Chapter 10 Flashcards
(122 cards)
1
Q
In the 1990s how was downsizing and restructuring viewed? What followed as a result of this view?
A
> In the 1990s, organizations became obsessed with reducing the workforce and operating in a “lean and mean” fashion.
> This was followed by an extended period where the focus was on employee retention and winning the war for talent.
2
Q
After the 1990s’ when did downsizing return?
A
> However, downsizing returned with a flourish beginning around 2008 with the global financial crisis.
3
Q
What suggests that downsizing won’t go away in the near future?
A
> The continuing impact of sluggish economic growth, huge debt burdens facing governments around the world, and rapid changes in technology (such as artificial intelligence and digitization) suggest that cost cutting and downsizing are unlikely to disappear in the near future (Gordon 2014).
4
Q
What are “survivors in downsizing”:
A
> employees that remain with the organization after downsizing.
5
Q
What does it mean when a firm is “too lean” or too “mean” in their downsizing?
A
> There is growing evidence that firms can become too “lean,” and downsizing may cut into the muscle of the organization.
> Furthermore, a number of the reductions have been characterized as “mean”— destroying the lives of victims of cutbacks and leaving a demoralized and frightened group of survivors of downsizing. In today’s environment, downsizing and restructuring are critical components of HR planning.
6
Q
Historically, the focus of many organizations was on what syndrome? What strategy was developed as a result of this syndrome?
A
> Historically, the focus of many organizations was on growth, or the “bigger is better” syndrome.
> As a result, managers responsible for developing a downsizing strategy but often had little experience in effectively managing the HR planning process and very little guidance from the management literature.
7
Q
What can be said about the downsizing literature that is out there?
A
> Although the past 30 years have seen a considerable volume of articles on downsizing and restructuring, the suggestions they contain often are based on a single experience, are not supported by research, and frequently are in conflict.
8
Q
What has caused downsizing across other countries? Is it just a Canadian phenomenon?
A
> Downsizing is not just a Canadian phenomenon. Organizations around the world are striving to improve their competitive position and respond to the challenges of a global economy and COVID-19.
9
Q
What kind of policy can have a major impact on downsizing? Provide an example of a policy that affected employment.
A
> Government policy can also have a major impact on downsizing.
> Government-imposed lockdowns during the pandemic had a major impact on employment, with employers being required to shut down or alter their business operations.
10
Q
What is a downsizing strategy?
A
> strategy to improve an organization’s efficiency by reducing the workforce¸ redesigning the work¸ or changing the systems of the organization
11
Q
What is downsizing?
A
> activities undertaken to improve organizational efficiency¸ productivity¸ and/or competitiveness that affect the size of the firm’s workforce¸ its costs¸ and its work processes
12
Q
How has Kirk Cameron, a leading scholar in the area of organizational change has defined downsizing?
A
> Downsizing is a set of activities undertaken on the part of management and designed to improve organizational efficiency, productivity, and/or competitiveness. It represents a strategy implemented by managers that affects the size of the firm’s workforce, the costs, and the work processes.
13
Q
How does Datta define downsizing?
A
> a planned set of organizational policies and practices aimed at workforce reduction with the goal of improving firm performance
14
Q
How does Sheaffer define downsizing?
A
> a selective reduction in organizational resources, including different combinations of reductions in physical, financial, organizational and human resources
15
Q
What are the three types of downsizing strategies?
A
> workforce reduction, work redesign, and systematic change
16
Q
What kind of downsizing strategy is workforce reduction what what does it entail?
A
> it is a short-term strategy
> It is aimed at cutting the number of employees through attrition, early retirement or voluntary severance packages, layoffs, or terminations
17
Q
What kind of downsizing strategy is work redesign what what does it entail?
A
> it is a medium term strategy
> focuses on work processes and assesses whether specific functions, products, and/or services should be changed or eliminated
18
Q
What kind of downsizing strategy is systematic change what what does it entail?
A
> it is long-term strategy
> characterized by changing the organization’s culture and the attitudes and values of employees, with the ongoing goal of reducing costs and enhancing quality
19
Q
Define workforce reduction:
A
> While a number of workforce reduction approaches allow for a relatively quick reduction of the workforce, the problem is that their benefit is often short-term, and in many instances the organization loses valuable human resources.
