“They (surviving employees) can’t seem to snap back. …layoffs are behind us. We have streamlined the work flow but productivity is actually lower than before we started. Am I missing something?”
- A General Manager at a firm that had recently downsized, in his interview with David Noer (President of Noer Consulting, An Expert on Organizational Change Management)
These are challenging times. Economy is in doldrums and markets are shrinking. If we go by the conventional definition of downsizing (5% reduction in organization size), the number of organizations undertaking this painful exercise will easily outnumber the leaves shed in an orchard during autumn! All major business dailies are flush with news of downsizing, accompanied by severe restructuring and layoffs. Morale of the workforce is understandably low and uncertainty in the environment makes the life of managers more difficult during these testing times.
One of the biggest fears of HR managers post-downsizing is the ticking time-bomb in the form of talented but demoralized and disgruntled employees, seeking job change in large numbers. Turnover intentions tend to be high amongst survivors when an organization downsizes and there are many reasons for that. The prime reason is a decline in organizational commitment amongst survivors, whose source, in turn, is a breach of trust in the minds of employees regarding the obligations of the organization and its management (psychological contract in the minds of employees). Employees assume some amount of job stability and security which is breached due to the downsizing event. During downsizing, the victims must be treated fairly but surviving employees also assume importance as it is through them that the organization plans to script a revival. This warrants adequate managerial attention their direction as well. It is absolutely essential that post-downsizing, the organizational commitment of survivors do not go down or else, the loss to the organization can be severe and its revival seriously hampered.
Managers planning and implementing the downsizing process need to be aware of some key factors that have a definitive influence on organizational commitment of survivors. Before, during and after the implementation of downsizing process, the survivors are watching closely and listening intently to all the moves and signals emanating from the agents of downsizing (managers who are party to downsizing related decision making and/or implement the downsizing process). The survivors interpret those events and form perceptions about various aspects of downsizing process. These perceptions influence their opinion about staying committed to the organization.
The current work studies the impact of downsizing on organizational commitment of non-agent survivors (i.e. people who remained with the firm after the downsizing and have no role in implementing or in decision making related to the downsizing process). It uses a field study conducted in an IT company in India and based on the analysis of gathered data, comes up with suggestions to the managers who are grappling with the difficult assignment of downsizing the workforce. The study finds that perceptions of fairness and legitimacy of the downsizing process and the intensity of the breach of psychological contract in employees’ minds are the key downsizing related factors that play a role in influencing the organizational commitment.
The report also recommends ways and means by which managers can bolster and enhance the perceptions about the fairness and legitimacy of the downsizing process and the communication strategy that needs to be followed to minimize the perceptions of a breach in psychological contract after a downsizing has been experienced by the survivors. The report also recommends steps that can be taken by mangers of downsizing firms to keep up the morale of the workforce and generate high levels of organizational commitment even in these stressful times.
