Simon Kirby, chief operating officer at Rolls-Royce, is stepping down just 19 months after taking the post, becoming the first high-profile casualty of the FTSE engineer’s latest restructuring.
The shake-up of Britain’s flagship engineer could also see the group quit its London headquarters, just minutes from the Houses of Parliament and for 40 years the base for the group’s most senior management.
Mr Kirby was one of the first outside recruits to a new team of executives appointed by chief executive Warren East in 2016 to reorganise the group as it recovered from a string of profit warnings between 2014 and 2015.
Poached in September 2016 from the controversial high-speed rail project HS2 — where shortly after leaving he became embroiled in a controversy over unauthorised redundancy payments — Mr Kirby will leave Rolls-Royce in June with an undisclosed pay-off.
Mr Kirby, who was the UK’s highest paid civil servant when chief executive of HS2, denied he was responsible for the redundancy arrangements.
His departure from Rolls-Royce was announced in an internal memo to staff issued on Wednesday afternoon.
Mr East said that Mr Kirby’s role had been rendered redundant by the decision in January to move from five to three business units, giving each greater decision-making power and accountability.
“With a much leaner centre, it has become clear that we no longer need the chief operating officer role for which Simon Kirby was recruited,” Mr East said. “It is a sign of his professionalism and integrity that he has played a key role in an initiative that has resulted in his own role being eliminated.”
Mr Kirby said he was “pleased to have made a contribution to the transformation of Rolls-Royce . . . It is clear that in this model you do not need a chief operating officer and the time is therefore right for me to leave Rolls-Royce to pursue a different career opportunity.”
A person with knowledge of the situation said that Mr Kirby was close to confirming a new role in another company.
Rolls-Royce has so far given few details about the impact of its planned restructuring.
However, the cost-cutting drive will mean further management and administrative job cuts. It could also result in Rolls-Royce decamping from its Buckingham Gate headquarters. “We need a smaller, more cost-effective London head office location,” Mr East said in his memo.
The changes mark the second phase of Mr East’s drive to cut the costs and bureaucracy that continue to weigh on decision-making and productivity.
Over the past four years Rolls-Royce has lost roughly 4,000 jobs in a series of cost-cutting programmes, while Mr East himself in November 2015 launched a plan to reduce the group’s 2,000 management posts by 25 per cent. Some insiders complain, however, that many of the posts were cut only to re-emerge in different guises.
In the latest programme, Mr East said he was considering the creation of a “global business services” organisation to consolidate central functions shared across civil aerospace, defence and power systems units.
The Rolls-Royce chief emphasised the urgency of cost-cutting as the group strains to meet its promise of delivering free cash flow of about £1bn by about 2020.
Problems with the Trent 1000 engine powering the Boeing 787 widebody aircraft were “adding to an already challenging cash position in 2018”, he said, and non-essential spending was to be stopped. “Please do everything you can to reduce costs now,” Mr East appealed to employees.
Rolls-Royce is expected to update employees and investors in June about the implications of its new cost-cutting drive. Mr East said in his memo that the opportunities to “reduce overlap, minimise complexity and start to empower the business unit” had become clearer.
Discussions would begin in the next few weeks with unions on “emerging proposals” for HR, finance, IT, general counsel, COO and strategic marketing functions.
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