Hi Nora
What I understand from your query is, management (employer) has advised you to send a letter (as you are handling HR Issues) to the concerned employee informing of change in reporting from CEO to HOD, this also mentions that no reduction in salary or job profile of the concerned employees
In my opinion, this is a simple instance of informing the employee of change in reporting. There is no such big issue or hassle as long as work is not affected, reporting structure is clear.
In every employment there is certain level of flexibility has to be there to adjust such changes as per business needs. So dont worry about it, you may draft a letter informing of new development. unless there is more to the story which you would like to share and seek opinions.
Do you fear any ego clash ? or hurting ego of the concerned employee due to change in reporting from CEO to HOD ??