20
Q
Define work redesign:
A
> This strategy, which is frequently combined with workforce reduction, includes things such as the elimination of functions, groups, or divisions; the reduction of bureaucracy; and the redesign of the tasks that employees perform. Because some planning is required, this strategy takes somewhat longer to implement and avoids the problem of the organization simply doing what it always has done but with fewer people.
21
Q
Define systematic change:
A
> By its very nature, this strategy takes considerable time to implement. The thrust of the strategy is to consider downsizing as an evolutionary part of an organization’s life with the goal of continuous improvement: Employees assume responsibility for cutting costs and searching for improved methods and practices. Because of the human and financial commitment required for this strategy, the impact on the organization’s bottom line is rarely immediate, and consequently the approach is less than appealing to firms that focus on short-term profits or budget goals
22
Q
What are the three types of “restructuring” strategies?
A
> The three types of “restructuring” strategies are: portfolio restructuring, financial restructuring, and organizational restructuring
23
Q
What is portfolio restructuring?
A
> changes to the organization’s business portfolio (changes in the mix and/or percentage makeup of the organization’s businesses, including divestures and acquisitions)
24
Q
What is financial restructuring?
A
> Financial changes such as reducing cash flow or increasing levels of debt
25
What is organizational restructuring?
“any major reconfiguration of internal administrative structure that is associated with an intentional management change program"
26
What are the 8 most common factors to downsizing?
> Declining profit
> Business downturn or increased pressure from competitors
> Merging with another organization, resulting in duplication of efforts
> Introduction of new technology/robotics/digitization
> The need to reduce operating costs
> The desire to decrease levels of management
> Getting rid of employee “deadwood”
> Major disruption, such as COVID-19
27
Simply put, what is the reason for organizations engaging in downsizing?
> Simply put, many organizations engage in downsizing because managers perceive that cutting people will result in reduced costs (costs being more predictable than future revenues) and improved financial performance.
> In addition, labour costs are often seen as easier to adjust relative to other expenditures (such as capital investment).
28
What observations has Pfeffer made about layoff effectiveness? (What two reasons)
> Layoffs don’t even reliably cut costs. When a layoff is announced, several things happen.
1) First, people head for the door—and it is often the best people (who haven’t been laid off) who are the most capable of finding alternative work.
2) Second, companies often lose people they don’t want to lose. Managers also underestimate the extent to which layoffs reduce morale and increase fear in the workplace
29
When firms experience a "firm-based decline" what strategy should be employed?
> For employers experiencing “firm-based decline” (due to factors such as financial performance, governance issues, and HR policies and investment), a “flexibility-oriented” human resource strategy is preferable.
30
When firms experience a decline attributable to “industry contraction-based decline, what strategy should be employed?
> However, if the decline is attributable to “industry contraction-based decline” (such as economic, technological, legal, social, and competition changes – including a global pandemic), a more “efficiency-oriented” human resource strategy is recommended.
31
If a firm is experiencing a firm-based decline and a industry contraction based decline, what strategy should be employed?
> If an employer is experiencing both types of decline, a “niche-oriented” human resource strategy is desirable
32
What do studies often reveal about downsizing?
> study after study reveals that many downsizings are not well planned, frequently ignore the linkage between downsizing and the strategic direction of the organization, and underestimate the impact of downsizing on the organization and its human resources.
33
Proactive organizations plan for downsizing by doing what?
> plan for downsizing by careful planning.
34
What are short-term cost adjustments in alternative to downsizing?
> hiring freeze
> mandatory vacation
> reducing the workweek
> reducing overtime
> reducing salaries
> short-term facility shutdowns
> obtaining cost-reduction ideas from employees
35
What are Medium-Term Cost Adjustments in alternative to downsizing?
> extending reductions in salaries
> Voluntary sabbaticals
> Lending employees
> Exit incentives
36
Jobs are being dramatically altered due to several factors including what main two components?
> such as artificial intelligence (AI) and computerization
37
A number of recent reports suggest that the current view of work will be changed markedly and that a number of occupations are at risk of being eliminated due to what?
> are at risk of being eliminated due to technological advancements.
38
What is the doomsday perspective?
> The doomsayer perspective takes the view that AI may lead to “technological unemployment,” particularly in certain occupations and countries, while the optimist perspective argues that efficiency gains from AI greatly outweigh transition costs and create new opportunities for workers with evolving skills and training
39
What are 5 Factors Distinguishing the Intelligence Revolution?
