting on signage, and a consultant's benchmark showed the department producing a third of what an outside agency could at the same cost. The chief marketing officer presented the benchmark to the executive committee and proposed outsourcing. No one in the room had seen the budget requests. The department's manager had kept every one, with the denial emails, and brought the folder to her meeting with human resources.
Why it works
Years of denied investment make the restructuring easy to approve: documented performance gaps and obsolete tools stand in for a decision that would otherwise look predetermined. The department's output really does degrade, so keeping it looks worse. Keeping it becomes costlier, because the price of modernizing balloons with every deferred upgrade and any defender has to explain investing in a unit that underperforms. It needs budget authority over training and equipment, two to four budget cycles, performance measures that count output and ignore investment history, and a plausible reason for each denial.
The thinking behind it
Herbert A. Simon Simon's Administrative Behavior (1947) treats decisions as shaped by the premises an organization supplies, including the information put in front of decision-makers. A restructuring proposal that shows current output and omits years of denied investment supplies a premise that makes elimination look like the obvious finding. Setting the budget history beside the performance data changes the premise.
Lee Ross In The Intuitive Psychologist and His Shortcomings: Distortions in the Attribution Process (1977), Ross describes observers explaining results by the people involved and giving too little weight to what they were given. A department kept on obsolete tools with no training declines, and the decline is then attributed to its staff. That is why the resource history has to be in the record when the decision is made.
Warning signs
One unit's training and tooling budget is zeroed or deferred for consecutive cycles before a performance review, with cost discipline, growth priorities, or a weak case given as the reason. Its performance is then benchmarked against outside providers or newer functions. The restructuring proposal cites the performance gap and leaves out the investment history.
How to defend yourself
Get the resource history into the record before the decision, because at the moment of decision only the outputs will be on the table.
- Keep every budget request, denial, and approval chain, with dates.
- Set that history beside the performance data whenever your unit's results are discussed.
- Train yourselves and build your own tools where you can. A department that compensates breaks the decline the tactic depends on.
- Ask an internal auditor or a governance committee to examine the link between the budget pattern and the restructuring proposal.
How a leader shuts it down
Show investment history alongside output in every performance review of a unit. When a restructuring rests on a performance gap, ask what the unit asked for and was refused. Internal audit and the board's governance committee can trace resource denials through to the eventual decision.