Downsizing
In many cases, firms persist with workplace restructuring in the form of downsizing, because of the misconception that the financial benefits will always outweigh the negative impact of employee morale and commitment. The expectation is that the expense reduction will lead to a positive impact on the bottom line and will ultimately be reflected in improved profitability and productivity. However, many organizations neglect to factor in the psychological impact of downsizing on those who remain. In fact, if downsizing is handled improperly, the problems it was designed to correct may be intensified due to the impact on the loyalty and attitudes of the survivors. The poor strategic planning of downsizing organisations has the potential to make the practice obsolete, its sustainability rests solely on the ability of managers to implement the tactic in a strategic and consultative manner. The sustainability of downsizing will be determined by its success, witch will ultimately be resolved by organisation's ability to overcome the negative impact on employees, while still achieving strategic goals.For several years there has been a strong tendency to adopt a downsizing strategy to deal with the economic pressures i
Survivors of the downsize process must have confidence in the company's honesty and its ability to secure their jobs. Dawkins & Littler (2001) discusses how managers complained of the "morale-sapping" character of most downsizing and described how low morale "created anxiety and paralysis within their companies to the subsequent detriment of productivity"( Dawkins & Littler 2001, p. Survivors' reactions to layoffs: We get by with a little help for our friends. Involvement by the Human Resource department should ease the pain of those affected by the lay-off. 266) - and that these psychological states have the potential to affect survivor's work behaviours and attitudes, including level of performance, motivation, job satisfaction and commitment. 11) It is imperative that companies maintain trust, keep the lines of communication open, and develop a strategic plan for its employees to follow after the initial downsizing. Organizations have seen the negative affects of downsizing. 120) In this context, downsizing can be seen as a strategic transformation that can be used to change the organisation's culture and the way it does business.
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