1) The concept of a job has been fundamentally changed—traditional notions of work are often not applicable in the world of work that is emerging.
2) Machines are learning faster than humans—machines now have the capability to learn and upgrade their skills and capabilities.
3) New opportunities for people and machines are emerging as technologies converge—artificial intelligence, motion sensors, and advanced cameras are being integrated.
4) The impact of technological change will result in wide and deep disruption—for instance, even fields such as law and medicine (which have historically been largely unaffected by automation) are being changed dramatically.
5) A new workforce is emerging—a growing number of employees are freelancers or consultants who are employed for a specific project and then move on to another job with a different employer.
40
A 2020 report by the World Economic Forum (Russo 2020) projects the following 6 factors about future jobs?
1) There will be a loss of 85 million jobs within five years, but the robot revolution will create 97 million new jobs.
2) By 2025, the top skills needed will involve analytical thinking, creativity, and flexibility.
3) The top emerging professions will relate to data and AI, cloud computing, and content creation.
4) Eighty percent of business executives are focusing on digitizing work processes and introducing new technology, and 50 percent of employers are speeding up automation in some roles within their organizations.
5) The pandemic has had a disproportionate impact on low-skilled workers and points to the need for reskilling.
6) Career pivots or making career changes to totally new jobs will become the new normal.
41
he displacement of work by automation is affected by a number of factors, including:
> including the cost of developing new technology, the labour savings associated with replacing people with technology, the quality of the new technology, and the time to have significant adoption at the workplace.
42
What percentage of people will have to find totally different work?
10%
43
Although the demand for employees is high, the technology sector is experiencing what?
> Although the demand for employees is high, the technology sector is experiencing some job cutbacks
44
A recent Canadian study by Frenette and Morissette provides insights into the risk of job loss. The researchers noted that advances in AI and robotics, in conjunction with the COVID-19 pandemic, will result in what? what types of jobs are currently being held by workers?
> will result in greater risk of job loss or job transformation for specific groups of workers
> They found that about 1 percent of Canadian workers held unprotected jobs, about 13 percent were in single-protected jobs, 45 percent were in double-protected jobs, and 41 percent were in triple-protected jobs.
45
Triple-protected jobs are characterized by? What about unprotected jobs in comparison?
> by (1) having no defined end date, (2) having little risk of being lost or transformed as a result of automation, and (3) being resilient to pandemics.
> unprotected jobs have none of these characteristics. I
46
Individuals in triple-projected jobs were more likely to be what in terms of demographics?
> were more likely to be male, highly-educated, high-wage earners, in the 35 to 54 age group, born in Canada or a long-term immigrant, have a spouse with a university degree, and live in a major metropolitan area
47
Automation-related job transformation based on education levels - what is the highest level of education rate and what is the lowest?
> Master's degree 1%
> no certificate/diploma/degree 33%
48
Of the occupations that are at a higher risk of automation-related job transformation, what is the highest?
> office support, 36%
49
Are Canadians knowledgeable about AI? A survey by Loewen and Lee-Whiting (2021) asked Canadians about automation, AI, and COVID-19. The results suggest that what?
> The results suggest that Canadians are concerned about the effects of automation and the pandemic on the future job market.
> About 60 percent of Canadians indicated that they knew nothing or very little about automation and AI, while 16 percent have a good understanding and 2 percent indicate that they are experts.
> While 18 percent of participants strongly agree that they have the skills to maintain their standard of living in the current economy, 20 percent are neutral and 28 percent disagree with the statement.
> Almost half of the respondents believe that AI and automation will drive economic inequality and about 40 percent are of the opinion that the government should punish organizations that cut their workforces due to new AI or automation practices
50
How did companies react to the COVID-19 crisis? A Harvard Business School report examined the behaviour of 354 large U.S. companies employing a combined more than 25 million employees - explain the findings:
> The findings indicated that organizations with more financial flexibility and greater cash reserves were more likely to avoid deep employment cutbacks.
> financially-strong firms with a lower commitment to employees and weaker corporate governance were as likely to engage in layoffs as those in a weaker financial position.
> Layoffs were particularly common in the restaurant and fast-food sector, and it was anticipated this would result in challenges of recruitment and rebuilding the workforce as demand returned, leading to the challenge of meeting consumer demand with fewer employees
51
The retail sector is being revolutionized by what has become known as what effect?
