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Organizational Change: the Effect on Employee Morale and Motivation

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Organizational Change: the Effect on Employee Morale and Motivation
Abstract
News of job losses (whether we label them as downsizing, layoffs, or restructuring) reaches us daily. And sometimes the reality hits close to home – loss of a job of a family member, a close friend, a valued coworker or someone you supervise. According to McKinley, Sanchez and Schick (1995), “This process of deliberate personnel reduction has been justified as a cost-cutting measure and as an incentive to increase productivity. However, evidence has shown that downsizing negatively affects employee morale and productivity.” While people who lose their jobs can be strongly impacted by loss of financial security, fear for the future, and even decreased self-esteem, it’s important to recognize that people who survive job cuts face their own set of negative consequences. This group of “survivors” may experience stress as well as feelings of anxiety or depression. This paper examines these issues by reviewing the numerous organizational and leadership changes that have taken place at WellPoint, Inc. within the last two years. In addition, a small sample of WellPoint associates was surveyed to assess the effects that the organizational restructuring and leadership changes have had on employee morale over the last two years. The results of that survey are presented in this paper.
Introduction
What single change causes the most consternation in the work place? The announcement of job cutbacks. With all the recent staff reduction announcements, this news is all too familiar. With it comes the immediate negative effect on employee morale, both for the laid-off employees and the remaining staff. Emotional turmoil resulting from an event such as organizational change can leave lasting scars on individuals and organizations. Disruption of normal operation can be short-lived if normal feelings of grief, loss, fear, and even guilt and anger are allowed to be expressed when the organizational change is being announced and/or is occurring. However, if these

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