Downsizing is described as a strategy that targets to increase business results by dropping the resources of a business, adjusting the organizational structure to the new strategy and environment. This tendency is observed in industrial and service zones (Littler, 1998; Gandolfi, 2007) and is present generally in the U.S., Europe, Asia (Morris, Cascio & Young, 1999; Dahl and Neshheim, 1998; Suarez, 2000). At this project I will explain the psychological and economical impacts of downsizing for the organizations, the workforce and the society.
IMPLICATIONS OF DOWNSIZING FOR THE WORKFORCE
Primary, employee cut down tactics, which are intended to decrease headcount frequently through joblessness. Another, work reforms tactics, which contain reformatting roles organization structures and hours. Work reform includes reducing functions, hierarchical levels, divisions, or products, consolidating and merging units, and cutting the working hours, while systematic changes involve replacing the organization’s internal and external systems such as communication, production chains, values in terms of suppliers and customers (Bleuel, 2001). Third, systemic change strategies, which contains redefining downsizing as ongoing process, as a base for continuous improvement, rather than as a programme or target (Cameron, 1994).
IMPACT ON SURVIVORS
According to K. Jeffrey, both leavers and survivors also suffer negatively after downsizing has followed. Most survivors weren’t sure of their position in the new structures of the company, expected performance standards, the important people in current networks who were either leaving the organization or changing their positions, additional work demands, and the worth of their expertise to the new organization. These factors are further compounded by job insecurity. (Jeffrey, K. 2011).
According to Kumar, N., & Pranjal, B.
Potential Reactions to Survival of Organizational Downsizing Cause of Survival Causes for Survival
ReactionAbility Internal, stable, uncontrollableEffort Internal, unstable, controllableHelp from others, External, unstable, controllable (by others)Luck external, stable, uncontrollable Positive emotionsPride, Enhanced self-esteem, hopefulnessPride, enhanced self-esteemGratitude toward helper, admirationGratitude toward superior power (e.g. God) Negative emotions
Anger, resentment, guilt, hopelessness, envy, shame, feeling of indebtedness, decreased self-esteemFear, hopelessness, stress Positive attitude and behaviorsTrust, loyalty, low absenteeism, enhanced sense of employment security, job satisfactionTrust, loyalty, low absenteeism, job satisfactionSocial cohesion, cooperation, trust, improved physical functioning, motivationIncrease effort Negative attitude and behaviors
Hostility, intention to leave, misbehaviorLow trust, high absenteeism, misbehavior Source: (Kumar, N., & Pranjal, B., 2009)
According to De Witte, most survivors were troubled about their upcoming future and for how much they were going to keep their jobs within the reduced company and were concerned that they were not ready to find employment elsewhere given the prevailing economic condition in the country. Some of them were also concerned that there are no similar jobs for them both in private and public sector given the salaries and benefits they were getting. Job insecurity is a often examined cause of stress in the setting of organizational change and downsizing. Job anxiety is stressful for the individual and characterized as a work stressor. There are two characteristics of job insecurity, quantitative and qualitative. Quantitative job insecurity refers to the concern of losing the job and also being laid-off in the near future. As qualitative job insecurity reflects the concern or fear of losing on the part of the survivor significant aspects of the job, as job...