Executive Summary
In the last decades, businesses and organizations have been faced with the need for restructuring to make them more competitive globally and better positioned to meet their present needs. This development has led to the implementation of changes that have left the workplace a battleground between employer and employees as they have had to deal with genuine concerns on their job security, motivation, morale, and loyalty to the business, greater work burden.
Moreover, it has resulted in decreased motivation in the workforce. Various approaches have been used by organizations to implement such changes such as downsizing, in a more human and apolitical way such as voluntary early retirement with incentives, redeployment of staff, skill retraining of staff and failure to replace retirees with a limited degree of success. There is a need therefore, to study an organization’s situation and the impacts of restructuring on the motivation of its workforce which is the purpose of this study.
The organization is facing some problems such as a real and justified concern on job insecurity, psychological health problems, burnout and job and organizational withdrawal. The objectives of the study are; establishing the reasons for restructuring and how it was implemented, Find out the impacts of restructuring on the staff; find out measures taken to deal with impacts on the staff and propose a solution to deal with the above impacts. The methodology used was a case study where questionnaires and interviews were conducted and a review of documented information. Data collected was analyzed using descriptions, graphs and tables.
The study found out that there are various reasons for restructuring such as the need to survive in the market, increase productivity and profitability, in response to information technology and make it better positioned to meet present needs. It proposes several recommendations such as, addressing the political conflicts that cutbacks attract should be addressed beforehand by educating the public on the need to cut back, the need to recreate a sense of shared purpose in the new circumstance to the remaining employees to boost their morale and invite the customers and suppliers to assess what your organization does more and what it does less and their opinion on what should be done.
Introduction
Restructuring of organizations can have negative effects in the motivation in the workplace. Motivation is the reasons why people want to work. However, there is a gap that exists between an individual’s desired state and the actual state. Motivation therefore is a means to reduce and manipulate this gap, the motivator influences others in a special way towards specifically stated objectives oriented or in-line with corporate policy of the organization (Mathys, & Burack, 1993).
Restructuring on the hand is the reorganization of a business structures brought about by changes such as in, ownership, operational, legal etc in order to make it more profitable or better positioned to meet its present needs. These have resulted to major changes to all industrialized economies. The workplace has as a result experienced a lot of turmoil as employers and employees try to adapt to the effects brought about by restructuring and downsizing to the detriment of workplace motivation(Burke & nelson, 1997).
These impacts include, job insecurities, low job morale, reduced loyalty to the businesses and industrial conflicts. In a study carried in an Australian public transport organization undergoing change and downsizing where job insecurity was a real and justified concern, psychological health problems, burnt out and job and organizational withdrawal were reported. Decreased morale on the remaining employees is also reported.
A survey carried out on employees of 1,034 Canadadian organization which down sized and restructure, showed that 61% of organizations reported decreased morale, 50% reported decreased company loyalty and 37% reported decreased satisfaction (Guterman, 1992)). Various approaches have been used to deal with the impact of restructuring in regard to effects on the workforce such as social dialogue between employers, workers and government representatives, financial support for early retirement programmes, voluntary severance packages and partial assistance for short-time working.
Statement of the problem
In spite of all these efforts to deal with the impacts of restructuring and change in organizations on workplace motivation, the employees of organizations discussed in this study were faced with a number of issues such as job insecurity, reduced morale, decreased loyalty to the organization and genuine lack commitment to work and increased work burden due to restructuring. The study therefore focused on analyzing the issues, identifying the root causes and how various organizations dealt with them and proposing a solution based on these issues.
Research questions
- What was the need for restructuring and how was it implemented in the organization?
- What were the impacts of these changes on employees?
- How did the organization deal with the above impacts?
Research objectives
The study aimed at:
- Establishing the reasons for restructuring and how it was implemented.
- Find out the impacts of restructuring on the staff.
- Find out measures taken to deal with impacts on the staff.
- Propose a solution to deal the above impacts.
Research premises
The study assumes that:
- There was need to restructure organizations.
- There are impacts on employee’s motivation as a result of restructuring.
- There are measures taken by managers to deal with impacts of restructuring on employee’s motivation.
A solution to these problems is needed.
