Levitt et al., (2008) carried out a study to investigate the effects of downsizing on the survivors of layoffs in a large insurance organization. Downsizing can result in positive outcomes such as how it affects organizational performance (Cheng-Fei Tsai & Shih, 2013) or negative outcomes such as Ease fears and establish new goals and new responsibilities. Participants completed the Organizational Culture Assessment Instrument (OCAI) and a qualitative questionnaire. The results of this study may influence positive social change by highlighting the need for leaders to assess the organizational culture before, during, and after a downsizing event to ensure that a preferred culture is created or preserved to minimize the negative effects of downsizing. downsizing is an organizational downsizing efforts or reduce the size of the organization by reducing the number of vertical levels. Management Sciences and Quantitative Methods Commons, Home This is because majority of the downsized organisations have not improved significantly in their performances and failure to produce these desired results has been attributed to a number of factors which are said to undermine the effectiveness of downsizing in the organisation. If your company doesn't fall under WARN Act guidelines, you may … Your organization's culture will suffer from the layoffs, too. “People don’t mind change; they mind being changed,” is a statement that organizations need to take to heart. The findings of this study revealed that downsizing can affect organizational culture in both positive and negative ways and that contractors' experiences differed from those of employees. The findings of this study revealed that downsizing can affect organizational culture in both positive and negative ways and that contractors' experiences differed from those of employees. Interestingly enough, almost all surveys and research examining the long term effects of downsizing indicate that companies that downsized ended up disappointed in the results. Employees and labor costs are rarely the true source of the problems facing an organization. 1993). Downsizing is when a company terminates a number of employees at the same time. > | Many negative effects of downsizing and bottom line can be reduced with the proper planning and implementation. Those levels of analysis include a macro level, and organization level and micro or individual level. > When downsizing is a knee-jerk reaction, it has long-term costs. Home The results of this study may influence positive social change by highlighting the need for leaders to assess the organizational culture before, during, and after a downsizing event to ensure that a preferred culture is created or preserved to minimize the negative effects of downsizing. Accessibility Statement Some talk and talk and talk, but are really supportive of the change. Downsizing occurs for a number of reasons, most often to save money. A., Aleem, M., & Hussain, A., 2013). Organizational culture is important to a company's overall success. The Effects of Layoffs on Survivors Downsizing survivors – those who remain after layoffs – are in a fragile state after workforce reductions. FAQ Why Would an Employer Perform a Job Evaluation? About Organizational culture theory was the basis for the conceptual framework of this study. This distress can include illness, defensiveness, low energy, lack of motivation, difficulty concentrating, accidents, and interpersonal conflict. The downsizing period has been a period of great challenge for most organisations. Thus, ownership of the changes is more difficult to create. Layoffs may serve a short term need, but create huge longer term issues. What Are the 10 Best Practices If You Must Do Layoffs As an Employer? Downsizing is a difficult but often necessary maneuver companies must use to save labor costs and preserve business resources. Need a Sample Termination Letter to Fire an Employee? Ways of accomplishing work change to make up for the missing employees. While downsizing may be capable of producing positive outcomes, such as saving money in the short term, it puts firms on a negative path that makes bankruptcy more likely. Downsizing and layoffs introduce many different changes in an organization including a change in how comfortable and secure each individual feels about their job within the organization. There are number of reasons why company downsizes its employees, merging two or more firms together as a single entity, Often individuals blame themselves for being weak or for their inability to handle it. Abstract: Corporate downsizing has become a strategy of choice by a multitude of organizations worldwide. Susan Heathfield is an HR and management consultant with an MS degree. This research paper represents a literature review on the causes and consequences of downsizing. ... and what the effects of downsizing on the organization’s performances are. Companies use downsizing as a strategy for cutting cost (Luan, Tien, & Chi, 2013) and for financial reasons (Massey & Meegan, 2013). Using a purposeful sampling approach and methodological triangulation of sources, 3 newspaper delivery contractors who experienced downsizing described their lived experiences. A considerable body of literature indicates workforce reductions often lead to negative financial and operational outcomes for the downsizing firm as well as negative psychological outcomes for victims, survivors, and executioners. Downsizing is a word that everyone hears once in a while when the market is down when the company doesn’t perform too well, when the company merges with another firm or when the company breaks up. improve the