Vitality

Employee Satisfaction: Corporate Restructuring Can Negatively Affect Employee Wellbeing, Even If No Jobs Are Lost

Corporate
Corporate restructuring makes employees unhappy. Pixabay Public Domain

In the corporate world, restructuring is defined as “a reorganization of a company with a view to achieving greater efficiency and profit, or to adapt to a changing market.” The decision to restructure could be motivated by finances, job cuts, or a merger or acquisition. Whatever the reason behind a corporate restructuring, a new review out of the University of East Anglia (UEA) has found the process has a mostly negative effect on employees.

Published in the journal Work and Stress, the review looked at 39 different studies from 2000 until 2011 which dealt with corporate restructuring in the public, government and healthcare; and in the private sectors, industry, transport, finance, and services. The studies had categorized restructurings due to downsizing, closures, mergers, changes in ownership or privatization, or a combination of two or more of these factors.

The researchers, from UEA's Norwich Business School and the Netherlands Organization for Applied Scientific Research (TNO), also sought out how these restructures affected the short- and long-term well-being of employees. They considered how employees fared based on their job characteristics, what role they played in the restructuring, and the nature of the individual employees themselves both immediately following the company’s announcement to restructure and during the restructuring process.

The researchers found not all employees were negatively affected by the restructuring, with a few of the studies saying some restructures had a positive impact on employees. The majority of the studies, however, found restructuring — both before and after the process — is bad for employee well-being. They found this to be true regardless of whether or not the company downsized.

"Our findings show that it doesn't really matter whether people are laid off or not, it still has a negative impact,” Nielsen said. “Those employees who stay on at the organization might have to do tasks they are not familiar with and they don't necessarily get the training. They need other competencies."

The higher the physical demand and less control the employee had over their job, the worse off they were, the researchers found. As for individual employees, insecurity about their role, how they adjusted to change, how they perceived the restructuring, and if they had a negative experience during the restructuring all poorly impacted their well-being.

"The characteristics of the restructuring process, such as fairness of procedures, communication and change management in general have been found to have an impact on worker well-being,” Nielsen said. “Some groups of workers react less negatively, for example if they have more chance of influencing the process. The key point is how you manage the change. Make sure people have control over their jobs, that there is good communication and the right kind of training.”

On the plus side, the researchers found companies that provided continuous communication about the transition and proper training for staff who took on new responsibility positively affected the well-being of employees.

"Organizations, managers, and employees should be supported in dealing with changes in a healthy way, for example by training, coaching, and other on-the-job programs aimed at individual, group, and management level,” Nielsen suggested. “Researchers and occupational and human resource management practitioners should work together in developing interventions and evaluating the intervention process and its impact on well-being and company results."

Source: Nielsen K, et al. The Impact of Restructuring on Employee Well-being: a Systematic Review of Longitudinal studies. Work and Stress. 2016.

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