Justification of the study
Human resources era the most important factor of production and a motivated workforce is more productive and creative. This important factor has been threatened by restructuring of organizations which is expected to continue and therefore there is need to study on these effects in order to find solutions to them.
This study also aims at proposing a solution for tackling issues arising from the impacts of restructuring on motivation in the workplace.
Literature Review
Motivation is the reasons why people want to work. There is a gap that exists between an individual’s desired state and the actual state. Motivation therefore, is a means to reduce and manipulate this gap, the motivator influences others in a special way towards specifically stated objectives oriented or in-line with corporate policy of the organization (Gignac & Appeibaum, 1997).)Research shows that well motivated employees are more productive and creative and the opposite is true.
A study by the Minneapolis Gas Company involving 31,000 men and 13,000 women to determine what potential employees desire most from a job was carried out in a 20 year period, between 1945-1965. Security rated highest, advancement, type of work and company rated next in that order (Burke & Nelson, 1997).
Restructuring and change in the workplace
This refers to reorganizing a company’s structures such as, ownership, operational, legal etc in order to make it more profitable or better positioned to meet its present needs. A company can also restructure as a result of change in ownership or in answer to crisis in the business such as repositioning, buyout or bankruptcy (Wiele, & Brown, 1998). In the last four decades, restructuring and downsizing has been brought about by the effects of the economic recession, global competition, impact of information technology and attempts to survive and increase productivity by organizations (Appeibaum, Delage, Labib & Gault, 1997).
These have resulted to major changes to all industrialized economies. The workplace has as a result experienced a lot of turmoil as employers and employees try to adapt to the changes brought about by restructuring and downsizing.
Impacts of restructuring or change on motivation in the workplace
Research that has demonstrated that there has been significant human and social costs on people affected by organizational change and restructuring; this is mainly on motivation, morale, job security and loyalty to the businesses.
The weightiest impact of restructuring and downsizing in the workplace is job losses. Studies have shown that anticipation of job loss is a demotivator. Job insecurity has been shown to be associated with increased medical consultations for psychological distress and increased complaints for back pain. Further job insecurity of the parents can also affect the work beliefs and attitudes of children (Orr, Millen & McCarhty, 1999).
In a study carried in an Australian public transport organization undergoing change and downsizing where job insecurity was a real and justified concern, psychological health problems, burnt-out and job and organizational withdrawal were reported(citation).
However, Orr, Millen & McCarhty, (1999) says that social support from colleagues, management and union support had no influence in this and that those certain of losing had less psychological problems than those unsure of job security. In a similar study in 1998 on the perceptions of managers affected by restructuring, the year before on factors of loyalty to the organization; morale; motivation; and job security, showed a negative effect on employee on these factors (Lewin.J.E, 2000). These factors are described by the tables below:
Table 1: Effects of restructuring on the sense of motivation in %.
Table 2: Effects of restructuring on the sense of job security in %.
Decreased morale on the remaining employees is also reported. A survey carried out on employees of 1,034 Canadian organization which down sized and restructured (Appeibaum, Henson & Knee,1999), showed that 61% of organizations reported decreased morale, 50% reported decreased company loyalty and 37% reported decreased satisfaction.
In another study on the restructuring of universities in Australia driven by the government budget of 1996, impacts of the same on the human resources which went unrecognized (Orr, Millen & McCarhty, 1999). The motivator of such restructuring was the need to create a unifying national system of universities, control of universities finances by the government and political factors. One of these impacts was a severely eroded working condition of academics and continued push for greater effort from the staff by senior management, decreasing chances to renew and revitalize the academic staff and loss of genuine commitment to quality academic outcomes.
In the same study Orr, Millen & McCarhty, (1999) looked at how staff reacted to change of lighthouse logo of Macquarie University by the University management by hiring of consultancy services without the staff’s knowledge. The university had a culture of caring for the community and the change was to make it more marketable and more competitive nationally. The staff was angry and felt left out. The study reported that the workers thought the university was being disloyal and the change of logo was a sign things had changed between them and the institution.
