Corporate Downsizing

The Impact of Downsizing on Corporate Reputation

“…However, it is not clear that downsizing has a positive or negative impact on financial performance, as research findings are quite ambiguous. Numerous studies have failed to prove the existence of such a positive impact (Baily, Bartelsman and Haltiwanger, 1994; De Meuse, Bergmann and Vanderheiden, 1997), while Cascio, Young and Morris (1997, p. 1175) found that downsizing firms did not, in the long term, ‘show significantly higher returns than the average companies in their own industries’. Likewise, Lewin and Johnston (2000) reported that two surveys sponsored by the American Management Association (AMA) in 1994 and 1995 found little support that downsizing led to productivity improvements and profits.…”

“…Downsizing, despite its increasing acceptance by corporations, has remained a controversial topic. Empirical evidence fail to support the notion that downsizing leads to superior financial performance in the long run (Baily, Bartelsman and Haltiwanger, 1994; Cascio, Young, and Morris, 1997; De Meuse, Bergmann and Vaderheiden, 1997). Some academics insist that downsizing, if done strategically, can benefit the firm (Burton, Keels and Shook, 1996), while others claim that downsizing as a strategy for improvement is ‘by and large, a failure’ (Cameron, 1996).…”

Does Downsizing Strategy affect the Retained Employees Performance?

“…In an extension of this research it was noted that since 2000 downsizers enjoyed lower profitability than stable employers or upsize in the two years subsequent to the announcement of layoffs. Other studies on American corporations also showed that downsizing did not lead to improved financial performance (De Meuse et al, 2004). It was further noted that financial performance of companies which downsized did not significantly differ from non-downsizers.…”

Organizational downsizing, mergers and acquisitions, and strategic alliances: Using theory and research to enhance practice.

“…It will not get out of it quickly, either. There is very good reason to believe that it likely will take a couple of years (see De Meuse et al, 1994Meuse et al, , 2004. Further, executives should not expect that a clear strategy implies a clear path toward organizational success.…”

“…The literature does not clearly examine the methodology that leads to the least negative employee reactions. Rather, research reveals the procedures used to select, notify, and support employees are important (De Meuse, Bergmann, & Vanderheiden, 1997;Feldman & Leana, 1994). For example, Wiesenfeld et al (2000) found that managers who perceived procedural unfairness during downsizing tended to manage poorly, and in turn, their direct reports tended to have negative perceptions of their immediate work environment.…”