> by what has become known as the “Amazon effect.”
> using robots to replace work
52
Although the hotel sector has been adopting labour-saving technology over the past number of years, the pandemic has increased the use of technology. Describe some of the changes:
> Robots have been introduced to assist in the preparation and service of food, allow guests to use kiosks to check in on their own, deliver food or supplies to guests’ rooms (delivery bots), and clean both common areas and rooms.
53
What are the downsizies to using robots in the hotel sector?
> Still, the use of robots has not been problem-free. Some robots failed to live up to performance expectations, and droids have exposed some customers to hackers. Not all customers are comfortable with robots, although others have appreciated the contactless environment when robots cleaned the rooms.
54
In examining the downsizing decision, it is necessary to consider what 2 issues?
> it is necessary to consider both inplacement and outplacement issues
55
What is inplacement and outplacement?
> Inplacement refers to a career management approach aimed at reabsorbing excess or inappropriately placed workers into a restructured organization,
> while outplacement focuses on the provision of a program of counselling and job search assistance for workers who have been terminated.
56
Downsizing is, in most circumstances, perfectly legal - what are some things to consider though?
> there may be contractual provisions (such as terms of a collective agreement) and legal restrictions (such as human rights legislation, labour or employment standards, or the common law of wrongful dismissal) that restrict how an employer may engage in downsizing.
57
A number of downsizings may infringe on what kind of principles?
> may infringe on principles of organizational justice.
58
What two elements play a key role in understanding how victims and survivors of a downsizing react to the experience?
> Perceptions of fairness and equity play a key role in understanding how victims and survivors of a downsizing react to the experience.
59
What are the three types of organizational justice warrant consideration?
1) Distributive
2) Procedural
3) Interactional
60
What is the distributive justice warrant consideration?
> This is concerned with the fairness of the downsizing decision. For example, responses from employees may include feelings of guilt after seeing co-workers lose their jobs, support for the downsizing decision as necessary for the firm, or feelings of unfairness and concern that further layoffs may put their own job in jeopardy.
61
What is the procedural justice warrant consideration?
> This is concerned with the procedures (or “decision rules”) used to determine which employees will leave or remain with the organization.
62
What is the interactional justice warrant consideration?
> This is concerned with the type of interpersonal treatment employees receive during the implementation of the downsizing decision. Interactional justice can be broken down into (1) interpersonal justice, or the degree to which people are treated with dignity and respect by those involved in implementing the downsizing, and (2) informational justice, which focuses on the explanations used with regard to the downsizing decision.
63
Fairness is correlated with what?
> fairness is correlated with higher organizational commitment when considering the responses of both survivors and victims of downsizing;
64
procedural fairness is more important than what kind of fairness?
> procedural fairness is more important than distributive fairness for downsizing survivors;
65
The impact of fairness is greater in countries with what kind of culture?
> the impact of fairness is greater in countries with a more individualistic culture (rather than a collectivistic culture);
66
fairness is more important if the downsizing was undertaken to do what?
> fairness is more important if the downsizing was undertaken in order to maximize profits rather than out of economic necessity.
67
One study found that job insecurity may lead to:
> emotional exhaustion, which impairs the ability of some employees to self-regulate, resulting in unethical behaviour.
68
While highly adaptable employees frequently have the skills and abilities to cope with job insecurity, employees who face challenges adapting to major change are more likely to engage in what kind of behaviour?
> unethical behaviour at the workplace
69
Downsizing may be considered a breach to what kind of contract? What other contracts could be breached
> Downsizing may be considered a breach of the psychological contract that exists between an employer and an employee (i.e., an individual worker’s perception of the agreement they have with the employer).
> In addition, downsizing may also involve the violation of social contracts; an organization is a member of different local communities, and a failure to adhere to certain values and mores (an ethical floor or basic standard of ethics) would result in the organization being considered a “poor” corporate citizen.
70
One researcher observed that the COVID-19 pandemic has led to a wave of layoffs around the world and placed increased attention on what kind of restructuring?
“responsible restructuring”
71
What is responsible restructuring? (responsible restructuring)
> the actions, practices, and strategies adopted by organizations to ameliorate the negative effects of redundancy
72
What is the regulatory strategy? (responsible restructuring)
> Compliance with national, provincial, and municipal legislation is important. There is also the critical issue of whether an organization goes beyond the minimum standards of relevant legislation.
