One of the problems with functional and product division structures is that it is often impossible to accurately measure the contribution that completion of particular tasks or activities is making to the profitability of a particular product. However, since the divisions in a multidivisional structure are essentially self-contained business units it becomes much easier to identify how the activities of individual managers and employees impact “bottom line” performance and this tends to improve morale and increase enthusiasm within the workforce. This is particularly true in situations where division managers are given the latitude to create their own incentive and reward programs that are customized to the specific activities of their division.
Typically success as a divisional manager is a prerequisite to promotion to a higher status corporate manager position in a multidivisional structure and this creates additional incentives for divisional managers to work to improve the performance of their divisions and impress the senior corporate managers with their ability to collaborate with other divisions to make the entire organizational structure operate more smoothly and effectively.