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How Employees are Affected by Organizational Change

In corporations, organizational change is implemented because the business environment in which the organization operates is undergoing change. The company may be dealing with a downturn in its industry or the general economy, resulting in downsizing measures such as layoffs of employees being undertaken in order to reduce operating losses. Companies that are growing extremely rapidly also make organizational changes, usually increasing the number of management layers and adding new people with specialized skills to the management team.


In companies that are downsizing, the workload for the employees that remain can become overwhelming, leading to the potentially serious condition of burnout. Laurie Tarkan reports in the article "6 Steps to Battling Job Burnout,"” published at on August 25, 2011, that job burnout can increase stress hormones, which may lead to health problems such as high blood pressure, heart disease and depression. Employees may end up resenting the unreasonable workload and lose interest in their job, causing productivity to decline.

Stress About Job Security

In a company that has experienced layoffs or downsizing, employees wonder whether they are the next ones to be let go. This heightened level of worry causes morale within the organization to decline. Employees may become more afraid of making mistakes believing it will give the company an excuse to terminate them. The company may lose top performing employees who become disenchanted with working for a company that is on the decline and choose to join another company where there is greater job security.

Uncertainty from Rapid Change

Working in a high energy, rapidly growing company may sound like the ideal situation for an employee, but if the organization structure is undergoing rapid change as well employees may develop feelings of uncertainty or even helplessness. They arrive in the morning to find everything changed -- they have a new boss, new responsibilities and new co-workers. If they were not consulted prior to these decisions being made, employees may view these changes as arbitrary and unnecessary. The chance of this is lessened if supervisors take the time to explain the reason for the changes to each employee, and listen to any concerns they may have.

Declining Job Performance

Companies periodically restructure their organization in an effort to become more efficient and increase productivity. Management believes that shaking things up will get employees out of their comfort zone and inspire them to greater effort. But sometimes the changes have the opposite effect. Employees may become confused about their new roles, reporting relationships and task priorities. Some individuals may not be able to work harmoniously with the new co-workers they have been assigned. They may even lose confidence in their abilities. In extreme cases, an employee may feel like a “fish out of water” and his job performance declines. Company management made the mistake of not understanding the strengths and capabilities of each member of their team, and as a result employees were not a good fit for the new roles they were assigned.

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