Impact of restructuring on civil aviation
In a paper presented by International Labour Organization (ILO) in February, 2003 meeting in Geneva (Lee & Corbett, (2006), privatization was reported to be a reason for structuring civil aviation in many countries in order to sustain economic development, increase efficiency in delivery of public interest services and increase revenues by cutting costs of labour. Partial privatization has been common with many governments choosing to retain regulatory responsibilities for safety and economic aspects.
The civil aviation industry has experienced a lot of restructuring in recent times in an attempt to provide high quality services, make them more profitable, cut costs and higher productivity. More than three quarters of respondents reported in this paper noted the negative impacts of restructuring and other dimensions of employment such as levels of job security, job satisfaction were seen to have deteriorated. Since 2001, the airlines especially in North America and Europe have embarked on restructuring.
They experienced schedule and employment cuts. To counter the protests that followed the resulted to dialogue with employee representatives. Trade unions moved to reduce and mitigate the effects of impending job losses. Wide consultations with workers and trade unions in accordance with legislations followed in Europe for social dialogue. This resulted into a lower number of lay-offs than initially indicated and worsened the long standing tensions between management and workforce. This has often led to strikes and other forms of industrial conflicts according to United States Bureau of labour statistics (2005).
Methodology
The methodology used was case study since there is only one organization and could combine both qualitative and quantitative methods of data collection.
The study used the organization under study as its unit of analysis, workers union and also individual workers and managers.
Nature and sources of data
The nature of data collected was one which was intended to give an overall and critical assessment of the restructuring and its effects on the motivation in the workplace in the organization. Primary data was collected through administration of questionnaires and interviews. Demographic data such as the workers income level, position in the organization, occupation, how they feel about the organization, how they were affected by the changes, etc were collected using structured questionnaire. Secondary data was obtained from literature review relevant on the organization under study organization and restructuring in organizations.
Sampling methods used were: cluster sampling; according to the management levels in the organization i.e. senior management, middle level management, junior management, directors and chief executive/chairman/ managing director. Then a list of people in these levels was used as the sampling frame and then subjected to simple random sampling. This ensured representation; simple random sampling was used in each cluster by assigning each name a unique number the selecting sample units by use of random number from the tables. This ensured each individual had an equal chance of being selected; purposive sampling was done on the basis of background information by subjectively selecting the organization’s managing director and the chairman of the workers union.
Methods of date collection
Administration of structured questionnaire in the view of collecting demographic data such as the workers income level, position in the organization, occupation, how they feel about the organization, how they were affected by the changes and what they feel should be done to mitigate negative impacts of restructuring.
Oral interviews; which involved collection of data through face to face interaction with the organizations’ managing director and the workers union chairman.
Review of recorded information
This was a secondary method of data collection by review of relevant literature on restructuring and changes in organizations; what brought them about; how they were implemented; their impacts; and mitigation of these impacts. The information was obtained from documented materials such as journals, books, company records, thesis, and minutes of meeting among others. The information targeted the general conditions of restructuring in businesses, their implementation, impacts and mitigation measure by businesses and others and their level of success.
Constraints to data collection
- Time limitation
- Lack of enough finances
Data analysis, findings and discussions
Qualitative description methods were used to analyze and present the information collected from the respondents. Areas of analysis were respondent’s expressions, events, questionnaires. It organized grouping answers to the various questions as answered by the respondents. Data presentation was done through tables.
Findings of the study
The study found out that the reasons for the organization wanting to restructure are: privatization was reported to be a reason for restructuring in order to sustain economic development, increase efficiency in delivery of public interest services and increase revenues by cutting costs of labor, global competition due to liberalization of the economies, impact of information technology and attempts to survive and increase productivity by organization.
The impacts of the changes on the workforce have been mainly negative such as, Job losses and the effects of this as a concern has been deteriorating psychological health problems, burnt-out and job and organizational withdrawal was reported by those affected, Decreased morale on the remaining employees was also reported, industrial conflicts which took several forms such as go-slow, strikes and law suits filed by employees and trade unions. Feelings of disloyalty and mistrust between both stakeholders also resulted.
Approaches used in dealing with impacts of restructuring on motivation in the workplace
The company dealt with these impacts by use of social justice which took the form of negotiations, consultations and exchange of information between the employers, workers and government representatives on issues of common interest dealing with economic and social policy. Other approaches used include; financial support for early retirement programmes with incentives such as lumpsum payout, voluntary severance packages and partial assistance for short-time working, recreating a sense of shared purpose in these new circumstance to the remaining employees, retraining of lay off staff in preparation to their job search and social support of such employees.
