Concept of Employee Downsizing

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Table of Contents

Introduction and overview of the article
Theme and article summary
Methodology
Bibliography
Footnotes

Introduction and overview of the article

Human resource is an important capital for an organization; however, during organization change, employee downsizing may be an essential strategy for an organization’s survival. Employee downsizing may not involve laying off staff, but can be done through freezing of hiring. However, hiring freeze, also known as attrition, does not always result in staff reduction; instead, it may cause staff imbalances especially considering that there is no replacement of retiring employees^[1].

Employee downsizing is defined as planned reduction of the workforce by either laying off, early retirement or failing to replace retired staff and does not include termination due to poor performance^[2]. This strategy is used by organization to cut back the cost of operating. In addition, downsizing is done to reduce managerial layers, hence speed up decision-making process, to increase productivity and increase core competencies, and outsource peripheral duties.

There are various criteria that management uses when choosing the employees to downsize – productivity, age, competency of employee and health or fitness of the employees. Generally, managers indicate that they use performance appraisals and evaluating skills of employee when selecting employees for downsizing^[3].

Downsizing can produce adverse consequences to employees and the employer. Generally, employee motivation on those left behind is largely affected, which can be translated to low productivity. Besides, the organization can lose valuable staff due to voluntary retirement that may be difficult and expensive to replace.

In the event downsizing is unavoidable, management should ensure that the process is done at the appropriate time, proper selection criterion is used, while sufficient communication and secrecy is maintained to avoid negative effects^[4]. In another perspective, both the leaving and staying employees may be affected health wise. Therefore, this research evaluates the effects of downsizing on the health of leavers and those staying in an organization.

This article evaluates the health of employees in municipal before downsizing and after downsizing. Consequently, the article tests the hypothesis that employees with health problems before downsizing in an organization are the target of layoffs, while the health of leavers after downsizing is dependent of reemployment.

In support of first hypothesis, many researches indicate that, organization may consider the health of an employee during downsizing. Generally, various researchers suggest that loss of job due to downsizing considerately affect the health of employees.

Theme and article summary

The theme of this article is health trends of employees before and after downsizing. It explores the links of health problem with being targeted for layoff and the consequences of being laid off on individuals’ health.

The research was based on two hypotheses – selection and consequence hypothesis. The selection hypothesis suggests that employees with health problems are a target of being made redundant while consequence hypothesis indicated that downsizing increased the risks of health problems. Leavers were grouped into three categories depending on the amount of reduction of days worked, which included minor, intermediate and major.

Consequently, they were also classified as reemployed leavers or unemployed leavers. In deed, this pre downsizing health problems determined whether leavers obtained subsequent employment. The result was that, employees who obtain reemployment after downsizing expressed better health than their counterparts did. However, the stayers experienced the highest risk of health problems after downsizing.

Generally, this was attributed to high levels of stress and anxiety due to strict supervision by the management. Importantly, the research dispels the selection hypothesis that claimed that leavers were less healthy than stayers were. Contrary to the selection hypothesis, healthy and more competent employee easily volunteered to leave.

Authority, timeliness, and Bias

The research was conducted by a panel of experts in the field of human resource management hence a reliable authority in the matter. In addition, it comprised of several authors who brought onboard wide variety of expertise and knowledge on the matter. Despite this, the article has weaknesses as it reports on a research done in 1990, which is quite a long time ago; hence, the findings might not be applicable in present settings. Finally, the authors have referenced many other authors who may contribute to some preconceived notions.

Accuracy, Reliability and Viability

The research evaluated the health of both stayers and leavers, hence creating a platform for critical comparison. However, the research did not evaluate the reasons for leaving by the leavers. Data concerning health before downsizing was collected in a fairly stable time, hence producing accuracy. However, the findings may not apply universally as labor and social policies differ from one country to another.

Primarily, data was collected from employers’ records and questionnaires filled out by employees, hence the data used were reliable. The participants in these research comprised of a wide range of employees including different sexes, age groups, and thirty-two variant job categories.

Furthermore, the research was conducted over three years duration, giving sufficient time for possible consequences of downsizing to be identified. Moreover, the research categorized the leavers and the stayers into smaller categories that aided comprehensive assessment of each group.

Methodology

The researchers used quantitative methodology research technique through consultation and evaluation. Based on previous research on impact of downsizing on health of stayers, the researchers sought to identify the effects of downsizing on both stayers and leavers. They used a methodology of testing two hypotheses – selection and consequence hypothesis.

Analysis, Significance of the findings

The article illustrates the impact of various levels of downsizing on the employees, both leavers and stayers. Consequently, it outlines various levels of downsizing. The findings support the consequence hypothesis; leavers were exposed to physiological, mental, and physical problems.

Moreover, the selection hypothesis is disapproved partially since there are employees who are willing to leave voluntarily and are healthier than the stayers are. Subsequently, the stayers in the job categories where there was major downsizing expressed more health problems than their counterparts in other job categories that had lower downsizing did.