73
What is the procedural strategy? (responsible restructuring)
> Issues may include the adoption of internal processes and procedures that are perceived as fair, making responsible downsizing visible to employees, the timing of the downsizing, and justice (distributive, procedural, informational, and interactional).
74
What is the communication strategy?(responsible restructuring)
> An example would be the involvement of human resource professionals and management, employees, and their representatives in the downsizing process and the role of effective communication.
75
What is the employment strategy? (responsible restructuring)
> Downsizing is frequently associated with a feeling of “loss” and with “scarring” effects. Providing employment-related support (such as retraining and job-transition assistance) and opportunities for internal redeployment are among best practices.
76
Assuming the organization has decided to embark on a downsizing strategy, planning is essential. Some key issues include the following:
1) Determining how many people will lose their jobs.
2) Determine who will be let go
3) Determining how the reduction will be carried out?
4) Determining the legal consequences
5) Designing current and future work plans?
6) Implementing the decision
7) Performing a follow-up evaluation and assessment of the downsizing efforts.
77
What kind of career should workers prepare for?
> Rather, workers should prepare for a “multiorganizational career” and recognize that it is highly unlikely that they will remain with the same organization throughout their working lives.
78
In what ways can an employee experiencing job loss suffer?
> emotionally (for instance, feeling anger, sadness, helplessness, and a variety of other emotions),
> socially (impacting personal, professional, and social relationships),
> financially (loss of income and benefits, inability to find employment, a lower-paying new job),
> physically (for example, high blood pressure, gastrointestinal issues, lack of motivation to exercise),
> and mentally (increased stress, mental health problems)
79
While job loss is not typically considered a favourable experience, a study of 30 men and women who lost their job and were using an outplacement firm revealed that losing a job may have some positive aspects. Some of the benefits resulting from job loss identified by participants were:
> The opportunity to reflect on their careers and a chance to think about what they really want to do
> A chance to get out of a job they didn’t like: a number of the participants, upon reflection, concluded they weren’t satisfied with what they had been doing
> More time for family and a better work–life balance
80
If a single organization acting alone decides to engage in workforce cutbacks, the employees have the option of what? What about in an economy in which several firms are downsizing?
> the option of seeking alternative employment
> they will have less employment alternatives.
81
A number of organizational interventions and practices have been identified as helping previously employed workers adjust to job loss and secure new employment (Feldman and Leana 1994, 239–260). They include the following:
1) Advance notification of layoffs, which gives employees time to deal with the reality of job loss and seek future employment
2) Severance pay and extended benefits, which provide an economic safety net
3) Education and retraining programs, which give individuals time to acquire marketable skills
4) Outplacement assistance, to inform employees of new job opportunities and improve their ability to “market” themselves
5) Clear, direct, and empathetic announcement of layoff decisions
6) Consideration of HR planning practices that represent alternatives to large-scale layoffs
82
Is losing a job associated with a greater risk of suicide? What about being unemployed for a long period of time? Researchers examined these questions using U.S. panel data over a 10-year period. Their major findings include the following:
> Recent job loss (unemployed less than five weeks) was not associated with a difference in suicide risk in men versus women.
> A narrower measure of recent job loss (based on mass-layoff events) was positively associated with the suicide rate for both men and women. The authors estimate one additional suicide for every 4,200 men who became unemployed as part of a mass layoff and one additional suicide for every 7,100 women who were part of a mass layoff.
> Suicide risk increases for both men and women who experience long periods of unemployment.
83
In addition to several major downsizings, COVID-19 was also associated with large numbers of employees resigning from their jobs - what has this been called?
> what has been called the "Great Resignation
84
Is the great resignation over in Canada?
> According to the Human Resources Professional Association (HRPA), the Great Resignation is far from over in Canada (Utomi 2022)
85
What does the HRPA have to say about the great resignation?
> The HRPA asserts that the Great Resignation is only the symptom, with the cause being what they call the “Great Prioritization” (associated with individuals placing a higher priority on personal well-being, health [physical, mental, and social], family, and other interests and hobbies)
86
Define job security?
