Corporate restructuring : does damage to institutional trust affect employee engagement?

Abstract

The business environment is continuously changing and organisations are dealing with the after-effects of a global economic slowdown as well. Organisations are under pressure to change the way they do business in order to remain competitive in a more demanding and cost-controlled environment. Many organisations have turned to restructuring as a strategic decision to realign internal structures with changing macro-environmental factors. Through restructuring they implement cost cutting by downsizing or re-engineering processes and closing down unprofitable divisions. The finding from this research is that, within the population studied, restructuring and damage to institutional trust affect the level of employee engagement. This finding was supported by statistical evidence which indicated that there is a high correlation between corporate restructuring, institutional trust and employee engagement and that a change in experience or perception of one of these constructs will affect the others accordingly. The conclusion drawn was that retaining the trust and commitment of employees is a central issue for companies in a highly competitive and changing environment. The article provides clear evidence of the possible negative implications of corporate restructuring and provides practical suggestions for limiting the potential problems.