Conclusions and Recommendations
This study illustrates the importance of analyzing issues and actions of the organization in a broader perspective before implementing any restructuring or changes. This is in order to look at the structure(s) that dominate the thinking and thus dominate decision making because the idea of restructuring is not based on any structure being better than the other. The organization should look into the problems and strategies underlying each of the frames, this way they gain a richer perspective on the alternatives, their nature, their dynamic, and their potential impact in all areas of the organization. In many of these organizations it is evident, there is no conducive environment for workers to be creative, have work satisfaction and a sense of positive contribution.
Recommendations
Social dialogue should include provision of information on the organizations situation to workers where government should be a key participant in social dialogue. This should be in good faith and minimize the negative social impacts.
Workers should equip themselves to make constructive contributions to policy decisions and discussions on how their organizations should be structured, operated and valued and the management should give them a chance to get involved in these changes.
Restructuring should not be a reaction to some external factors but a proactive action prepared for with prior analysis of strategies, knowledge of the mission and competencies available and those needed and clearly defined goals,
Organizations should adequately prepare for restructuring with adequate planning and all the while engaging people at all levels of management.
If lay-offs are to be implemented they should avoid large-scale layoffs and implemented at all levels of management,
Addressing the political conflicts that cut-backs attract should be addressed beforehand by educating the public on the need to cut back,
Customers and suppliers should be invited to assess what your organization does more and what it does less and their opinion on what should be done,
Restructuring should be gradually be implemented, with increased communication and participation,
There should be transitional programs both for workers laid off and for those retained in order to avoid any confusion brought about by the changes.
References
Mathys, N.J & Burack, E.H, (1993). Strategic Down sizing: Human Resources Planning Approaches. Human Resources Planning Journal. Vol.16.
Bediako S (2002). Impact of Down sizing on Employee Community in Health-care Services Organisation. Leadership in Health Services. 2002 Vol.15:1-6.
Lewin.Jeffrey E.Johnston (2000). The Impact of Downsizing and Restructuring on Organizational Competitiveness. Wesley J Publication: Competitiveness Review.
Tang, T.L, Fuller, R.M. (1995). Corporate Downsizing: What Managers Can Do To Lessen the Negative Effects of Layoffs. Advanced Management Journal. Vol. 60.
Lee J & Corbett J.M (2006). The Impact of Downsizing on Employees’ Affective Commitment. Journal of Psychology. Web.
United States Bureau of labour statistics (2005). Monthly Labour Review. Vol.128; 12.
Appeibaum S.H, Henson D & Knee, K (1999). Downsizing Failures: An examination of Convergence/Reorientation and Antecedents-Processes-Outcomes. Management Decisions. vol.37;6
Orr, S, Millen R. A &McCarhty, D (1999). Beyond Downsizing: Recreating in Australia. Management Decision. Vol. 37;8.
Burke R.J & nelson D.L (1997). Downsizing and Restructuring: Lessons from Firing Line for Revitalizing Organizations. Leadership & Organization Development Journal. Vol. 18;7.
Burke R.J & Greenglass E.R (2001). Hospital Restructuring and Psychological Burnout in Nursing Staff. Equal Opportunities International. Vol.20:1/2
Appeibaum S.H, Delage C, Labib N &Gault G (1997). The Survivor Syndrome: Aftermath of Downsizing. Career Development International. Vol.2;6.
Wiele. T Van Der & Brown A.(1998). The Effect of Downsizing on Service Quality in Some Large Organisations. Management Service Quality. Vol.8;3.
Guterman M.S (1992).The Downside of Downsizing: Retaining the Productivity Edge in an Age of Restructuring. International Journal of Career Management.vol.4;3.
Weller L.D. (1995): School Restructuring and Downsizing: Using TQM to Promote Cost Effectiveness. The TQM Magazine. Vol.7; 6.
Gignac A. & Appeibaum S.H. (1997). The Impact of Stress on Customer Service Representatives: A Comparative Study. Journal of Workplace Learning. Vol.9;1.