Like other integral components of any organisation downsizing is now considered a standard management practice. Downsizing has become a strategy of organisations and an unescapable issue for managers today. From a global perspective, downsizing causes and effects are similar worldwide supporting the argument that downsizing is here to stay and is perhaps now an accepted part of the organisational makeup. Managers across countries are choosing downsizing as a strategy for improving overall organisational success despite the overwhelming evidence to the contrary and the multiple players affected negatively by downsizing. The literature is demonstrating that downsizing is not producing the benefits desired and that managers are overlooking the need to understand and plan for the postdownsizing environment especially the effects to the human resource.
Significance to Social Impact
Experiences in the workplace, such as downsizing, continue to impact individuals, among other challenges in their personal lives. When a
company downsizes, an individual can become fearful and anxious due to the possibility of losing their livelihood. Researches suggest that downsizing impacts all employees negatively. Fear produces stress. Stress in turn can lead to burnout, which is a response to the many changes following a downsizing event such as job insecurity and work overload that caused the stress. Downsizing is also considered a threat to an individual’s social life. Often those on the receiving end of a downsizing event are the focus but there are also implications for managers that must make the decision to downsize; managers also experience fears and anxieties about downsizing and the possible impact to their own jobs and can experience burnout as well.
Most consequences of downsizing affect the internal processes of an organisation but downsizing also has an effect on external stakeholders as well, such as the customers of an organisation. Customers can become uncertain about a company’s product(s) or service and the overall stability of the company. This can translate into a loss of customer satisfaction affecting the relationship between the company and its customers.
Organisational culture is related to effectiveness and overall success in an organisation; therefore, an undesired organisational culture can lead to decreased performance and effectiveness companywide producing a poorly performing employee resulting in termination. Job loss affects the family due to loss of regular monthly income. The societal implications are far reaching because they extend to the family. This dynamic has caused more organisations to embrace the idea that there are benefits to a work-life balance not just for the employee but for the organisation and are implementing policies and programs to support this balance of which organisational culture plays a part.
Drawing from the downsizing literature, six strategies are put forth:
1. Human resource should be viewed as assets rather than costs since they are in fact the most important asset the company has.
2. A properly thought out long term plan for (pre, during and post) downsizing that includes all parts of the organisation should be in place.
3. All members of the organisation should be incorporated by allowing them to participate in the planning stage.
4. Fourth, leadership involvement should be evident through their support as organisational members will look for leadership during the downsizing process. This support helps employees to feel more confident that management cares about how they are affected in the process.
5. Communication must be open and honest. Being fair is not enough. It’s important to be perceived fair. Employees feel they have greater buy in when they are aware of the reasons and plans for attaining the goals of the company
6. Finally, those that remain after downsizing as well as those downsized, need support
Survivor Syndrome and Psychological Interventions
Any area that need attention is the effect of downsizing on the human resource: the victims, the survivors, and even those that must make the decision to downsize much of which involve the survivors.This term found its roots in the idea of the survivor’s syndrome and was suggested by the psychiatrist W. G. Niederland studying survivors of the Holocaust; the experiences of surviving employees after downsizing are likened to Holocaust survivors (Guiniven, 2001). Survivor’s syndrome is the physical and psychological effects caused by downsizing that may affect those workers that were not laid off. Many times the survivors are not considered because it is believed that attention tended to focus on those employees that were losing their jobs (Talwar, 2015); however, managers should be concerned about the survivors because that is the workforce that they will continue to work with. Regardless of the position of the management, managers
should seriously consider the needs of those employees that remain since most downsizing efforts fail to realise their goals because of neglecting the effects to survivors. Downsizing itself is not what causes the issues but it is the execution of the downsizing. It is also believed that survivors experience the same feelings as those that have been laid off; in some cases the feelings are even worse.
There are 14 symptoms of the survivor syndrome:
(e) job insecurity,
(g) reduced risk-taking,
(h) reduced motivation,
m) fatigue, and
It comes as no surprise that there are many psychological and health consequences experienced by the survivors of downsizing. Much of the research on the effects of downsizing focuses on the postdownsizing environment with very few about the predownsizing phase and during downsizing as is the case with downsizing and depression and causes of stress in all three
Depression is one of the most prevalent health conditions in the workforce. After downsizing the displaced, the survivors, the internally
redeployed, and the reemployed all exhibit depressive symptoms. Depressive symptoms are reduced however when they felt informed beforehand and perceived the process to be fair and transparent but greater if confusion abounded. Poor handling of the downsizing process also made them more emotionally distressed and depressed. This problem reinforces the suggestion that organisations should include all members of the organisation at every stage of the downsizing plan.
Managers may view employees as a cost and not an asset and will choose downsizing as an immediate fix to the problems of the organisation but might not consider the consequence to surviving employees that are burdened with the remaining workload.
Therefore, managers should consider the effects of downsizing on the remaining employees and take steps to minimise the consequences by providing resources such as counselling and retraining if downsizing is to have a successful outcome.