> Job insecurity has been defined as “an individual’s expectations about continuity in a job situation” or “overall concern about the future existence of a job”
87
It is readily acknowledged that surviving a downsizing is associated with a stressful work environment. However, are survivors more likely to use alcohol? Michael Frone explored this issue using data from almost 2,300 U.S. workers. Among the most important findings were the following:
> Being exposed to a downsizing was associated with increased frequency of drinking alcohol, number of drinks consumed per drinking occasion, and both binge drinking and drinking to the point of intoxication.
> Excessive alcohol use following a downsizing was significantly associated with younger downsizing survivors (40 years of age or younger), but the relationship between downsizing and alcohol use was not statistically significant for workers over 40 years of age.
88
There is considerable evidence that downsizing may produce a number of dysfunctional behaviours among the employees who remain with the organization - What are three aspects?
1) negative attitudes and behaviours - report increased job insecurity, fear, stress, and burnout. They may also experience lower self-confidence and self-esteem, reduced job satisfaction, and lower commitment to the organization. Not surprisingly, these factors may lead to increased turnover, absenteeism, and lateness.
2) Reduced performance capabilities - There is growing evidence that it is not necessarily the poor performers who leave the downsized organization. Of particular concern is the fear that the best employees will leave, because quality workers are more attractive to other firms.
3) Lower organizational productivity - Negative employee attitudes and behaviour, in conjunction with lower performance capabilities, may destroy or markedly harm team activities and result in lower productivity
89
Survivors of layoffs reported what kind of perceptions?
> Survivors of layoffs reported lower perceived organizational performance, lower job security, reduced attachment to the organization, and a higher intention to quit their job compared with employees who had not experienced downsizing.
90
Survivors of offshoring (moving work to foreign entities outside the company) perceived what?
> perceived that their employer’s organizational performance was lower, manager fairness was lower, and commitment to the organization was not as high compared to respondents who had not been downsized
91
Survivors of outsourcing perceived what?
> survivors of outsourcing (moving work to outside entities such as contractors or consultants, resulting in job loss) did not differ significantly in their attitudes relative to employees who had not been downsized
92
In another study, of almost 2,300 U.S. workers, researchers compared workers who were exposed to a downsizing (“survivors”) with those who were not.
> About 52 percent of the participants were male and the average age was just over 40 years
93
They found that downsizing was associated with nine of twelve work conditions - what were they?
> higher levels of work demands, role conflict, supervisor aggression, dysfunctional leadership, job insecurity, employment insecurity, lower levels of friendship formation, distributive justice, and promotional opportunities
94
What six employee outcomes were associated with downsizing?
> inability to detach from work;
> energetic resource depletion, such as mental, physical and emotional fatigue; health [physical and mental];
> negative affect [depression, anxiety, and anger]; positive effect, for instance, happiness and confidence;
> and work attitudes, including job satisfaction, commitment to the organization, and intention to quit their job
95
What results due to participating in the downsizing process?
> participating in the downsizing process was very difficult for a number of managers.
> Of particular note was the experience of social and organizational isolation, a decline in personal health and well-being, and an increase in family-related problems
96
Another study revealed that having to carry out the downsizing (being the “executioner”) is like what on the employee?
> is emotionally taxing and that the downsizers develop mechanisms to distance themselves emotionally, physically, and cognitively from the task
97
How do experienced downsizers handle it?
> Experienced downsizers were more able to develop coping mechanisms and an emotional numbness to the task (Gandolfi 2009, 185–200).
> Downsizers may begin speaking in less personal terms to describe their job—for instance, a workforce reduction may be described as a realignment or “revectoring.”
98
Stevens and Hannibal (2021) assert that the individuals responsible for the downsizing (sometimes known as the executioners or smiling assassins) frequently experience several negative outcomes associated with their work - what do they refer to these individuals as?
> They refer to such individuals as “redundancy envoys” and reconceptualize them as quasi-dirty workers whose work may be morally tainted.
99
edundancy envoys suffered from what as a result of downsizing? a
> suffered from high levels of stress and anxiety;
> considerable internal conflict, as they had strong feelings of empathy for the victims of downsizing but felt that managing the layoffs was part of their job;
> doubt and insecurity about whether they were doing the right thing;
> and guilt associated with destroying the workforce and dismissing employees who were not responsible for the organization’s problems.
100
How does downsizing affect the stock markets?
> One study indicated that downsizing had a negative impact on stock market returns, and this was even more pronounced for larger downsizings.
