Successful Execution of Corporate Downsizing Essay

Downsizing is defined as a deliberate design within organization that aims to reduce the workforce in order to improve the performance of the organization. It is a managerial tool to improve efficiency, productivity and to enhance the competitiveness of the organization. From the organizational point of view, this act is a positive strategy while the human resource considers it a threat. The paper focuses on how downsizing impacts the relation between the organization and its members; the reaction of the retainers and how they perceive the organization.
Some of the benefits of downsizing include greater flexibility, enhanced quality, rise in productivity and efficiency and a faster process of decision making. Downsizing has become a necessary approach for the corporations in order to raise their level of competitiveness. The actual purpose of downsizing is to reduce the costs of the company by reducing the workforce so that the bottom line of the company can be improved. But it cannot be ignored that the attitude and the behavior of the workforce that survives changes. The problem is that the most prevalent effect is negative on the survivors. It is essential that employees believe that management had no other option than downsizing and consider it legitimate; if in case, the survivors do not consider it legitimate then their commitment and loyalty towards the organization would be negatively impacted. Another aspect is that if the survivors feel personally benefitted then they have positive attitude. In addition, if the employees feel that the procedure had been fair and their colleagues were not victimized, they would feel satisfied and content with the organization.
If the senior management is credible, then their communication is more effective; but if the employees perceive that the senior management and the organization do not value the employees, there is a more chance that management’s words are taken for granted. The most important is how the fairness and legitimacy is promoted; if the management promotes fairness and legitimacy, then the perception of the survivors of the procedural fairness is enhanced. No matter what, the ‘retainer’s syndrome’ is always present when corporate downsizing takes place. This is when the members of the organization feel more uncertain and insecure; they feel anxiety and fear of losing their job. This leads to developing stagnation and deterioration in the behavior because their morale declines. With lower morale their trust in the organization declines which adversely impacts their productivity leading to decline in the performance of the overall organization.
When downsizing takes place, there is a breach of psychological contract between the employee and the organization—this is the contract which implies that life time employment is guaranteed in return for loyalty and hard work. The employees feel dependent on the organization giving them the entitlement but with downsizing this feeling is changed to sense of betrayal. It has been shown by many researchers that downsizing in organization induces strong stress in the relation between organization and its members which influences the behavior at work and the attitude of the workforce. The relationship which was earlier perceived to be long-term moves away to uncertain. The retainers who have short years of service feel more fearful as compared to those who have been in service for a long time.
In conclusion, with corporate downsizing comes feelings of fear, tension, anxiety and stress; these affect the members physically, psychologically and emotionally. The members feel more uncertain and insecure which affects their productivity and commitment. In a globalized era, high competitiveness is the key to survival and for that purpose, organizations need to execute downsizing as a success strategy; the management requires being proactive rather than reactive.