British engine making company Rolls-Royce has revamped its senior management to simplify decision-making and drive long-term growth.
On Wednesday, Dec. 16, Rolls-Royce announced the new senior management structure confirming that the company has removed some senior management layers. The restructure removes the heads of five units: power systems, marine, nuclear, civil and defence aero-engines.
Presidents of all the five departments will now report directly to Warren East, the CEO of Rolls-Royce. East became the CEO in July this year after former CEO of Rolls-Royce, John Rishton, retired from the company.
According to Rolls-Royce, the new management structure will simplify executive accountabilities, increase leadership focus on operational performance and allow the company to build on its world class engineering capabilities.
The latest restructure is one of the steps taken towards the company's plan to generate cost savings of around £150 million to £200 million ($225 million to $300 million) per year. The company hopes that the benefits of the restructuring will be noticeable from 2017. In February 2016, Rolls-Royce will give another update regarding the range of cost saving programs it plans to adopt.
East said that Roll-Royce is a world-class company and with its strong market position the company has excellent prospects on a long-term basis.
Following the latest restructure, Tony Wood the head of aerospace, and Lawrie Haynes, the head of the land and sea division, will leave Rolls-Royce in January 2016. Wood has served the company for about 15 years and Haynes for 6 years.
Rolls-Royce has also announced that Colin Smith, the Group Director of Engineering & Technology, will become the Group President from Jan. 1, 2016. Smith will still remain a member of the Board. Smith will be succeeded by Chris Barkey, who is currently the Engineering Director of CLE.
Rolls-Royce has demoralized investors for the last two years in a row. The pre-tax profit of Rolls-Royce is estimated to reduce 21 percent this year to around £1.28 billion ($1.92 billion). The company has also reduced its pre-tax profit forecasts by £650 million ($976 million) for 2016. Rolls-Royce claims that low pre-tax profit prediction is due to slowdown in servicing older aircraft engines and also due to lower oil prices, which has affected the company's marine engine business.
A company spokesperson suggests that a total of 12 people were affected due to the latest senior management restructuring.
