Impact Of Organizational Restructuring On Organizational Performance

2561 words - 10 pages

LITERATURE REVIEW
When the organizational restructuring is done properly it will lead your organization to give maximum organizational performance.
In a research article of William McKinley and Andreas Georg they explored two consequences of organizational restructuring that are usually unforeseen by managers and they are, at organizational restructuring level of producing cognitive order for top executives, while at the environmental level the consequence of environmental instability. Both feed back to promote further organizational restructuring, making restructuring a self-interest sphere.
Most of the business press and intellectual writing on this phenomenon are restricted to restructuring's anticipated financial and strategic consequences. Following Merton's (1936), Rogers' (1995), and Tenner's (1996) distinctions between foreseen and unforeseen consequences, but William and Andreas focused on some less transparent consequences of restructuring that they believe are unanticipated by most managers. They proposed that organizational restructuring in an unstable environment generates a sense of cognitive order for top executives but it is not shared by their subordinates, who are prone to perceive organizational restructuring and as a result it becomes a source of cognitive disorder and leads the employees to betrayal. The environmental instability produced by large-scale organizational restructuring stimulates executive perceptions of environmental instability and, thence, additional restructuring.
In a research article on organizational performance the authors David Parker and Keith Hartley says that they went through the study of 10 organizations in the U.K. which underwent changes in their organizations. Their focus of the study is on the impact of these organizational status changes on financial performance measured using a set of standard financial ratios. They said that their financial ratios did not provide a consistent set of statistically significant results for any of the organizations they studied. This suggests that studies which test for performance changes using only a narrow base of financial performance measures, notably profitability must be interpreted with care. They also suggested that organizational status changes in the direction of privatization do not appear to guarantee improved performance. According to Perry and Rainey in 1988 the Performance appears to result from a complex set of factors and not simply ownership. Results on tests of performance in productivity, employment, and financial ratios against change in status, competition and internal management failed in most cases to support the research that change in ownership improves enterprise performance.
According to authors James G. March and Robert I. Sutton most studies of organizational performance define performance as a dependent variable and seek to identify variables that produce variations in performance. Researchers who study organizational...

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