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Reorganisation often sees simultaneous “hiring and firing” yet organisations are failing to audit existing skills before making redundancies, according to new research.

The CIPD survey of 800 executives found that, while over 85% of reorganisations involve a reduction in the workforce and two-thirds of reorganisations lead to the recruitment of new employees, reorganisations fail to deliver real improvement in performance in 40% of cases.

The report, ‘Reorganising for success: CEO’s and HR Managers perceptions’, says there is much scope to improve both project and people management in the reorganisation process.

Key findings include:

• Organisations that deliver complementary changes in organisational structures and processes and employee behaviour report greater success – yet significant change for individuals in terms of responsibilities and job profile are rarely aligned with career and reward structures and change is often piecemeal.

• Only 40% of reorganisations are completed on time and 60 % within budget.

• Training or coaching is rarely provided for those managing the process or those affected by it – (27%)

• Employees are rarely given the opportunity to participate in decisions about the reorganisation (41%) and are even less likely to be involved in decisions about how the new organisation will be implemented (36%)

• Senior management attitude and experience is critical – the rationale for and management of reorganisation is mainly the result of internal thinking and experiences.

• CEOs report the importance of benchmarking with other organisations.

The report cites high profile stories of success, such as the reorganisation of the chemical company DuPont, in February 2002, which was followed by a 12% increase in stock price, taking the company’s market value from $42 billion to $48 billion.

By way of contrast, in 1999, the new Chief Executive of Proctor and Gamble, Durk Jager, launched ‘Organisation 2005’. By the summer of 2000 the reorganisation was
considered a failure and Durk Jager had lost his job.

Richard Whittington, Professor of Strategic Management at the Said Business School, which carried out the survey said: “In this fast changing world embedding the ability to reorganise quickly and effectively is imperative for organisations looking to build long term advantage.”

View the full report here.