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Costly Impacts of Structural Change

Leaders have a variety of reasons for changing their organization’s structure. Sometimes, an organization grows quickly and is forced to restructure so it can better serve regions, products, and consumers. Other times, organizations restructure to create growth. Some, unfortunately, make changes simply for the sake of change, as if a different structure could make the company more successful. 

Structural changes affect employees and the organization as a whole, regardless of why the changes were made, and some structural changes are more costly than others. In cases of expansion and growth, some employees get an opportunity to shine while others struggle to adjust to new supervisors or tasks. In cases of downsizing, positions might get eliminated, placing addition pressure on the employees left behind who must continue to be productive with fewer resources. 

Before considering a reorganization of your department or company, take into consideration the impact it will have on your employees. 

Additional pressures for productivity without adequate resources. This is likely to create lack of motivation, increased health care costs, decline in productivity, increased grievances, additional labor unit costs, increased turnover, and an overall decline in compassion for employees. 

Eliminated positions. This places employees in fear that they won't have the jobs to which they have become accustomed. While this may provide a spurt in productivity because individuals won’t want to lose their jobs, it will be short-lived. Employees eventually get worn down when doing too much, which results in lowered productivity, increased health care costs, additional labor unit costs, and the possible need to hire additional workers. 


New supervisor adjustments. All sorts of personality clashes can occur when employees face a new supervisor. Employee frustrations become a part of everyday stress to meet new or greater expectations. This, too, results in lack of motivation, increased health care costs, declines in productivity, increased grievances, and increased turnover. In turn, this results in further employee replacements. 

Improper monitoring. When organizations become immune to bad performance, your good employees are likely to leave, decline their performance, or become complacent in their jobs. Low-performing employees who have not faced consequences in the past might reel if suddenly called to action. They, too, might resign their positions, leaving the company with gaps to fill. 

The answer? Right-size your workforce from the beginning; know supervisor and employee personalities; enhance and maintain a good performance appraisal process; and always have justification for decisions.


© 2016 ASTD, Alexandria, VA. All rights reserved.

About the Author
ASTD Field Editor Carol Decker is an associate professor of business administration at Tennessee Wesleyan College in Athens, Tennessee; 1.423.746.5270;
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