Staff Restructuring in the New Economy

Staff Restructuring in the New Economy

José Antonio Fernández Sánchez (University of Alicante, Spain) and Encarnación Manresa Marhuenda (University of Alicante, Spain)
DOI: 10.4018/978-1-61350-207-5.ch010
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In times of recession, survival for most businesses means to do more with fewer resources. It is necessary to encourage policies that will help a company to become more efficient, like staff restructuring. This policy encompasses many decisions, from laying people off to relocating employees to other positions as a consequence of the deployment of a more rational structure, which in turn answers to a change in strategy caused by the turn in the environment. This chapter explains the concept of staff restructuring in detail and offers several methods to carry it out. Afterwards, the potential problems that may arise from implementing this strategy are discussed, and, finally, some clues on how to avoid such problems, or, at least, mitigate their consequences, are presented. It is also made clear that a short-term approach in this regard will lead to a future lack of competitiveness, and therefore, endanger long-term survival.
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Staff restructuring strategies are not a new fashion. Already in 1994, Cameron affirmed that it was an insufficiently studied topic (Cameron, 1994) and since then, research in this field has dramatically increased.

This issue is so relevant that the European Union held a conference especially dedicated to staff restructuring processes in Dublin in June 2003 1 because, although these processes have been taking place, hundreds of experiences have been identified and many articles have been published for several decades, we still suffer from a knowledge deficit in this area and, what is worse, from a lack of action devices that have been tested, approved and shared by the different economic actors.

Firms that decide to implement a staff restructuring strategy do so aiming to considerably improve their performance in terms of net profit, total income, return on equity, productivity, and other items. In fact, there is supporting evidence of this phenomenon in Alicante province (Spain). Economic results improved according to subjective measures (managers’ opinions) and objective measures (organisations’ economic data) (Fernández Sánchez, 2011). However, most authors have come to the conclusion that staff restructuring processes fail to provide the desired results and that the situation tends to worsen instead of improving (Whetten et al., 1995).

All the above has encouraged us to delve into this topic with the aim of shedding some light on it, by means defining the term clearly, identifying those practices which provide the best outcome, describing available methods to try to alleviate the problems which can derive from these processes and, finally, looking for possible alternatives to restructuring.

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