James L. Allen Professor of Strategy & Organizations; Professor of Management & Organizations
How does the language of business describe the ways inherent organizational problems are addressed? Is the decrease in a firm’s workforce size from “restructuring” really an opportunity for those remaining? Or does this language of increased opportunity just sugarcoat the idea of people losing their jobs?
Paul Hirsch, a professor in the Management and Organizations Department of the Kellogg School of Management, and Michaela De Soucey, a doctoral student in Northwestern’s Department of Sociology, examined these questions, resulting in a chapter for the 2006 Annual Review of Sociology. They were particularly interested in the rhetoric and language that corporations use to frame their reorganization and how the consequences of these changes are described. Their focus is on how the concept of “organizational restructuring” has been used in recent history to describe business practices and outcomes that are popularly viewed as positive and necessary for economic growth, even if they have negative consequences for workers and society. An examination of the history, current usage, and jargon associated with organizational restructuring shows how the term has been communicated, interpreted, and “sold” in the public arena.
Their research found five themes in studying the effects of organizational restructuring: changes in work types, hours, benefits, and perceptions; and increased income inequality. Moreover, the definitions of the terms “organization” and “career” have changed to allow for more virtual organizational forms and hierarchies, as well as different types of employment (more temporary and contract, rather than full-time with benefits). Organizational restructuring, then, changes the use of language as well as ideas about “work” in addition to business and corporate structures.
The concept of “restructuring” is a somewhat recent addition to business vocabularies. It was introduced into corporate language in the 1970s, and it was negatively associated with economic distress. Around this time corporate America began to consider large, traditional organizations to be near extinction. In the 1980s the term took on a more positive and constructive connotation, in terms of providing businesses with opportunities to make structural changes to increase their efficiency and profits.
When it is used in the academic world, the language of restructuring typically refers to tougher labor policies and employment practices. In business, however, issues of job security and performance are linguistically dominated by the “inevitability” of competitive market forces and globalization. In the current business literature, organizational restructuring is frequently associated with buyouts, takeovers, and management changes. It is characterized as effectively reducing costs, improving product and service quality, and responding quickly to new opportunities in the marketplace. Beliefs about fierce competition, the “new economy,” demanding customers, economic pressures, and financial crises turn into arguments that resources within and across organizations need to be used more productively and effectively. Hirsch and De Soucey’s research shows that the language of organizational restructuring draws, but remains distinct, from actual structural changes in corporate workplaces. Business and academic literatures in the recent past have used different ways to interpret (and re-interpret) the idea of restructuring as a tool for better understanding the business world.
Organizations indeed strive to be flexible and adaptable in order to survive and compete in the marketplace. They always have. Recent developments in information technology and changing international trade laws and agreements, especially, have changed the contemporary American business landscape. The language of restructuring (e.g., “lean and mean” companies, “strategic alliances in the global marketplace”), as well as the rise and acceptance of related jargon (e.g., “rightsizing” and “warehousing”), has made diminished job security and employment prospects into more commonly understood and socially acceptable consequences for workers once a company is “restructured.” This shift signals unpopular social changes on the ground level, accompanied by the concepts of “externalities” and “downsizing.” An important trade-off between the corporate structure and the workers is unmistakable.
Given the social changes coupled with global political-economic practices that affect large populations of workers, this paper considers the term “restructuring” somewhat tame in terms of what it implies for work. Changed working conditions follow from the reorganization of the corporate firm. Executives are highly rewarded through salaries and benefits or generous exit packages, while less-skilled employees and the more vulnerable workers receive reduced salaries, benefits, and job security. In this regard, Hirsch and De Soucey contend that the social and research outcomes of “organizational restructuring” frequently deemed negative by social scientists conflict with the discourse of those who frame it as positive and beneficial for the economy and society at large.
In untangling the discrepancies between language and action, Hirsch and De Soucey also found that, while restructuring terminology is a recent addition to the language of business, the transformations it describes have existed since the inception of capitalist industrialism. In this regard, they recognize both the conditions that precede organizational changes as well as the social effects that result from restructuring. Contrary to beliefs about the “good old days,” they suggest that the post-World War II period should be considered the anomaly, not the norm, in the history of American organizations and capitalism. Throughout history, processes now called “restructuring” have reflected shifting concentrations of wealth and power. The concept of efficiency, for example, is not specific to the current time period or business environment.
Organizational restructuring, as language and practice, illuminates the realities of corporate power. Rhetorically, it has replaced many alternative terms in describing corporations’ defensive moves against external and contextual pressures. Hirsch and De Soucey’s study has important implications for the current American export of managerial ideology to international contexts. Examining how the rhetoric of restructuring affects international business practices will be an important next step for understanding new trends in management, labor, and strategic planning in a globalizing world.
Hirsch, Paul, and Michaela De Soucey (2006). “Organizational Restructuring: Rhetorical and Structural Implications.” Annual Review of Sociology, 32: 171-189
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