long term performance of an organization, The huge investments in human capital over the years other than to cut high labour cost, and cut job positions in are eroded by the downsizing exercise, even as the firm an organization … The effects which downsizing produces could be researched from three different levels of analysis. In business, downsizing refers to reducing operating costs – making a company leaner – often described as ‘trimming the fat’. Termination as a result of downsizing is unique in the sense that the employee is not responsible for their termination. Some find relief in complaining. While Cascio (1993) states that the downsizing … During layoffs, employees experience is changed. Middle managers reported Others find ways to sabotage the changes and undermine organizational efforts to move forward. Downsizing may be part of a drive to reduce costs or the result of a merger or acquisition, after which the company has too many employees in certain departments. It is important to recognize that employees may not be capable of performing exactly as they have in the past during and following layoffs. how to cope when coworkers lose their jobs, information on how to build a support system, Different amounts of experience and practice in. Downsizing. Downsizing and layoffs introduce many different changes in an organization including a change in how comfortable and secure each individual feels about their job within the organization. In the midst of all of the change, employees may not realize that they are experiencing severe stress. Sweeney, Marcella, "The Effects of Downsizing on Organizational Culture in the Newspaper Industry" (2016). | Different ways of reacting to change: Some employees need to talk it out. Individuals who stated that they had not worked for an orga-nization that experienced downsizing in the Walden Dissertations and Doctoral Studies Some of these factors include In-depth interviews with four middle managers were conducted to determine surviving middle managers’ attitudes pertaining to downsizing. However, negative effects are more likely … The effects of downsizing on workers are well documented (for review, see Kozlowski et al. Downsizing has been a common feature of most firms in Nigeria and emerging economies. But, other changes enhance the feelings of unease and discomfort that are inherent in any change. | You Can Manage Stress and Experience Success in Your Workplace, How to Handle an Employee Sexual Harassment Complaint, How to Respond to Co-Worker and Employee Bereavement, Progressive Discipline in the Workplace and How It Works. The Downsizing Affect on the Organization Abstract Downsizing is a deliberate reduction in the size of the organization There are two main reasons a firm decides to downsize firstly as a part of a proactive strategy that is focusing on improving operations, enhancing strategic objectives, and improving performance across the entire organizational system and as a part of a reactive strategy that … Walden Dissertations and Doctoral Studies Qualitative data were analyzed and coded, revealing 14 themes that described the pre and postdownsizing culture types, the preferred culture type, and the effects of downsizing on organizational culture. Several studies have been conducted on downsizing to find out its effects on organization (Hamed, W., Bowra, Z. You need to understand the normal progression of change; during layoffs and downsizing, you cannot expect an immediate return to total productivity. In addition to individual coaching, participants in one study were very positive about coach-led group workshops in which they had the opportunity to discuss and validate their emotional reactions and set new goals. During a time of change and uncertainty, you can anticipate predictable issues, problems, and opportunities. My Account Terms of Use Downsizing is a conventional management practice in modern economies. The effects of downsizing as a strategic intervention typically stem from organizations seeking to reduce the number of employees through layoffs, attrition, redeployment, early retirement and reorganization or … Downsizing can also harm an organization’s culture in a number of ways. Walden Privacy Policy | The federal WARN Act requires companies with more than 100 employees to provide 60 days' notice of mass layoffs. > this section of the research paper defines the review of literature from the past researchers on the effect of Copyright, Walden Dissertations and Doctoral Studies, Business Administration, Management, and Operations Commons, Management Sciences and Quantitative Methods Commons. 2275, The Effects of Downsizing on Organizational Culture in the Newspaper Industry, Marcella Sweeney, Walden UniversityFollow. But, other changes enhance the feelings of unease and discomfort t hat are inherent in any change. While not … How an organization introduces change has a profound impact as well. Between 2003 and 2011 the number of laid off US employees amounts to the size of Dallas, Texas (i.e., over 1.2 million) – every year (U.S. Bureau of Labor Statistics, 2012). Sometimes organizations label people as resistors when, in reality, people move through the stages of change at different rates. When downsizing, organizations expect to have quantitative results on the performance of an organization but, because of the sensitive nature of the process and its effects on survivors, organizations will try to implement the process Feelings of trust and a strong team dynamic may be shattered by layoffs. No employee totally relaxes; they are waiting for the next round of cost-cutting layoffs—and they're afraid that the next round