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27

AUG

2015

Restructuring rise drives contracting demand

Chris Palmer

Changes at Fonterra are in the spotlight but many other Kiwi corporates are quietly restructuring.

Restructuring activity has picked up considerably in the past three to six months, this trend can be put down to forecasts of an adjustment in economic conditions.

While Fonterra is in the headlines, we know of several other major New Zealand companies undergoing a significant re-shaping of their businesses, with many others making similar moves on a smaller scale.

Economies go through cycles all the time and although the economic conditions remain strong, there are forecasts of an adjustment looming in the form of commodity prices, forecasts of lower economic growth and slightly increased unemployment.

For sectors like tourism the performance is strong as the economic conditions are very positive, however for some exporters exposed to commodity markets and flatter overseas economies, they are experiencing or forecasting a downturn. So the changes happening are very sector specific.

This rise in reshaping organisations has led to increased demand for executive contracting, which is focused on specific skill-sets including change management.

There are generally two trends in executive contracting. When the economy is buoyant we see contractors engaged in ‘business as usual’ positions to cover vacancies created by increased job movements as people are being head-hunted from one job to the next.

The second trend, which we are arguably seeing more of right now, results in more contract opportunities in key projects. Businesses are needing to address specific areas of a business, such as a cost reduction program or a greatly improved management reporting suite, or change management specialists to help manage the business through a transition.

There are several benefits to this approach including the experience and fresh perspective these outsiders bring, as well as the flexibility to grow or reduce resourcing as required.

Bringing in external people to manage the change process can make it easier for those left behind after the restructure is completed. It can be difficult for someone at the company to run that process, because they will still be there the next week and will have to face their colleagues, who may hold some resentment towards them. If you have an external person spreading that message, you can save peoples’ goodwill and relationships with colleagues.

Skill-sets such as financial, operations, marketing and technology are in demand, and there are also many skilled human resources professionals available who have experience in managing transition programmes.

Many businesses seem to be taking a proactive approach by re-shaping their organisation ahead of time, rather than waiting for a crisis to hit.

The residual impact of a major economic slump only a few years ago has most likely created a desire to front foot the changes needed to retain performance.

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