The point of departure must be to define restructuring; yet the plethora of definitions offered by the academic literature renders this a problematic term to operationalise. A general reading of the literature suggests that the following may be defined as forms of
reorganisation: outsourcing (Doellgast and Greer, 2007; Morris et al, 2006); merger and acquisition activity (M&A) (Blickle and Witzki, 2008; Croucher et al, 2004); the removal of managerial layers (Littler and Innes, 2004; McCann et al, 2004; Worrall and Cooper, 2001) and structural changes following devolution or changes in ownership (Kinnie et al, 1998). Organisations may reach the stage where they have grown too large, resulting in a decision to downsize, in order to allow the company to regenerate (Marks, 1994).
Decentralisation, de-layering and outsourcing activities may, consequently, energise an organisation by making it fitter and more focused to reach its goals (Marks, 1994).
English language research on restructuring frequently employs ambiguous terms to describe types of restructuring activity; however, clarification becomes increasing problematic because, in many cases, restructuring is presented as interchangeable with downsizing (Kinnie et al, 1998). Downsizing is generally employed as an umbrella term to suggest a decrease in the size of an organisation, either through a reduction in the number of business units and/or departments, or a displacement of staff (Kinnie et al, 1998). Evidently, this is, in the first instance, a problematic definition because firms may increase the size of their workforce through restructuring activities, such as M&A.
In terms of a time-frame, downsizing, as a response to market changes, achieved attention within management literature alongside the Womack et al (1990) concept of lean (Kinnie et al, 1998). Reductions in demand, structural changes following the simplification of the
organisational structure, the quest for improved flexibility are predominately catalysts for downsizing activity (Kinnie et al, 1998). Evidently, outsourcing and de-layering are practices through which companies may simplify their structures and become smaller;
hence, these are also forms of downsizing. As a consequence, in seeking to define restructuring and downsizing, it becomes difficult to disassociate these terms from each other and there is an inevitable overlapping of definitions.
To further complicate the terminology, downsizing is, as Kinnie et al (1998) suggested, merely another way of describing practices which have always occurred in organisations.
This viewpoint was also reflected in the interviews:
“This [downsizing] is just a new name for something that we’ve been doing for years. In 1995, when we were starting to do away with energy, we moved eight hundred people and created a subsidiary - but no-one would call this downsizing. It was a question of reorganisation”.
(HR manager, Utilities Firm A)
Many academics have associated restructuring (especially downsizing) with job losses (c.f. Behrens and Kädtler, 2008; Budros, 1999; Burke and Nelson, 1997; Carbery and Garavan, 2005; Koeber, 2002; Littler and Innes, 2004). Hence, there is a danger that downsizing may be treated indiscriminately because is depicted as being synonymous
with a deliberate reduction of the workforce18. Moreover, to equate downsizing with job losses presumes that employees are on open or permanent contracts because workers who are on fixed-term contracts or are employed through an agency cannot be made redundant (Kinnie et al, 1998). Whilst the deregulation of labour markets has, arguably, made it easier for employers to make employees redundant, in the case of Germany, workers receive more employment protection.
As figure 7.1 demonstrates, Behrens and Kädtler (2008) identify seventeen types of organisational change associated with restructuring affected German organisations.
18 Nevertheless, the displacement of the workforce may include temporary lay-offs, early retirement of older workers (McCann et al, 2004 Carbery and Garavan, 2005), secondments (McCann et al, 2004), rightsizing (Marks, 1994), recruitment freezing (Carbery and Garavan, 2005) and redundancies (McCann et al, 2004). Having said this, the literature does not concur on the extent to which the shedding of labour may be called downsizing (Littler and Innes; 2004).
Forms of Restructuring % Firms Implementing 19
1. Movement of operations back into Germany 5
2. Relocation of operations abroad 11
3. Establishment of cost centres 12
4. Establishment of profit centres 13
5. Integration of acquisitions 22
6. Concentration of functions in other locations 23
7. Changes to product lines 24
8. Mergers 25
9. Removal of layers of hierarchy 27
10. Expansion of temporary working 29
11. Introduction of group work 32
12. Outsourcing functions / departments 32
13. Concentration of functions onsite 33
14. Removal of departments 38
15. Personal saving package specifications 43
16. Outsourcing of activities 43
17. Cost-savings targets 52
Figure 7.1: Forms of Restructuring affecting German Organisations (adapted from Behrens and Kädtler, 200820)
Despite being able to identify seventeen individual forms of reorganisation (see figure 7.1), Behrens and Kädtler (2008) also ran into problems with defining restructuring21. Drawing on Faust et al (1994), Behrens and Kädtler (2008) choose to simplify their definition of restructuring into two categories: operative de-centralisation and strategic decentralisation. Operative de-centralisation relocates operational control and responsibilities downwards in the firm, but control remains within the company. Faust et al (1994) associated the introduction of quality circles, manufacturing cells and team-led initiatives as types of operational decentralisation, whereby responsibility is given to the workforce. In contrast, strategic de-centralisation removes control over certain activities to outside the existing boundaries of the firm. Following the definitions of Faust et al (1994), Behrens and Kädtler (2008) included de-layering and the introduction of group working as examples of operative de-centralisation and outsourcing, increases in temporary work and the shift of production abroad as examples of strategic decentralisation.
Figure 7.1 underlines the wideness expansive nature of the definition of restructuring by Behrens and Kädtler (2008). Therefore, to some extent, Behrens and Kädtler (2008) offer a more workable clarification of restructuring through the inclusive nature of their
21 Behrens and Kädtler (2008) admitted to having simplified their definitions for the purpose of carrying out their interviews because they argued that introducing seventeen categories of restructuring would have only confused their interview respondents. Consequently, they chose the categories of operative de-centralisation and strategic dede-centralisation as a means of simplification for the purposes of fieldwork interviews.
definition. Figure 7.1 determines that cost-saving initiatives (52 per cent) and personal savings targets (43 percent) were the most common forms of restructuring. In line with definitions by authors, restructuring is still presented within a rhetoric of cost-saving;
Behrens and Kädtler (2008) show that cost remains the driver behind restructuring processes. The next section will examine the implications of restructuring.