The Purge: Corporate ReOrgs Edition

I’ve got a friend at a large healthcare corporation where in the course of a few years there he’s had to endure four full purges of his 1000+ person division. These choices go against everything the research suggests builds trust in an organization and I figured I’d opine on the damage such decisions can have on both, the individual, and organizational well being.

The Hidden Costs of Full Purge Reorganizations

Organizational restructuring is sometimes necessary for business evolution, but the increasingly common "full purge" approach—where entire departments or leadership teams are replaced in one sweeping move—carries devastating consequences that often outweigh intended benefits.

As an executive coach working with organizations through periods of change, I've witnessed firsthand how these aggressive reorganizations create lasting damage that undermines the very improvements they aim to achieve.

When companies implement full purge reorganizations, the consequences ripple throughout the organization in predictable patterns:

Psychological Safety Collapses

Surviving employees experience what many psychologists call "organizational trauma." The sudden departure of colleagues creates profound uncertainty and fear. People stop taking risks, sharing ideas, or investing emotionally in their work. Innovation stalls when everyone is focused on basic survival.

Institutional Knowledge Evaporates

Organizations lose critical operational knowledge, customer relationships, and cultural context that can't be documented in transition plans. New hires, regardless of talent, struggle without this foundation of institutional wisdom.

Trust Deficit Emerges

Trust—the essential currency of effective organizations—becomes scarce. Employees question leadership intentions and withhold discretionary effort. The psychological contract between worker and employer fundamentally breaks.

Recovery Takes Longer Than Expected

Most leadership teams underestimate recovery time. While financial metrics might stabilize within quarters, rebuilding psychological safety and organizational cohesion often takes years.

There are more effective alternatives. Thoughtful, phased reorganizations that prioritize transparency, respect institutional knowledge, and actively manage the human transition can achieve necessary structural changes without demolishing organizational culture.

The most successful leaders understand that organizations are living systems of human relationships, not mechanical structures to be dismantled and reassembled at will. By honoring this reality, they can guide necessary transformations while preserving the human capital that ultimately determines their success.