'Restructuring' puts the brakes on UK recruitment

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

Many of those companies consequently expect to reduce the size of their workforce, slowing or in some cases stopping recruitment 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, 21% believe it will go down. This figure doubles to 42% among employers who are planning to restructure and who expect a change in the size of their workforce.

Commenting on the findings Professor Shaun Tyson from Cranfield School of Management, which produces the research data, said: "Restructuring activity reflects changes in the market conditions in which many organisations operate. 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."

Professor Tyson said restructuring was not a sign of business failure.

He added: "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 with 81% predicting recruitment problems, compared with 72% of 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. Thirty nine per cent of employers say there will be no change in their recruitment activity over the next six months and 44% expect their workforce numbers to remain level.

(SP)