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Smart moves: Directors 'blind' to impact of restructuring on employees

Philip Schofield finds that the larger the organisation, the poorer staff morale becomes
THE restructuring of British industry - involving cost-cutting, redundancies, culture change, performance improvement, delayering and site closures - has not had its intended outcome, according to a new study. Moreover, few directors are aware of the devastating effect these changes have had on employee morale, job security, motivation and loyalty.

The survey, The Quality of Working Life, by the Institute of Management and the Manchester School of Management at UMIST, questioned 1,361 managers on their experiences in the previous 12 months. It found that 60 per cent had been affected by organisational change. While 37 per cent of those in family-owned businesses and 56 per cent in private limited companies had been affected, the figure was 70 per cent of those in PLCs and the public sector.

The authors, Professors Les Worrall and Gary L Cooper, note that managers in family-owned businesses and private limited companies have "a lower degree of exposure to redundancies, site closures, cost reduction programmes and delayering" than those in PLCs and the public sector. They also found the larger the firm the greater the exposure.

Most of those affected agreed that accountability had increased. But the authors say evidence of positive benefits with regard to faster decision- making, flexibility, productivity, profitability and having the right mix of skills and experience "is far from conclusive". They wonder "whether the gain has been worth the pain".

Looking at the impact on employees, they found that half the managers affected by restructuring believed loyalty had decreased (only 10 per cent thought it had increased). Even more had seen a drop in motivation, and two-thirds said morale and perceived job security had fallen.

The negative effects were most severe in PLCs and public sector organisations. The negative effects were also "inordinately greater" in firms employing more than 500 people. The authors suggest this indicates problems of planning, managing and communicating change.

One of the most startling findings in the survey is the difference in the way in which board members see things compared with senior, middle and junior managers. Chairmen and CE/MDs tend to believe that loyalty, morale and motivation have improved as a result of restructuring. Chairmen even say job security has improved. As one goes down the management hierarchy, opinions become increasingly negative. Senior managers do not agree that loyalty, morale, motivation or job security have improved.

The authors say: "This finding raises major issues about the degree to which the most senior level of management is informed about the impact of the change they are bringing about. What is most interesting is the apparent discontinuity which occurs between directors and senior managers: life in the boardroom and life in the rest of the organisation are two radically different things. The identification of such a clear 'us and them' hiatus at the boardroom door is an issue of some concern in a modern industrial society."

One of the most damning findings is that most board members think their organisation learns from its mistakes: most managers at all levels disagree. There is clearly a hiatus between director level and the senior management level on many criteria. Whatever the cause - poor communications strategies, difficulty in managing change, an inability to share their vision or values, poor listening skills - most directors appear in urgent need of appropriate development.

'The Quality of Working Life' is available from the Institute of Management, 2 Savoy Court, Strand, London WC2R OBZ, pounds 25 to IM members, pounds 50 to non- members.