One basic advantage of organization planning is the avoidance of organizational inflexibility. Many enterprises especially those which have been in operation for many years, become too rigid to meet the first test of effective organization structure: the ability to adapt to a changing environment and meet new contingencies. This resistance to change can cause considerable loss of efficiency in organizations.
Signs of inflexibility
Some older companies provide ample evidence of inflexibility: an organization pattern that is no longer suited to the times, a district or regional organization that could be either abolished or enlarged because of improved communications, or a structure that is too highly centralized for an enlarged enterprise requiring decentralization.
Reorganization is intended to respond to changes in the enterprise environment there may be other compelling reasons for reorganization. Those related to the business environment include changes in operations caused by acquisition or sale of major properties, changes in product line or marketing methods, business cycles, competitive influences, new production techniques, labor union policy, government regulatory and fiscal policy, or the current state of knowledge about organizing. New techniques and principles may become applicable, such as developing managers by allowing them to manage decentralized semi-independent units of a company. New methods may come into use, such as gaining adequate financial control with a high degree of decentralization.
Moreover, a new chief executive officer and new vice presidents and department heads are likely to have some definite organizational ideas of their own. Shifts may be due merely to the desire of new managers to make changes based on ideas formulated through their previous experience or to the fact that their methods of managing and their personalities require a changed organization structure.
Furthermore, reorganization may be caused by demonstrated deficiencies in an existing structure. Some of these arise from organizational weaknesses: excessive spans of management, an excessive number of committees, lack of uniform policy, slow decision making, and failure to accomplish objectives, inability to meet schedules, excessive costs, or breakdown of financial control. Other deficiencies may stem from inadequacies of managers. Lack of knowledge or skill on the part of a manager who for some reason cannot be replaced may be avoided by organizing in a way that moves much of the authority for decision making to another position.
Personality clashes between managers also may be solved by reorganization. Staff-line conflicts may develop to such an extent that they can be resolved only by reorganization.