Final answer:
The statement is true; Company XYZ's reduction of hierarchical levels and laying off 15 percent of its workforce to meet its profitability goals is an example of restructuring. Restructuring often involves downsizing for greater efficiency, and can be influenced by labor laws and strategic decisions to avoid wage cuts.
Step-by-step explanation:
When Company XYZ reduced levels in its hierarchy and laid off 15 percent of its workers to meet its annual profitability goal, this indeed exemplifies restructuring. Though the term can carry a variety of implications within the corporate world, at its core, restructuring refers to reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable or better organized for its present needs. This process often involves reducing the workforce, which is a form of downsizing to cut costs and increase efficiency.
Company restructuring can be driven by the need to improve operational efficiency, to reduce expenses, or to improve the company's competitiveness. The decision to lay off workers may not be taken lightly, as it affects not only the employees who lose their jobs but also has a psychological impact on the remaining workforce. Industrial-organizational psychologists may be engaged to manage the transition, deal with the morale of the employees who stay, and help support those who are let go with services like separation packages. The example also touches on how labor laws can shape corporate behavior. In certain countries such as France, stringent requirements kick in when a company reaches a specified size, leading companies to be cautious about expanding or hiring. Similarly, companies may choose to restructure rather than impose across-the-board wage cuts, which can lead to the loss of the best employees due to adverse selection—another strategic consideration during tough economic times. Overall, restructuring is a strategic tool used by companies facing economic challenges or those aiming for better fiscal health. In this case, Company XYZ's actions to achieve profitability targets through hierarchy changes and reductions in its workforce align with the general paradigm of corporate restructuring, making the statement true.