While the organizational structure must necessary be somewhat formal, it is impossible and impractical to think any particular structure as permanent. In fact, a number of events can trigger the need to evaluate the efficiency and adequacy of the company’s current organizational structure. For example, changes may occur in the external environment including advances in technology, strategic changes by competitors, new regulations or deregulation in areas important to the products and services of the organization, and shifts in consumer preferences. Internal changes include turnover in key personnel, political skirmishes among departments and strategic changes such as entering into new markets or launching new products.
Before embarking on any major change in a company’s organizational structure several questions should be raised and answered. First, will the change add significantly to the strength of the business and improve operations in a way that is readily apparent to all interested parties? Second, is the change directed at a source of a performance gap or merely upon a symptom? For example, structural change is appropriate when there is a need to reconfigure groups in order to foster more efficient communication and coordination; however, if the real problem is ill feelings between groups of employees then structural change alone will not resolve the issue. Third, how will the proposed changes be interpreted by the affected parties (i.e., managers and employees), particularly those that are not part of the management team that has decided to implement the changes? Unless the reasons for the changes are clearly communicated, mid-level managers and line employees may view the changes as punitive or as changes in values that are not intended by senior management. Therefore it is important for senior management to consider in advance how the changes will be perceived from different vantages points within the organization and this requires insight into how the informal structures of the organization work. Finally, is the change consistent with the values of the company and its reward systems? In particular, there must be ways for managers and employees to demonstrate that they are implementing the changes and incentives must be established to recognize those that support the implementation.