101
However, the negative effects associated with downsizing were reduced or eliminated when the firm adopted a strategy in which what occured?
> in which specific units and functions were targeted for layoffs; targeted cuts allow the firm to retain the most valuable human resources, whereas across-the-board cutbacks result in the loss of quality employees.
102
If engaging in a large downsizing is inevitable, firms with disengagement incentives/strategies (incentives to leave) are viewed in what way in the stock market?
> are viewed more favourably by the stock market relative to firms without such incentives/strategies
103
the decision to use a press release to announce a downsizing was associated with what kind of reactions and from who?
> was associated with more negative reactions by investors
104
One study examined “serial downsizers” (i.e., firms that had downsized the workforce both when the study began and five years later). The serial downsizers had the poorest scores on what? What about late-downsizers and early-downsizers?
> had the poorest scores when considering changes in employee satisfaction (e.g., poorer morale, quality of work life, commitment to the organization).
> While the “late downsizers” (those organizations that had downsized only recently) also had negative scores on the employee satisfaction measures, the “early downsizers” did not significantly differ from those employers that did not downsize throughout the period of the study.
105
What are the implications for employee quit behaviour if an organization downsizes due to Trevor and Nyberg?
> Downsizing was associated with a higher quit rate.
> Higher quits are frequently associated with negative consequences, compounding the negative effect of the downsizing.
> If downsizing is unavoidable, adopting practices such as job embeddedness (e.g., flextime, on-site child care, and defined benefit plans) and procedural justice prior to the downsizing may reduce the consequences of downsizing resulting from higher voluntary turnover, induce the least valuable employees to leave, and encourage the most valuable employees to stay.
106
One issue that has received little attention is the effect of downsizing is?
> One issue that has received little attention is the effect of downsizing on the organization’s reputation for corporate social performance (RCSP).
> Reputation for corporate social performance can be defined as “the firm’s reputation for principles, processes and outcomes related to the social impact of the firm’s operations”
107
Another issue beginning to attract attention is the relationship between downsizing and what?
> between downsizing and employee safety. The research evidence suggests that downsizing creates job insecurity, which is strongly associated with low levels of job satisfaction.
> Low job satisfaction, in turn, is related to safety motivation (the incentive to work safely) and safety knowledge (an understanding of safe operating procedures). When safety motivation is low, employees are less likely to engage in “safety compliance,” that is, comply with safety procedures and carry out their work in a safe manner
> also associated with more workplace accidents
108
What are the implications for workplace safety? According to Predictive Safety (2022), the implications include the following:
> A shortage of workers means that remaining employees may have to work faster and some may take short cuts or not follow safety practices due to work overload.
> When older and more experienced employees leave, their replacements may not have the skill or knowledge to complete their jobs in a safe and timely manner.
> Reliance on the use of overtime results in employee fatigue and increases the likelihood of injuries and accidents.
> With fewer supervisors, there may be lapses in monitoring safety performance, fewer workplace inspections, and less time to train and provide feedback to both new and existing employees.
109
Are victims of downsizing more likely to engage in criminal behaviour? A large study of Norwegian men between the ages of 18 and 40 revealed what?
> men between the ages of 18 and 40 revealed that men who lost their jobs due to a mass layoff were more likely to commit more crime.
> Criminal behaviour increased by around 20 percent in the year of the layoff and then gradually dissipated.
> Criminal offenses were more likely to occur during the week rather than on the weekend, with the highest rate of criminal behaviour on Monday and the lowest on Sunday.
> Property crimes were most common, but rates for violent and alcohol/drug-related crimes were also higher for men losing their jobs (compared with men who were employed).
> Rates for violent and alcohol/drug-related crimes were also higher in the year before the men lost their jobs.
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What factors are associated with these findings? The authors point to two important variables:
> First is time availability, or the notion that men who have lost their jobs have more free time on their hands.
> Second are psychological factors such as mental distress and issues with self-control.
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In relation to strategy, what should downsizing be like?
> The focus should be on rightsizing, which involves establishing a shared vision of the organization and a clearly stated strategy supported by management, understood by employees, and involving a sense of “ownership” by members of the firm
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There is evidence that negative outcomes associated with downsizing might be mitigated by what aspects?
