Restructuring is a complex issue with make or break implications for organizations.
Many organizations see restructuring as a strategy for cost-cutting and reducing headcount with a clear focus on protecting profits. Yet, research shows companies are struggling with the process of aligning the organization with the new business environment. Poor execution is common and most organizations and senior leadership teams are failing to get it right.
Extensive research involving 28,000 respondents, across 15 countries and 10 major industry sectors found that:
- 54% of employees doubt senior leadership’s ability to respond appropriately to changing external conditions
- When change is implemented, 58% of employees do not believe it is implemented well
Ultimately, a successful restructure, downsizing, rightsizing or rebalancing will depend on the engagement of the employees who remain after the restructuring has been completed.
Employee engagement is a critical measure of organization integration and reflects the employees’ involvement with and their contribution to, the success of the business. The level of employee engagement positively impacts retention, attendance, safety, trust in leadership, revenue, customer loyalty and profits.
More often than not, employee engagement levels of ‘survivors’ is a forgotten factor when designing and implementing any form of restructure. Yet, it is a leading indicator of future financial performance.
The relationship between employee engagement and change management show that:
- When change is managed well, the number of engaged employees increased by 60%
- Alternatively when change is not managed well, the number of disengaged employees increases by 94%
- When change is managed well, the number of productive employees increases by 82%
- Alternatively when change in not managed well, the number of unproductive employees increases by 51%
The business implications of are staggering. It is commonly accepted that an engaged workforce has a significant impact on future organizational performance. Research has shown that an engaged workforce results in:
- 50% higher productivity
- 56% higher customer loyalty
- 33% higher profitability
Given the link between employee engagement, future organizational performance and profitability it is clear that organizations that treat restructuring as an ‘event’, by removing people and roles, without planned and integrated process to manage change, will create additional long-term performance challenges for themselves.
The message for leaders is clear. Their response to managing change must be decisive, planned, transparent, collaborative and well communicated – before, during and after restructuring, downsizing, rebalancing or rightsizing the organization