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, individual and organizational well being.
The Hidden Costs of Full Purge Reorganizations
Organizational restructuring is necessary for business evolution, but the uncommon "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 purge reorgs, the consequences ripple throughout the organization in devastating and 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. (And to think this org purges multiple times a year!)
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.
If you’re interested in learning more about how to execute a reorg that supports employees, business function, and financial performance, or if you’re looking for ways to support your leadership in approaching a reorg, get in touch and we can talk about the most effective ways of doing so.