> mitigated by increased communication and employee participation, and systematic analysis (in advance) of tasks and personnel requirements
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While managing layoffs is extremely difficult, the challenges are magnified during the pandemic; a recent Harvard Business Review article made several suggestions
1) Gather info - when and how to notify employees about layoffs and reactions they will have.
2) Understand your limitations: One idea is to ask each employee if there is a time when you can have 15 minutes of their focused attention.
3) Set the right tone: A particular challenge is if the conversation will need to be held remotely. call or zoom?
4) Be human and direct: The message should be clear, concise, and unequivocal and provide the time period when the individual’s employment will end + address the actual reason
5) Offer assistance: But don’t promise more than you can deliver. Outline available resources and opportunities for government assistance
6) Be transparent: Remaining employees (survivors) are also going to have questions and concerns about their continued employment. One option is an ongoing “ask me anything” forum
7) Vent and focus on your own well-being: Laying off employees during a pandemic is a huge responsibility; you also need to pay attention to your own physical and mental health.
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One study compared the effect of the three downsizing strategies (workforce reduction, organizational redesign, and systematic change) on two performance outcome measures (cost reduction and quality improvement) (Mishra and Mishra 1994, 261–279). It found that:
1) It found that the workforce reduction strategy was negatively related to organizational performance,
2) while the organizational redesign and systematic change strategies were associated with improved performance.
3) Moreover, mutual trust between employees and senior management plays an important role in the success of organizational redesign and systematic change strategies.
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Researchers developed a list of six best practices in downsizing firms (Cameron, Freeman, and Mishra 1991, 57–73):
> Downsizing should be initiated from the top but requires hands-on involvement from all employees.
> Workforce reduction must be selective in application and long-term in emphasis.
> Special attention should be paid both to those who lose their jobs and to the survivors who remain with the organization.
> Decision makers should identify precisely where redundancies, excess costs, and inefficiencies exist and attack those specific areas.
> Downsizing should result in the formation of small, semi-autonomous organizations within the broader organization.
> Downsizing must be a proactive strategy focused on increasing performance.
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According to HRM professor Nita Chhinzer, the keys to effectively managing the layoff process include the following:
> Do it quickly and efficiently – spreading layoffs over a longer period of time leads to increased job insecurity, a possible decrease in productivity, and losing good employees who decide they want to leave.
> Make sure that supervisors have clear and detailed information about the layoffs and what their responsibilities are related to the downsizing.
> Have all information packages and forms prepared well before the layoff. Laid-off employees are going to have questions relating to such issues as when does the layoff occur, what is the severance package, when are company property items (such as laptops and security cards) due to be returned, and is there a possibility of recall.
> Explain the rationale for the layoff and be prepared to address employee concerns regarding why they were selected for the layoff and other workers were not.
> Don’t neglect the survivors who remain with the organization.
> Be aware of the risks of voluntary layoffs. High-quality employees are typically the most marketable, and the organization may suffer if they leave and poorer quality workers remain.
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What are 6 elements for communication in a downsizing?
It is important to (1) attend to rumours,
(2) provide survivors with available information on the downsizing,
(3) ensure that survivors are aware of the new organizational goals,
(4) make expectations clear,
(5) tell survivors that they are valued, and
(6) allow time for grieving
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Human resources experts have a considerable role to play in downsizing and restructuring. Some considerations are as follows:
> Advising on restructuring the organization (work groups, teams, departments, and so on) to maximize productivity and retain quality performers
> Developing skill inventories and planning charts to evaluate the impact of a downsizing on HR needs and projected capabilities
> Communicating the downsizing decision effectively
> Evaluating the downsizing program after completion
- This includes an assessment of who left the organization and who remains
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The use of robots is expected to accelerate, due in part to:
> The use of robots is expected to accelerate, due in part to the Great Resignation and the shortage of employees in several sectors of the economy, and to the fact that robots are increasingly becoming able to complete complex tasks.
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In any downsizing involving a union, it is critical that management representatives do what?
> read the collective agreement
> The collective agreement often outlines the procedures to be followed in the event of a reduction of bargaining unit employees
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What is the The interventionist union response?
> The interventionist response was characterized by early involvement in the restructuring process and the involvement of a broad cross-section of the union membership in the development and implementation of the new form of work organization.
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What is the pragmatic union response?
> the pragmatic response was one in which the union relied on the employer to make workplace changes and then negotiated with management over the impact of such changes.
