The Implications of Downsizing on Employees, Their Families, and Communities - Coursework Example

? The Implications of Downsizing on Employees, Their Families and Communities Introduction The contemporary global market is characterized by cut throat competition between firms and dynamic consumer behavior. As such, many organizations are employing different approaches like strategic mergers, acquisitions and downsizing among others in order to survive and impose market presence. Downsizing, also known as restructuring or rightsizing, refers to making an organization’s workforce leaner through layoffs. Organizational downsizing is usually a consequence of economic slump and/or organizational strategy to reduce operation costs in order to attain specific performance level as concerns profitability. Downsizing can have many implications on employees, their families as well as the communities in which rightsizing organizations operate. The impacts on employees may include loss of morale, financial loss and emotional and psychological stress among other effects. Similarly, their families are bound to suffer a reduction in standards of living and may also be subjected to psychological torture in the period that their bread winners remain jobless. Downsizing can also negatively impact on societies in which they operate. Through massive layoffs, the living standards in the societies decline and robbery may take lead in communities which are deficient of job opportunities. Irrespective of the motives, corporate downsizing may yield considerable consequences on the superficial corporate social responsibility of any organization. This paper explores the implications of downsizing on employees, their families and communities. How Downsizing (Rightsizing) Affect Employees Downsizing is a practice that has become synonymous with contemporary organizations. The experience of working in an environment with high likelihood of redundancy and seeing co-employees leave an organization has become part and parcel of workers. Downsizing in organizations makes employees to feel anxious. It affects the morale and also threatens the welfare of employees in numerous ways. In most occasions, employees may perceive the organization as unfair and behaving in unwarranted manner. Besides affecting the morale of employees, downsizing also thwarts trust, employee commitment, loyalty and performance. According to Redman and Wilkinson (2001), downsizing causes “downsizing syndrome” on survivors. It also imposes psychological impacts on leaving employees. i. Downsizing Implications On The Morale Of Employees Employee morale is a crucial determinant of organizational performance. In the event of downsizing, both surviving employees and downsizing victims tend to exhibit low work morale. Downsizing creates adverse emotions among remaining workers who feel withdrawn from executing their organizational duties. Moreover, surviving employees usually feel irritated, grief, betrayal and are psychologically estranged from their organization. Despite the fact that employees usually struggle to perform better in order to retain their jobs after downsizing, their attempt is usually compelled and not out of free will. Surviving employees are always ready to try new approaches to task execution. With few employees increasing, work burden increases and so does the stress level for employees. Consequently, a downsizing organization may fail to realize it anticipated better performance because of deteriorating morale of employees. In some cases, downsizing might even lead to protest and rampant absenteeism among employees, who feel uncertain as to what might become of them in the near future. The loss of longtime workmates and close friends adversely affect both leaving and surviving employees. The idea of separation flattens the morale of remaining employees, which in turn lowers the performance level. It is quite obvious that employees are bound to loss morale in the event of downsizing. Therefore, organizations should be ethical enough to mitigate the impact of downsizing on employees by ensuring adequate and efficient communication with employees of the reasons and intention to downsize. ii. Downsizing and Employee Performance Despite the fact that organizations usually execute downsizing as a strategy to boost their performance, many studies have shown that downsizing also has adverse implications on the performance of employees. Many firms have exhibited declining productivity after trimming their workforce their workers. According to Rehman and Naeem (2012), employee loyalty is directly linked with their performance. iii. Downsizing and Employee Trust Downsizing leads to low level of trust between the organization and its employees. Survivors of downsizing usually live in fear that there could be more job losses. The remaining workers are usually stressed up with the imagination of possible redundancies in the near future. Employees who survive the axe usually feel betrayed by the company because the employer has severed longtime employment promise made to them during recruitment (Gandolfi, 2006). As they watch their colleagues leave the organization excruciatingly and unceremoniously, they are left mulling over how they survived the lay off and what might be cooking up for them. The surviving workers usually feel a sense of guilt over their survival and live in fear of being the next victims. They feel unwanted and mishandled by an environment, which to them is their second home. Survivors of downsizing usually doubt whether they can trust the management of the organization any more after witnessing the most devastating experience in every employee’s life. They remain oblivious of whether they should carry on with their normal duties or if more tasks awaits them. The level of trust in the period succeeding downsizing is often quite low because employees feel that their contractual agreements have been breached by the employer. iv. Downsizing and Employee Commitment and Loyalty Downsizing also impacts on employees’ commitment and loyalty to the organization. According to Gandolfi (2006), downsizing leads to severe psychological contracts between organizations and their workforce. Downsizing leads to more task demand for employees who survive the axing process. It leads to high demand for responsibility on part of managers, which in turn leads to loss of employee commitment. Rightsizing jeopardizes employee commitment, particularly, in cases where the remaining employees had close work relationship with the victims of downsizing. This is aggravated in the event that the remaining employees have a feeling that the whole process of trimming off employees was done unjustly. When downsizing is marred by organizational politics instead of pragmatic operational urgency, employees usually feel dejected at the unfairness of downsizing