Downsizing reading

Question 1

Thornhill and Saunders (1998)- definition of downsizing

Answer 1

deliberate organisational decision to reduce the workforce that is intended to improve organisational performance
Isn’t always only used in declining times- organisations can downsize without declining

Question 2

Thornhill and Saunders (1998)- downsizing methods

Answer 2

• redundancy
• natural attrition
• early retirement
• voluntary redundancy
• retraining
• recruitment freezes

There is a significant relationship between the type of strategy used to downsize and the consequences of the process- choosing the right process can minimise negative effects

Question 3

Thornhill and Saunders (1998)- consequences on the individual

Answer 3

Success depends on the ability of survivors to cope which is impacted by strategy and implementation
Unsympathetic survivors wont have a negative reaction- believe redundancies are justified and they work harder as a result

Current employment market for the job will effect how both survivors and leavers react- tough finding jobs there will be a more adverse reaction

Question 4

Thornhill and Saunders (1998)- managing the consequences

Answer 4

If its perceived as a fair decision, the reaction should be more positive (support leavers, give a high level of prior notification, show lack o0f alternative action)

Unfairness can cause remaining employees to work harder- long term negative effects

Question 5

Thornhill and Saunders (1998)- conclusions

Answer 5

Downsizing is aimed at improving effectiveness, efficiency, productivity and competitiveness
BUT
Its efficacy has been shown to be dependant on the reactions exhibited by survivors and the way managers respond to these reactions

Question 6

Schmidt (2012)- knowledge retention during downsizing

Answer 6

Many downsizing initiatives fail to retain critical skills, capabilities, experience and knowledge which could lead to deteriorating quality and productivity

Knowledge= important source of competitive advantage
HOWEVER- does retained knowledge harbour inefficiency and inflexibility and prevent adaptation to new situations??

Question 7

Cascio (2002)- responsible restructuring

Answer 7

See people as assets to be developed and ask how they can be used more effectively (rather than just cutting them)
Methods:
- make all concerns known to employees
- don’t use downsizing as a quick fix in the short term
- open communication
- consider rationale behind restructuring

Use restructuring as an opportunity to focus on the competitive strengths of the business

Question 8

Hamel and Prahalad (1994)- purpose of downsizing

Answer 8

carve away layers of corporate fat and amputate underperforming business

Question 9

Hamel and Prahalad (1994)- impact on society

Answer 9

restructuring has destroyed lives, homes and communities in the name of productivity and efficiency

Question 10

Datta (2010)- impact of downsizing

Answer 10

there are differing findings on the profitability and performance improvement that can be achieved through downsizing

Question 11

Datta (2010)- definition of downsizing

Answer 11

A planned set of organisational policies and practices aimed at workforce reduction with the goal of improving performance

Question 12

Sparks (2001)- impact of downsizing

Answer 12

It causes increased perceived job insecurity
This causes organisations to suffer financially due to the costs of increased absenteeism resulting from lowered employee wellbeing and commitment

Question 13

Murphy (1988)- stress intervention

Answer 13

-employee assistance programs
-stress management training
-stressor reduction strategies
Most common interventions only target the employee not the work environment causing the stress
Stress viewed as an individual issue

Question 14

Kinnman and Jones (2005)- lay representations of stress

Answer 14

Stress more likely to come from work than any other life domain
Stress= an individual problem- organisations only counsel and educate

Some people saw stress as unavoidable and that a certain level of stress can have positive outcomes- reach deadlines and stay motivated

Question 15

Chandola (2010)- downsizing causes stress

Answer 15

The changing nature of work has increased stress in the modern workplace- work intensification, unemployment, unstable labour markets, job insecurity

Stress can have long lasting effects which will have economic costs for individuals, employer and society

Question 16

Mellahi and Wilkinson (2003)- benefit of downsizing

Answer 16

Turn around declining organisations, cut costs and improve performance