When Organisational Restructures Ignore Microcultures, Service Suffers

I wrote this piece after spending extended time inside a large public-sector organisation navigating a major restructure. What struck me wasn’t open resistance or cultural clash—but how much important work was happening quietly, off the organisational radar.

This article is an invitation to Human Resources, People and Culture leaders, and executives to look beyond formal culture programs and ask a harder question: how is work really getting done during change, and what cultures are forming to make that possible?

Why Human Resources and senior leaders need to look beyond the org chart during mergers and restructures

Large-scale restructures are usually designed with the best of intentions: efficiency, integration, clearer accountability, better service outcomes. In the public sector these are often known as Machinery of Government changes, but the lesson applies just as strongly to corporate mergers, shared-services models, and enterprise-wide transformations. What tends to get far less attention is not the formal structure—but the informal cultural machinery that actually keeps work moving. Based on ethnographic research conducted during and after a major government merger in New South Wales, this article argues that microcultures—small, informal, task-focused cultural units—can quietly determine whether a restructure succeeds or stalls. For Human Resource, People and Culture leaders, and executives, the implications are significant.

The hidden problem with ‘integration by design’

Many restructures are built on an integrationist logic: bring teams together, align processes, unify culture, and performance will follow. In the case studied, the organisation had a strong, identity-driven culture often described internally as its “DNA.” This integrationist culture was visible, championed by leadership, and embedded in formal narratives about customer service and innovation. On paper, it worked. But underneath that visible culture sat powerful subcultures within corporate and support functions as well as multiple microcultures embedded in frontline and operational teams. These microcultures were not acts of rebellion. They were survival mechanisms.

What are microcultures, and why do they matter?

Microcultures form when teams face uncertainty, disruption, or competing demands—especially during mergers and restructures. They are characterised by strong task ownership, informal rules about “how things really get done”, tight boundaries around roles and responsibilities and a focus on preserving Business as Usual under pressure. In the research, microcultures emerged as a way for employees to protect service delivery when formal systems were in flux. In other words, when the organisation changed faster than the work could adapt, people adapted the culture instead.

Why leaders often don’t see cultural resistance coming

One of the most striking findings was how opaque these microcultures were to senior leaders. From the top, the merger appeared largely successful, cultural alignment looked strong and resistance seemed minimal. From the ground, employees experienced heightened interpersonal tension in which workarounds became normalised. Informal boundaries hardened and psychological safety varied sharply between teams. Much of this activity occurred in “backstage sites of enactment” —places where staff could enact their own cultural rules away from formal oversight. This creates a familiar leadership blind spot: things appear calm right up until performance, morale, or service quality suddenly dips.

Microcultures are not the enemy

It’s tempting to frame microcultures as resistance that needs to be eliminated. That would be a mistake. The research shows that microcultures often stabilise operations during disruption, preserve institutional knowledge and maintain customer outcomes under strain. The real risk is not their existence—but leaders’ failure to recognise, engage with, and work alongside them. When microcultures are ignored, they become more entrenched - mistrust between cultural levels grows and change fatigue accelerates, impacting the subjective experience of employees.

What Human Resource and People & Culture leaders can do differently

This research points to a shift in how organisations should approach cultural change during restructures.

1. Stop treating culture as singular

Most organisations don’t have a culture—they have many. Acknowledging subcultures and microcultures is a prerequisite for effective change.

2. Look for early warning signals, not outcomes

Microcultural tension shows up early as role protection, informal decision-making, ‘Us and them’ language and often discreet disengagement. These are diagnostic signals, not failures.

3. Create safe visibility

If employees only feel safe enacting their authentic selves in backstage sites of enactment, leadership is missing critical information. People and Culture teams can play a key role in creating forums where informal practices can be surfaced without penalty.

4. Design change with operational realities

Microcultures form around work that must get done—regardless of structure. Change initiatives that ignore this reality simply push adaptation underground.

The leadership takeaway

Restructures don’t fail because people resist change. They fail because leaders underestimate the cultural intelligence already operating within the organisation. Microcultures are where strategy meets reality. For senior leaders willing to pay attention, they offer an early warning system—and a powerful lever for sustainable change. For Human Resources and People and Culture professionals, the challenge is clear: move beyond culture-as-branding and start working with culture-as-practice. Because the real work of transformation rarely happens where the org chart says it should.

A call to action for Human Resources and senior leaders

If your organisation is preparing for—or recovering from—a restructure, merger, or major transformation, consider this a prompt to pause and re-calibrate.

·      Spend time with teams where service pressure is highest

·      Ask where informal workarounds are carrying formal systems

·      Treat microcultures as intelligence, not inconvenience

The organisations that navigate change best are not those that impose cultural alignment fastest—but those that listen earliest and adapt deliberately. For Human Resources and People and Culture leaders, this is your leverage point: make the invisible visible, and bring cultural reality into strategic decision-making.

If your organisation is navigating a restructure, merger, or cultural shift and you want to better understand what’s really happening beneath the surface, Mind Culture Life Australia works with leaders and People and Culture teams to translate cultural insight into practical action. Whether you’re sensing hidden strain, managing change fatigue, or trying to engage microcultures constructively rather than suppress them, we support organisations to design change that fits how work actually gets done.

For a confidential discussion, call us on +61 02 8114 4454

Dr Kiaos is a researcher and practitioner working at the intersection of organisational culture, change, public sector reform and mental health. She is the founder of Mind Culture Life Australia, supporting leaders and People and Culture teams to understand how work really gets done during change.

References

Kiaos, T.A. (2024). Examining organisational subcultures: Machinery of Government mergers and emerging organisational microcultures. Australian Journal of Public Administration, 83(3), 351-371.https://doi.org/10.1111/1467-8500.12590