Business Strategy and PlanningHuman Resources and Workforce

Who are Affected by Company Reorganizations?

Restructuring within a company is essential to be done from time to time in order to make the company have better performance and improvements. The reasons why companies reorganize are due to several situations that vary from the current state of the company. It could be that they are in a critical situation and want to improve, merge with another company or rebrand themselves to target more clients and customers.

What is a company reorganization?

It is a process where companies are changing and improving their operations, setup and strategy. It may involve relocation, changing management, laying off employees, reallocating funds, cutting budgets, and dismantling departments and business units. Usually, this is to update the company’s strategy, reposition itself in the market, handle financial difficulties or improve profits.

What are the effects on their employees?

Reorganizations can have a negative impact on employees since they do not know what could happen to them. Employees might be walking on eggshells after they are informed and alert about the changes that are going to happen in the future. They will be worried about getting laid off and taking on new responsibilities, which leads to a decrease in employee productivity and an increase in employee absenteeism.

Who is affected?

Reorganization will affect just anyone in the company. The company usually takes a really good measure so that it does not affect their business production or profitability. However, they could also cut off talented employees, which is typically due to cost-cutting. Sometimes, it may be because the employees could not provide much growth to the company and provide innovative solutions to help the company thrive. It might sound a bit selfish, but that is usually what happens in the corporate or business world. To add to that, in some cases, employees who are earning higher salaries are also at risk.

The statistics shown are biased toward professionals who are active on LinkedIn — Source from 365 Data Science

Just in December of 2022, small businesses were dismissing 15% of their workers. While it may not be one of the most crucial factors in choosing which department or job position will be diminished, there are statistics that show it. According to 365 Data Science, the level of education is not the key criteria for selecting which employees are to be laid off. The common job areas based on the survey by 365 Data Science are as follows:

  • Computer Science/IT: 22%
  • Business Administration: 13%
  • Communications: 6%
  • Marketing: 5%
  • Psychology: 4%
  • Management: 4%
  • Engineering: 3%
  • Human Resource Management: 3%
  • Other: 25%

As for another statistic that is collected from five big tech companies, which are Twitter (X), Amazon, Meta, Microsoft, and Google, they are those who did not work in tech jobs:

  • Human Resource and Talent Sourcing (27.8%)
  • Software engineers (22.1%)
  • Marketing (7.1%)
  • Customer service (4.6%)
  • PR, communications and strategy (4.4%)

In conclusion, company restructuring is a strategic process carried out by businesses for a variety of reasons, including performance improvement, market adaptation, and the resolution of financial concerns. Reorganization can result in positive improvements, but it often has a lot of major effects on employees, which can cause uncertainty and anxiety in the workplace. Reorganizing an organization is a challenging task that affects employees and other departments in a variety of ways. Organizations must carefully plan and convey these changes to employees in order to minimize disruption and help them get through the change.

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