How Companies Are Adapting Their Structure to Thrive in the New Normal

Jenny B. Fine

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As Thrive Causemetics chief executive Karissa Bodnar was navigating the challenges of running a high-growth brand in the early days of the coronavirus pandemic, she turned to an unusual member of her c suite—chief wellness officer Erin Brower—for guidance.

While the role is an unusual one in corporate America, frankly, so was the idea that the majority of employees would be working from home for a good part of 2020.

In the topsy-turvy role that businesses are now operating in, new functions, new structures and new priorities point to profound changes in how companies are going to operate as they look to navigate an ever-changed landscape.

The pandemic has given rise to a host of questions, from what new positions and capabilities are needed in the new normal to how to mitigate the financial fallout from the crisis.

“We believe this is the moment to implement zero-based organizational design,” says Sarah Willersdorf, managing director and partner at Boston Consulting Group, meaning essentially now is the time to start with a blank slate and shift talent to the capabilities that are driving growth.

“This is a moment to think, ‘if I was able to clean sheet my organization, what would it look like?’” Willersdorf continues. “Companies aren’t going to move to exactly that, but they are thinking about how to reduce fixed costs and come out of this more agile. You don’t want to waste a crisis either.”

One key area of investment will be around digital capabilities. As L’Oréal USA chief executive officer Stéphane Rinderknech said in the first weeks of the pandemic, COVID-19 has “accelerated the digital acceleration,” that was already happening in the beauty industry and beyond. E-commerce numbers are soaring, and the upward trend is only expected to continue. The result is that many companies are quickly reassessing their digital and marketing teams.

Everyone is taking a proactive approach to reorganization,” says Shella Abe, co-head of CEO Board Practice at TrueSearch. “Budgets are shifting to continue to strengthen ecommerce and online. These omni brands—before, everyone was trying to innovate, but now they’re forced to. Everyone is ramping up their digital commerce and capabilities.”

While beauty has been at the forefront of industries adapting to the digital age, even companies with strong teams in place are looking at what’s next and asking if it’s enough. “Beauty had been far down that path, but now it is about how to really optimize your people,” said Lisa Marie Ringus, executive vice president, global client strategy and growth, 24 Seven. “How is your digital organization structured? Does it roll into a digital center of excellence or marketing? Are there separate marketing and digital budgets? I’m hearing that we will see departments and budgets that are more integrated than ever before as we move forward.”

Willersdorf agrees, ticking off the areas she sees as ripe for reinvention. “Some of the biggest areas are around direct-to-consumer, having bigger and stronger digital teams, but making sure such teams are also channel agnostic,” she says. “There’s also a big focus on building out the artificial intelligence and tech backbone, to digitalize core processes and use more machine learning across all aspects of the business, from manufacturing and supply chain right through to how you market to consumers both online and offline.”

Ringus anticipates that an influx of talent will come from both inside and outside of the industry, particularly in the new work-from-home era, in which proximity to the home office is not as important as it once was. “There will be a race for talent,” she says. “The talent pool is completely open. This is a time when people are evaluating their lives and what’s really important to them and where they want to be.”

Another department expected to be upgraded is communications. “Brands are publishers now,” says Rich Gersten, founder and managing partner of True Beauty Capital. “How do you have good, relevant on-brand content. Who does it for you? How big a department is it? Is it in-house or outsourced? Not that it wasn’t important before, but it becomes even more important now as you’re driving more traffic to your web site and others. It forces you to think differently about the organization.”

The same holds true for internal communication as well as external. “We expect to see WFH become a key component of corporate life—not necessarily as we’re seeing it now, but there will be an acceleration of remote working that will have a real impact on internal camaraderie and communication,” says Willersdorf. “I think internal communications will be bolstered. We saw it in the crisis—there is a need to communicate more frequently and through more channels than ever before.”

“Culture counts in a WFH world,” agrees Abe. “If your culture isn’t intact, you’re losing trust. You’re losing motivated employees. The employee engagement piece you’re seeing a lot—happy hour meditation, yoga, cooking clubs, book clubs. That definitely continues.”

But for all of the new roles that will emerge in beauty companies, there are an equal number that analysts expect to see eliminated. Many expect that a significant number of businesses will emerge from the crisis 20 to 30 percent smaller than before. There is no question that teams have learned to operate more efficiently and with a leaner structure,” says Gersten. “As a general rule, during good times, companies tend to get a little fat and they realize they can retract.”

The brutal toll on brick-and-mortar, from bankruptcy filings by Neiman Marcus and J.C. Penney to door closings by Nordstrom and Macy’s, is expected to have an enormous impact on sales and education teams. “There is a lot of talk about what that org chart looks like relative to the past,” says Gersten. “How is education delivered, for example, in-store or virtually? How important is it to have your sales rep in the store? It used to be very important to drive sell-through, but when you’re worried about occupancy and social distancing, the role of that person starts to get impacted.”

Even the c-suite isn’t safe. Ringus posits that the skill set required by a ceo is changing and evolving with the times. Setting strategy and vision to drive the business forward is as important as ever—but so is the human factor. “From a leadership standpoint, people have to have a very strong EQ, the ability to lead with empathy and a human factor,” she says. “This is what is effecting businesses the most. How does a company really embrace their employees. For years, it’s been about the customer journey,” she continues. “Now it’s about the employee journey. Companies have to reinforce the value of their people, now more than ever.”

For More Beauty News:

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How L’Oréal USA CEO Stéphane Rinderknech Will Restore Growth to the Region

 

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