Chief operating officer David Taylor-Smith and Ian Horseman Sewell, who is head of global events, are to carry the can for the fiasco but chief executive Nick Buckles will remain in his post.
The report by PwC found that monitoring and tracking of the security workforce was inadequate and that management failed to appreciate the scale and exact nature of the project.
G4S fulfilled 83 per cent of contracted shifts at the Games, failing to provide all of the 10,400 contracted guards and forcing the UK Government to step in with military personnel.
G4S said its board had decided that it was in the best interests of the company and its shareholders that Buckles remains as chief executive.
Buckles, who admitted to MPs that the Games staffing episode had been a “humiliating shambles”, was not guilty of any significant shortcomings in his performance, the company said. However, G4S will appoint a chief operating officer to work closely with him on areas such as customer service and project delivery.
It has also promised to carry out more rigorous risk assessment of new contracts and will demand board-level oversight on contracts where annual revenues exceed £50 million.