Rolls-Royce taps McKinsey for organisational restructuring

13 June 2023 Consultancy.uk 2 min. read

Rumours have begun circulating that Rolls-Royce may be heading for a round of job cuts. The news comes after the engineering firm tapped McKinsey & Company for research into areas where it could find efficiency savings.

Rolls-Royce is a British multinational aerospace and defence company. Tracing its heritage back to 1904, today, it designs, manufactures and distributes power systems for aviation and other industries.

The historic company has weathered many storms over the years, but recent years have proven tough. As a result, it has invited consultants from McKinsey to advise on streamlining its operations – according to reports from The Times.

Rolls-Royce taps McKinsey for organisational restructuring

McKinsey’s reputation precedes it. Often, it works with the world’s largest companies in moments of crisis – and has therefore become synonymous with budgetary cuts and layoffs. It did not take long for suggestions that Rolls-Royce would shed jobs to start circulating, then.

According to further reporting from The Times, the company’s headquarters in Derby in the UK are likely to be hit hardest by any cuts. The article also noted that most of the firm’s back-office administration functions – usually the first place firms find ‘efficiency savings’ – are based in the city. However, a spokesperson from Rolls-Royce has since denied these rumours.

“We are working at pace on our transformation across a number of work streams,” the spokesperson stated. “We have made no decisions whatsoever on any potential impact on employees and any suggestion otherwise is pure speculation.”

Rolls-Royce Managing Director Tufan Erginbilgic has been in office since the start of 2023. Taking stock of the situation, he quickly invited McKinsey to help him restructure his business.

In the months since, an anonymous source told The Times that the consultants had indeed developed a turnaround plan – part of which will see the combination of non-manufacturing departments in each of the company’s civil aerospace, defence and power systems divisions. The source also suggested about 10% of about 30,000 jobs in those departments could be at risk of the axe.

Rolls-Royce was plunged into crisis when most air travel stopped for months during the pandemic, and then recovered only slowly. It earns revenue on a per hour basis when planes fly using its engines. However, Erginbilgic has steadfastly refused to blame the pandemic for the firm’s woes – and earlier in the year, told staff in Derby that the company's performance was "unsustainable" and it faced a "last chance" to change.

The Rolls-Royce automotive brand, Rolls-Royce Motor Cars, is part of German car manufacturer BMW Group.