Effects of Downsizing on Employees Essay Example

emotional trauma.

To maintain a stable life, they have to try to cope up with all these psychological issues. Downsizing thus defined, falls into the category of management tools for achieving desired change, much like “rightsizing” and “reengineering” (Kumar. M. , 2009). Purpose of Research & Implications •Research has to be done on this topic because a conclusive reasoning hasn’t been done on all the characteristics related to this issue. There are a lot of minor details that are not looked at. •Researchers haven’t really focused on the big picture when it came to downsizing.

Researchers at time have also showed downsizing as a positive aspect of the company, although all the negative effects on the employees have been disregarded. •Recession has recently hit the world and this is an ideal time to conduct an actual research on the negative effects of downsizing on employees as there are a large number of employees who are affected by this catastrophe.

•Since some important areas have been inconsistently researched upon, this is an ideal opportunity to get some pure information about this issue. Employees are already traumatized by the thought of getting terminated, and at this point of time if they are not even treated with dignity, they would go to a different level of depression and they are bound have very low self esteem. Termination interview’s nature has a big impression on employees as that is that last that they are going to see of the organization, and if the company follows bad termination practices, it’s bound to get the employee even more aggravated and eventually very upset (Wood. M et al, 2009)

Major findings and conclusions There was a study conducted by Obilade, S. 2009) about the impact of downsizing on the employee’s morale, and the random sampling method was used to administer this study. In this study 54 males and 20 females from 12 small businesses were asked to take part.

A 20 question survey was formed which focused on the effects of downsizing, the organizations way of informing the downturn and an open ended question at the end on how the person answering the question felt as a survivor on downsizing.

The study derived that (i) Downsizing must not adversely affect productivity and furthermore, measures must be taken to ensure that it does not adversely affect the morale of the employees. ii) Management needs to know how employees respond to redesigned work environments, technological changes, increased accountability, compulsory increased efficiency with fewer amounts of help, and comparable phenomena that have been established to exemplify many work surroundings that have had a downsizing occurrence. (iii) A closer examination of the specific items used to the measure of the effect of downsizing reveals that stress- related issues are most responsible for the negative attitude toward downsizing. iv) With companies downsizing it can affect you emotionally and mentally. The companies demand more responsibilities from fewer people, which can cause a lot of stress. The workloads increase to where one is working more hours and even weekends. Downsizing basically takes you away from your family and friends. Even though it is good for the company, it’s the employees who pay for it. (v) This study was part an attempt to analyze some of the variables that could

affect the motivational level of survivors of downsizing variables.

Furthermore the study proved that there was a big communication gap between the employees and the management, also that the management failed to answer the emotional needs of the survivors of downsizing which eventually resulted in a lot of mental trauma. However research has recognized that downsizing may have unplanned negative penalties for individuals and organizations (Cameron 1994; Cascio 1993;Kozlowski et. al. 1993). Leana and Flednan (1988, 1990) in their studies take a closer look at how employees diverge in their responses in context to downsizing.

Financial agony and earlier aloofness to the job seem to have the greatest negative impact. For the victims of downsizing losing the job often induces reactions comparable to those experiences with someone close to them, who has already had that experience. The feeling is so overwhelming that people are left feeling desperate over their job loss situation, and eventually this feeling takes a toll on them and they end up being violent and self destructive. This situation denotes murder in work place as the fastest growing form of homicides in the United States, with about 40 percent of these homicides followed by suicide (Thornburg, 1992).

In his influential work, Kant (1785) developed the concept of ‘respect for person’ and stated, “act so that you will treat humanity, whether in your own person or in that of another’, always as an end and never as a means only” (p. 420). The kind of deference that Kant calls for is attuned with attaining our ends by procuring the support of other people, as is the case in the employer-employee

association (Wood. M et al, 2009).. However Kant’s philosophies propose that treating people only as means, so that they are no different than mere things, is an act against humanity (Boatright, 2003).

Management broadens this judgment to the employment relationship and argues that just because an employee must be told that his or her help is no longer needed, this does not allow the management to treat this employee as a mere object or production unit. Kant further argues that being indifferent towards these employees because being indifferent is an act of denial of respect. Even though such acts are practiced, standardized phrasing of all termination interviews to reduce litigation potential could well enhance perceptions of indifference or lack of respect for the terminated employee as an individual.

Downsizing and Coping These are all stress related problems, and they are all related to the variables of downsizing. These are the severe consequences that employees have to face due to ill timed terminations. Findings have been made about various cognitive coping strategies leading to two different reactions to downsizing: people either resort to denial detachment-thus distancing themselves psychologically from the perceived threat, or show signs of hyper sensitivity, closely monitoring for dangerous signs (Greenhalgh and Jick 1989).

Employee Morale According to Reinardy, S. 2010 morale is a very important in an employee’s life. If the employee’s morale is low while he is working with an organization they are bound to be less productive as there are no elements in their work place that motivates them, rather there are factors that demotivate them. Also employees don’t feel respected working for an organization where their

morale is low. The author has mentioned how an employee should feel enthusiastic about working for an organization. If they feel indifferent then they are bound to lose interest and eventually end up being fruitless for the organization.

Every employee deserves encouragement in different forms from the employers, only then can there be a commitment from the employee to the organization. Correspondence All the studies conclude that there is an association with employees self esteem and downsizing. Employees require the management to be there with them throughout the whole situation. If an employee is being terminated, they deserve the utmost level of respect from the company so that they don’t feel depressed, and that they can go find employment elsewhere full of confidence.

Also the employees who are survivors won’t suffer from low morale due to the mistreatment of other employees. It all adds upto how an organization decides to deal with situations like termination and treatment of employees. If they are considerate of employees feelings, then even the ones who are being terminated won’t have a negative attitude towards the company and the survivors would feel comfortable working for an understanding organization.

Method to be used Making use of previously recognized dimensions, a 30- question survey was built examining employees self esteem and attitude towards the organization. There were two parts of the survey where one included questions about self-esteem which was for employees who were terminated and second part included their attitude towards the organization, which was for employees who were still employed with that organization.

For the research to be carried out five organizations from the finance sector

were selected. The financial sector is selected because of the high number of layoffs in that industry. It includes banks, credit card companies and companies involved in the stock market industry. All these industries have one thing in common and that is it’s related to finance, and thus we could get an overall picture of how the financial industry treats their employees.

The questionnaire would be a form of Likert scale which would range from very satisfied to very dissatisfied and there would be one open ended question where they can voice out their concern in detail if they wanted. Information about terminated employees and current employees will be provided by their organizations. An email will be sent out to select number of people with the questionnaire attached to it and a small compensation of $25 will be given to each person who participates in this survey.

The goal is to get information from at least 250 current employees and 250 terminated employees. The money is just an added and it will also make the personnel feel that this survey is taken for serious purposes. The employees will be promised that all the information that they provide would be kept private and confidential. The study might not be as conclusive as it should be because it’s done in a particular country and not all over the world where they suffered from recession.

The studies motive is to attain information about the after effects of downsizing on the self esteem of terminated employees and current employees. It will show the level of enthusiasm and interest which a personnel has, to work for an

organization after they see a fellow employee being mistreated. The study will also throw light upon areas of improvement on how to treat employees when they are being terminated. When the results come out all the aspects could be accounted for and a conclusive model can be constructed to avoid such ill effects of downsizing in future.