Restructuring puts the brakes on UK recruitment

Nov 13 2003 by Brian Amble Print This Article

One in three employers expect to restructure their businesses over the next 12 months, research from the Recruitment Confidence Index (RCI) has found.

As a consequence, many of those companies also expect the size of their workforce to reduce, and recruitment to slow down, or stop entirely.

The Recruitment Confidence Index (RCI) measures employers' recruitment expectations and business confidence. It is one of a basket of measures employers use to test the health of the economy and currently attracts responses from 1,200 organisations in the public and private sectors.

The RCI's autumn figures show that among companies who have no plans to restructure, but who expect a change in the size of their workforce, one in five believe it will go down. This figure doubles to more than one in four among employers who are planning to restructure and who expect a change in the size of their workforce.

"Restructuring activity reflects changes in the market conditions in which many organisations operate,” said Cranfield’s Professor Shaun Tyson. “ This is leading them to look for new ways of delivering products and services more competitively.

"The RCI shows that employment levels are not likely to rise following restructuring, reflecting the cost pressures which often drive reorganisation. Companies often go through a period of consolidation after restructuring and this has a negative effect on recruitment."

But Professor Tyson added that restructuring was not a sign of business failure. "We sometimes assume that businesses should always survive in the same form. Our findings show that UK firms are becoming more flexible and responsive to their markets."

Employers with restructuring plans are also expecting turnover and recruitment difficulties to rise; eight out of ten predict recruitment problems, compared with seven out of ten employers with no restructuring intentions.

Stephanie Richards, recruitment research manager at the Daily Telegraph said: "Organisational overhaul is not new. But in previously buoyant times, restructuring occurred when business was good. Now firms are restructuring in response to their falling share prices and simply to survive and remain competitive in an increasingly tough business climate."

Other findings in this quarter's survey show that although there is uncertainty among UK employers, business conditions remain remarkably stable. Almost four out of ten employers say there will be no change in their recruitment activity over the next six months while even more - some 44 per cent - expect their workforce numbers to remain level.