Academic journal article Journal of Global Business Issues

Corporate Downsizing: An Examination of the Survivors

Academic journal article Journal of Global Business Issues

Corporate Downsizing: An Examination of the Survivors

Article excerpt

ABSTRACT

This study investigates the effects of downsizing on the survivors of layoffs at a large insurance company. In-depth interviews with four managers were conducted to determine survivor's attitudes relating to the layoffs. All participants have been present for the company's numerous downsizing and restructuring initiatives. The results support previous research concluding that downsizing is often unsuccessful in achieving the goals sought by organizations for the following reasons: survivors of no longer feel a sense of team or purpose, put forth limited effort, operate at high stress levels, feel little job satisfaction, distrust the company and feel no devotion. The implications of these findings are discussed.

Introduction

Corporate downsizing is more than a buzzword in today's business environment. It appears corporations have embraced the strategy of downsizing into their business as a regular practice, evidenced by the daily barrage of layoff announcements in the media. Downsizing is no longer viewed as a last course of action to be considered when a company is "in trouble" or needs to reduce operating expenses; rather accordingto the literature, it has become a favored strategy by which a company can improve corporate efficiency and competitiveness (Godkin, St. Pierre, & Valentine, 2002).

While the ultimate effectiveness and benefits downsizing has for a corporation in the short and long term is in debate, there is a definite human impact. Robert Shaw believes "no other single factor has had as dramatic an impact on the erosion of trust in corporate America as the massive downsizings of the past decade" (Guiniven, 2001 p.53). The most obvious human impact is to the people who have been laid off. According to the literature, these individuals are often known as the "victims of downsizing due to research that document's the devastation of job loss, focusing on negative consequences in terms of psychological and physical well being" (Collins-Nakai, Devine, Reay, & Stainton, 2003 p.no). But what of those left behind, the survivors?

Until recently the "survivors" of corporate downsizing were considered the lucky ones. Little if any attention had been paid to the survivors, given the general consensus was the survivors would or should be grateful to have kept their jobs. Moreover corporations believed the survivors would work harder and more efficiently to keep their jobs so as not to become the next causality. This opinion appears naive in the sense that only positive expectations and impacts of the survivors were considered.

This paper will focus its investigation on the impacts massive corporate downsizing has on those left behind, the survivors. The importance of understanding how corporate downsizing impacts the survivors is essential since these are the very people the company will rely on to move forward. Are survivors really the loyal soldiers grateful to have kept their jobs? Have their attitudes changed? Does downsizing place additional stress on the survivors? By understanding the attitudes, emotions and viewpoints of the survivors, a clear perspective on the true short and long term benefits, gains or losses of downsizing for corporations can be derived.

Why do corporations downsize?

The most common reason corporations downsize is to improve profits. Ranganathan and Samant provide the following explanation "Facing competitive pressures a slowed down economy and dwindling business performance, many firms downsized their personnel in an attempt to reduce costs and improve profitability" (2003 p.239). Guiniven offers, corporations downsize for economic reasons (2001). Godkin, Valentine and St. Pierre stated, "Downsizing is widely used to improve corporate efficiency and competitiveness" (2002, p.57). Lastly, Cummings and Worley believe downsizing is "generally a response to one or more of the following conditions: 1) mergers and acquisitions; 2) loss of revenues and market share through technological and industrial change; 3) the implementation of a new organizational structure; and 4) the belief and social pressures that smaller is better" (2005 p. …

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