By: Jessica Kotcher
After reading many of the previous blog posts, it is safe to say that the organizational structure and its elements provide a solid foundation for which organizational behavior is based upon. The different elements and processes of organizational structure make it easier to run a successful organization in an efficient manner. Although we’ve talked about many of the processes and concepts that keep organizations running smoothly, we have not touched on the process of restructuring an organizations structure. Restructuring an organization is just that, changing an organizations structure. According to my Organizational Behavior text, “Restructuring has a small negative effect on task performance”. (Colquitt, Lepine, Wesson, 2011) This is because changes in specialization, centralization, and/or formalization could potentially cause uncertainty on how an employee is expected to perform at their job. Restructuring is not considered to be an easy task. “Business leaders who have been involved in any aspect of a restructuring understand the difficulty of crafting a successful solution.”(Recardo, Heather, 2012)
Restructuring can bring up questions in the work place, and many employees will be unsure of the tasks that they are responsible for performing. Restructuring could potentially set an organization back in quality of work ethic because employees are uncertain. It also says that “Restructuring has a more significant negative effect on organizational commitment.”(Colquitt, Lepine, Wesson, 2011) Commitment is said to be lower in organizations that go through the process of restructuring. Restructuring causes concern for employees and employees could potentially be worried of losing their jobs all together. Many organizations that are restructuring today are “flattening” their organization. This means that they are trying to show their investors that they are reducing their costs to become a more profitable company. Ultimately this is what a company, and its investors want, profit. Although flattening can result in a less costs, and more profit, that comes at a price for the employees. Flattening usually requires an organization to lay off several of its managers. Many companies in past years had no choice but to restructure their organization. “As money has become less accessible, companies have had difficulty refinancing their operations. But although 2008 will see an increase in insolvencies, restructuring will remain the norm for troubled companies.”(Restructuring, 2008) Restructuring is a process that could also be referred to as “Rebuilding”. Rebuilding an organization sometimes results in changes with the types of employees they hire, and type of business or market the company wants to be involved in. This causes employees to become less committed, knowing that their jobs could potentially be on the line, for people that are better suited for the position.
Restructuring can also be a very effective process. Let’s look at it this way; a business that needs restructuring is a business that was most likely facing problems, for example, losing profits and revenue. Restructuring can “revamp” an organization in a whole new light. Restructuring how an organization runs day to day, is not the only changes it can make. It can also make changes such as, who is running the organization, and what their goals and objectives are. An organization may change from a product-based structure to a function structure, or even to a geographic structure. One way to help support the company is to help manage those remaining employees, otherwise known as “layoff survivors”. The layoff survivors may or may not experience guilt for those who lost their jobs. It is important to make sure these employees know that they still have a voice in the company, and that their suggestions and opinions matter. While researching the idea of restructuring, I found some interesting tips for managers in this situation. “Many managers are promoted into management because they were good personal producers in their departments. In many cases, personal production is still part of the manager's job - but so are coaching and motivating employees, providing strategic direction for the business unit.” (Baranoff, 2011)
It is important for managers and existing employees to remember that restructuring is meant to convey a positive new environment for the organization. Although restructuring can cause stress and hardship for some, it can also bring light and new incentives for people to want to work there.
Restructuring. (2008). International Financial Law Review, , 1. Retrieved from http://search.proquest.com/docview/233193203?accountid=12924
Baranoff, Robert M, MBA,F.L.M.I., L.L.I.F. (2011). Restructuring management. LIMRA's MarketFacts Quarterly, 30(1), 112-112,111. Retrieved from http://search.proquest.com/docview/865045905?accountid=12924
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