THE EFFECT ORGANIZATIONAL RESTRUCTURE ON EMPLOYEE PERFORMANCE

CHAPTER ONE

  INTRODUCTION

1.1      Background to the Study

The success of any organization largely lies on internal and external factors. Workforce is the most fundamental and necessary for organizations competitiveness. Human resource is the real asset of an organization and plays a major part towards progress of the organizations. It is vital for organisations to fully optimise their resources as well as their workforce effectively. As with many private organizations in the world today, operations within the federal government are currently undergoing significant changes due to budget cutbacks and technological innovations. These changes need to be managed effectively in order for staff and management to adapt and find new ways to operate effectively within the changing environment.

As Katherine Mezei (Personal Communication, November 1, 1995), a consultant in the Professional Development Department of Humber College, states, “Organizations are great at change, but they are lousy at transition.” In the process of implementing organizational change, people can ‘drop off’ because their losses and grieving due to the change are not acknowledged. Changes taking the form of mergers, reforms, restructurings and downsizings are often planned and implemented before those who will be affected by them have even been informed. As with any organization, this is causing strong feelings of mistrust and apprehension among staff. A study conducted at Sir Sanford Fleming College in June 1994 to determine full-time support staff perceptions during a period of organizational transition, confirms these negative reactions (Milroy, 1995).

Both the speed of technological change and the need to implement cost-effective programs have caused an increase in the use of computer-based services. These shifts in direction call for new demands to be placed on government employees. Some skill sets will become obsolete while other new skill sets will emerge. If change is not effectively managed, the goals it was intended to produce are threatened. People build up resistance to it, productivity goes down, costs increase and the change itself may be abandoned (Bridges, 1988). The impact of taking on more responsibilities and seeing fewer employees to do the same or more amount of work is compounded by “survivor’s syndrome”. Feelings of guilt can add to strong feelings of change induced anxiety. Administrators and managers are often unprepared for these reactions. While they may have attained the services of an outplacement company to deal with the trauma of displaced workers, they generally fail to consider the emotional needs of the remaining staff. This can result in significantly reduced morale and productivity leaving the organization worse off than before (Noer, 1994).

Recently, due to the intense competitive environment rapid changes occur in the organizations which increased the competition for gaining revenues and growth. Concept of organizational change concerns mainly with the organizational wide transformation that mainly includes the changes in term of mission of the organization, operations of the organization, mergers, major partnerships and others. There are researchers who say that organizational change means organization transformation. In order to practice quality standard, value is the most important which sets the real beliefs in order to attain the performance in teams and to deliver the superior customer service to the clients. When change starts to appear then leaders have the chances to lead their workforce in better perspectives. Though employees obligation is necessary in order to move the organization towards growth and progress.

1.2   Statement of the Problem

Organizational restructure generally refers to the reorganization of the corporate operations to achieve higher levels of the operating efficiency. Downsizing is a norm in organizations today, yet studies have implicated that these initiatives, although intended to produce positive results, do more harm than good to the organization and its workforce (Cascio 1993). This harm done by the organizational restructure does not only employees performance and organisational profitability, but also extends to its learning process. Employee performance involves the overall output of employees while at work. The morale of the employees directly affects productivity. Dissatisfied and negative employees portray negative and low morale about their work environment while positive or highly confident employees are happy and positive at work.