The findings can be used by social service providers in supporting employees who lost their jobs to avoid health complication. Based on these findings, proper structures can be formed by the governments to meet the needs of immediate unemployed persons. Moreover, the organization can provide safety nets to assist its employees to transit easily from employment to unemployment status.

The finding can also be used to compel organizations to put in place programs and mechanism to aid employees during downsizing^[5]. In quest for high productivity and effectiveness, the organization can formulate downsizing in a manner that would lower the negative health effects on employees^[6].

Strengths

The major strength of the research is that, foundational information and data was collected before any rumors of downsizing were spread. This is in realization that, the fear of downsizing can affect the health of employees even before loss of job has occurred. Besides, the respondents that were involved in this research were many, hence a sufficient sample to evaluate and draw conclusions. The data excluded employees who retired due to old age in this research.

Moreover, the researchers did not use reduction of number of employees as a measure of downsizing; rather, they calculated the number of days worked. The sample being worked on comprised of several correspondent from wide demographic and variant job categories, hence providing a viable sample. Finally, the article articulates its findings and methods clearly, and gives logical explanations.

Limitation

The major limitation of these findings is that the research did not include the reasons for leaving during downsizing. These factors can influence the likelihood of employees to obtain new employment. Additionally, the research included early retirees in the group of non-employed leavers, which can influence the findings, as most of these persons were relatively older and prone to health problems.

Consequently, the researchers did not attain statistically significant percentages that support the claim that non-employed leavers have higher health problems. Several assumptions were applied during this research, which can influence the findings. Moreover, many other factors that contribute to ill health are not factored in this research.

The research links lack of reemployment opportunity to poor health, while there are other factors that contribute to lack of jobs i.e. economic forces and competency levels. Therefore, the authors recommend additional research on how downsizing affects stayers and leavers. Nevertheless, the article is written by several authors that could have led to lack of objectivity of the matter.

Summary

The research draws a link between downsizing and the level of downsizing to the health of the affected employees. Primarily, this research clearly indicates that there is connection between deterioration of health and downsizing of employees. It suggests that non-employed leavers are at a higher risk of various health issues compared to other groups. Nevertheless, the stayers in job categories that experienced major downsizing were also largely affected i.e. higher levels of downsizing implied higher risks of health problems.

In addition, leavers with better health have better chance of reemployment compared to unhealthy leavers, which contradicts the selection hypothesis. In addition, the research concluded that the average age of reemployed leavers was lower than unemployed leavers. Further, the health of reemployed and non-employed leavers did not differ significantly from stayers in job categories that experienced minor or no downsizing.

Data

The data clearly indicates a correlation between health problems and downsizing in an organization. However, in some respect, the research did not obtain statistical significance percentage to support the claim. Importantly, organizations and the local governments’ structures can be set in order to help employees to transit from employment to unemployment during downsizing.

Employee loyalty

Besides lack of motivation, employees especially stayers lack loyalty and commitment to their employers and their responsibilities is prevalent during downsizing^[7]. Mainly, loss of loyalty is caused by fear, anxiety, and strict supervision. Additionally, employees are concerned about possible job loss, chances of advancement, new supervisors, and hence variant expectations^[8].

In deed, lack of loyalty is higher in job categories that are more exposed to major downsizing. This can translate to lower productivity or even lose of valuable employees due to insecurity. Therefore, during downsizing, the organization management should formulate plans to motivate the stayers and restore employee trust and loyalty in the organization.

Bibliography

Anertez, Bengt & Ekman, Rolf. Stress is Health and Disease. Weinheim: Wiley-VCH, 2006. Web.

Diane publishing Company. Workforce Reduction: Downsizing strategies used in selected organizations. NY: Diane Publishing, 1995. Web.

Roussea, Denise. Psychological contracts in organizations: understanding written and unwritten agreements. California: Sage, 1995. Web.

Shalhoub, Zeinab & Karake, Zeinab. Organizational downsizing, discrimination and corporate social responsibility. CT: Greenwood Publishing Group, 1999. Web.

Yankelovich, Daniel. Mother Jones Magazine, Vol. 22, No. 4. Mother Jones Publisher, 1997. Web.

Footnotes

Diane publishing Company, Workforce Reduction: Downsizing strategies used in selected organizations, (NY: Diane Publishing, 1995), p. 6.
Denise Roussea, Psychological contracts in organizations: understanding written and unwritten agreements, (California: Sage, 1995), p.212.
Diane publishing Company, ibid, p.31.
Zeinab Shalhoub & Zeinab Karake, Organizational downsizing, discrimination and corporate social responsibility, (CT: Greenwood Publishing Group, 1999), p.60.
Diane publishing Company, ibid, p.35.
Bengt Anertez & Rolf Ekman Stress is Health and Disease (Weinheim: Wiley-VCH, 2006), p.106.
Daniel Yankelovich, Mother Jones Magazine, 1997 Vol. 22, No. 4 (NY: mother Jones Publisher), p.60.
Diane publishing Company, ibid, p.32.

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