Instability in the market and economic meltdown often results in restructuring management infrastructure. This process is a double-edged sword that has its own advantages and disadvantages. Such a change affects organizational performance and productivity. Let us analyze the pros and cons of the process.
Change in ideas and approach
Every person thinks differently. When there is a change in management, there is also a change in ideas and approach. This is very important in today’s competitive business scenario. Ideas that worked in the past become ineffective with time and a new person may come up with something that clicks for the company.
Engagement and communication
New people at helm of a company constantly interact with the workforce to understand them. This results in employee engagement. Communication regularly with the workforce helps the new members to know the issues bothering the employees.
Give shape to the future culture
Change in management give shape to the future culture of an organization. Culture of a firm depends on behaviors of employees. During a revamp, company policies are reset according to the prevailing situation. This may change the fortunes of a company. Often new rules are more customer and employee focused.
Negative investor reaction
Depending the size and funding of an organization, investors may turn hostile during a restructure process. Often investors feel that they will lose money if a change takes place at the top-level. Negative investor reaction can result in dropping of stock prices for firms that are publicly traded.
Depletion of assets
In some cases, organizational restructure involves curtailing the workforce and facilities. Employees are the core strength of any organization. With members of a team leaving, a company loses its assets. With employees leaving, an organization loses the skills and experience of those working on various projects.
Sets panic within employees
Restructuring often sets panic within employees. They are worried about their job security. Often employees after hearing the revamp news begin to search for new jobs. This takes away their focus on the work at hand. Often companies don’t share all the details about the process at one go. This makes employees more worried.
Hurts reputation in market
Restructure in management hurts the company’s reputation in the market. Customers and the public begin to raise questions about the future of the company. The process further hurts during economic turmoil when many people are already jobless. It’s better to receive help of a professional public relations consultant who will project a positive image during the entire revamp period.
If the visions are clear, then the new structure will improve efficiency and productivity of an organization.