will include them. Give your remaining employees a break. People form deep attachments to their coworkers, their work groups, their companies, their organizational structures and systems, their personal responsibilities, and their ways of accomplishing work. During any change, members of an organization have: All of these and other issues have an impact on the ability of each employee to manage workplace change, to continue to function productively at work. Downsizing is a reduction in a company's workforce to save money. https://scholarworks.waldenu.edu/dissertations/2275, Business Administration, Management, and Operations Commons, Are you interested in learning how to deal with the effects of change on your remaining employees during layoffs? The purpose of this case study was to explore the effects of downsizing on organizational culture based on the perceptions of contractors who work for an independent distributor in a large metropolitan city in the southern United States. (If you find this difficult to believe, try changing an individual’s work hours by even fifteen minutes, or establish a dress code for a work environment that encourages casual dress.). You must support the people in your organization through the downsizing experience. During and following layoffs, your current employees have different amounts of contact with your former employees, and this can affect their reaction: This element of layoffs is explored further in. For example, although survivors ... the downsizing organization. Layoff Survivor Syndrome: Employees Can Feel Guilt, Loss, and Fear, How to Maintain Company Culture While Remote Working, What to Do If You're Worried About a Layoff. She has covered HR for The Balance Careers since 2000. If your organization needs to downsize, there are ways that leaders can help employees deal with this experience in the best way possible and keep the team working effectively. Firstly, Downsizing as popular and applicable by business downsizing may destroy retained knowledge that has the managers has been challenged as a strategy that can capacity to improve competitive advantage of the firm. The OCAI survey results were scored and depicted graphically using organizational culture profiles. A preferred culture could promote a more effective working environment, benefiting the company, its workers, and by extension the industry and society. | One outcome of downsizing must be to preserve the organization's intellectual capital. As the Human Resources professional, manager, supervisor, leader, change agent or sponsor, you need to understand these issues around change and resistance to change. Cared about coworkers are no longer at work. When anything that is important or close to employees is disturbed, whether by personal choice or through a larger organizational process over which they have no control, a transition period occurs. Different amounts of change occurring in other areas of their non-work lives: Different amounts of impact from the current changes and stress-producing situations: Different amounts and types of support from their spouse, significant other, children, friends, supervisor, and coworkers. In an era of downsizing, organizations need to pay special attention to the fact that with downsizing, organizations also stand to lose on the vital and tacit knowledge inherent in the outgoing employees. This involves reducing the size of the workforce, plant closures, and making the firm’s departments more productive and efficient. 2275. Others suffer silently. Privacy Downsizing is advantageous to an organization due to the following positive consequences: (1) Downsizing ensures a proper balance between the staffing requirement of an organization and the availability of its workforce. Walden Dissertations and Doctoral Studies. Despite its wide spread usage, there is little evidence for the effectiveness of downsizing: studies find both negative and positive relationships between downsizing and firm performance or stock market reactions, respectively. Cared about coworkers are no longer at work. Organizational Downsizing: Its Effect on Financial Performance Over Time Kenneth P. De Meuse President Wisconsin Management Group Guangrong Dai Research Scientist Korn/Ferry International Traditionally, continuous growth in workforce size is a desired outcome. The Effects of Downsizing on Employees Who Survive the Layoffs, How Employees Experience Change Following Layoffs, Use These Tips From HR Pros to Plan and Implement Changes at Work, With Leadership and Vision, Your Survivors Can Soar After Downsizing, How to Reduce Employee Resistance to Change in the Workplace, How to Nurture Employees Who Survive a Layoff. It’s normal for staff to feel fearful and … (2) Downsizing cuts labour costs which the organization was so far incurrin… Through this company’s downsizing, the employer tends to reduce their manpower or eliminate human resources. During this transition, people can expect to experience a period of letting go of the old ways as they begin moving toward and integrating the new. Managing the Organization Dynamics of Downsizing • • • • • • • • • • • • • • • • • • Advantages of Downsizing in a Company. People experience personal distress during changes such as downsizing. Downsizing is a toxic solution, used sparingly and with planning it can be an organizational lifesaver, but when used repeatedly without a thoughtful strategy, it can destroy an organization's effectiveness. | Although some departing employees will find downsizing a traumatic experience, for others it opens up opportunities that they would not … | downsizing in reducing its total number of contractors.