and often perceive their superiors to be serving their self interests (Rehman & Naeem, 2012). Downsizing usually erodes the commitment of remaining employees. Employees who survive downsizing usually work towards saving their own jobs and are often stressed up in their endless effort to please the organization so that they retain their jobs. Consequently, downsizing worsens work conditions for employees remaining in the organization. v. Psychological Torture and Financial Implications on Victims Employees who have been retrenched from the company usually face hard time in finding new jobs after lay offs. They are financially destabilized and often undergo unimaginable psychological torture of how to raise their families. Receiving news about losing a job is in itself a time bomb that rips a person wide open and exposes him to the harsh world of unemployment and job hunting. The victims of downsizing do undergo moments of psychological torture right from the time they are issued with work termination news (Gandolfi, 2006). The Implication of Downsizing on Families of Employees Every family needs financial resources in order to lead better life. Without good financial support, a family is bound to be hit by every little hurdle in life. Downsizing is in deed no good news for families of the victims. Downsizing means job loss for family heads. It leads to decline in the availability of financial support for family members. One can only imagine the consequence of downsizing on a family that has a downsizing victim as the only bread winner. Downsizing leads to financial devastation of families of employees who have been axed. It exposes such families to harsh lifestyle where they cannot afford to pay for their children’s school fees. In extreme cases, families cannot even afford to buy their basic needs. These families become stressed up and their health cannot stop from deteriorating in the face of imposition to abject poverty. As a result of downsizing impact on families, family members who were absolute dependants of the victims of downsizing suffer mental torture. Life after downsizing is usually unbearable. In the transition before the victim gets a new job, all projects of the family stall because there is no source of funds to ensure their completion (Kurtz & Boone, 2011). As such, downsizing usually has negative impacts on the family of the victims. The Implication of Downsizing on Communities In the current market economy, corporations are expected to contribute to the development of communities in which they are located. Corporate social responsibility (CSR) is a modern strategy that many organizations have been using to appear part and parcel of communities where they operate with an aim of gaining competitive advantage (Kurtz & Boone, 2011). Similarly, employee organizations and workers unions have been constantly pushing for better packages and working conditions for employees. As such, organizations have been kept on the limelight and any unethical business conduct would most likely be detrimental to the reputation and overall performance of any organization. Downsizing translates to job losses in communities. As a result of downsizing, many members of the communities in which the organizations are located, are rendered jobless. This does not only contribute to deterioration of individual economic welfare but also the welfare of the general community. If people are jobless, their ability to pay taxes diminishes. Consequently they stop contributing through taxation towards the development of communities. They also become incapacitated to initiate and contribute positively to development projects of their communities. Organizations are expected to create jobs in areas in which they are located. Downsizing goes against the expectations of many communities. Therefore, downsizing devastates development process of communities and exhibits waning commitment of downsizing organizations to the communities that look up to them. Communities usually feel betrayed when corporations trim their workforce in order to pursue their own interest of profit maximization. Communities usually expect corporations to which they are affiliated to provide their members with long-term job opportunities and not to subject them to psychological torture by carrying out abrupt job termination. Consequently, their perception and trust in organizations that they once thought to be the solution to unemployment changes and they can only view them as traitors and uncommitted institutions to social welfare. Conclusion In the face of intense competition in the contemporary global market, organizations are seeking strategies to impose there presence in the market as well as to survive the threat of competition. Downsizing is one of the most common approaches that corporations use to ensure reduced operation costs and to boost their performance. However, it is not usually guaranteed that organizations downsizing usually achieve their intended targets. Indeed, quite a good number fail to realize their downsizing motives. The consequences of downsizing remain inevitable irrespective of whether the organization achieves its rightsizing goals or not. Downsizing affects not only the leaving employees but also the survivors, families of the victims as well as the entire communities involved. Downsizing causes psychological torture, financial dilapidation and deteriorating living standards for axed employees together with their families. In the case of survivors, downsizing result into feeling of mistrust, betrayal, job insecurity and loss of morale. It also leads to loss of loyalty and decline in performance. Communities perceive organizations to be major contributors to their development through engagement in social services and creation of employment. In the event of downsizing, especially when it is perceived to be compelled by office politics, the community losses faith in the organizations and see them to be acting immorally. Downsizing in some cases have been perceived by both employees and the entire community as unethical business conduct that violates and severs the welfare of individuals in the societies. As such, organizations intending to use downsizing strategy, should communicate their intentions clearly and effectively to all stakeholders so that the impacts of downsizing can be reduced. References Gandolfi, F. (2006). Corporate downsizing demystified: a scholarly analysis of a business phenomenon. Hyderabad, India: ICFAI University Press. Kurtz, D.L. & Boone, L.E. (2011). Contemporary business. Hoboken, NJ: Wiley. Redman, T. & Wilkinson, A. (2001). The informed student guide to HRM. London: Thomson Learning. Rehman, W.u. & Naeem, H. (2012). The impact of downsizing on the performance of survived employees: A case study of Pakistan. African Journal of Business Management, 6(7):2429-2434. Read More