The Downside of Downsizing

Abstract

With the help of data obtained from open-ended interviews conducted with the various stakeholders in downsizing operations and applied within a clinical framework, individual reaction patterns are explored in the victims, the survivors (those staying with a company after layoffs), and the "executioners" (those responsible for the implementation of downsizing). Special emphasis is given to the reactions of the executives implementing the downsizing operation. Among this group of people, a number of ways of coping can be discerned, described as compulsive/ritualistic, abrasive, dissociative, alexithymic/anhedonic, and depressive. The article ends with a number of practical recommendations about how to facilitate the downsizing process. From the interviews conducted, it appears that downsizing, in the more narrow sense of the word, can be a quite destructive process. Reframing the concept so that downsizing is viewed as a continuous process of corporate transformation and change, a way to plan for the continuity of the organization, seems to be a more constructive approach.

The effects of unemployment and perceived job insecurity: a comparison of their association with psychological and somatic complaints, self-rated health and life satisfaction

“…As perceived job insecurity is suggested to be problematic in terms of lack of control (Vander Elst et al 2011 interventions should target this perceived lack of control, for example by investing in communication (e.g. Kets de Vries and Balazs 1997;Vander Elst et al 2010), participation in decision making (Probst 2005), and perceived employability . As reducing perceptions of job insecurity is not always possible in economically turbulent times, intervention strategies should also target mechanisms that aim to reduce the negative impact of job insecurity on employees' well-being and health.…”

Struggles Over Legitimacy in Global Organizational Restructuring: A Rhetorical Perspective on Legitimation Strategies and Dynamics in a Shutdown Case

“…Only a few dissonants begged for more aggressive public policy against the changes (Craypo and Davisson 1983). At this time, economists, finance scholars and strategy researchers became interested in organizational restructuring, in particular in the financial benefits (Zajac and Kraatz 1993, McKinley and Scherer 2000, Clark 2004) and management of change (Gilmore and Hirschhorn 1983, Sutton et al 1986, Kets de Vries and Balazs 1997, Marshall and Yorks 1994, Freeman 1999). …”

There's more to the picture than meets the eye: A comparison of downsizing survivors with changed and unchanged job content

“…Organisations engaged in downsizing, as well as other types of organisational change, often expect positive effects such as lower overhead costs, decreased bureaucracy, faster decision making processes, smoother communication, increased productivity, and better earnings (Kets de Vries & Balazs, 1997). However, several studies have reached the conclusion that the postulated benefits of organisational downsizing are seldom achieved and that the negative side effects have severe consequences for the organisations' vitality and competitive ability (e.g., Beylerian & Kleiner, 2003;Burke & Nelson, 1998;Cascio, 1995Cascio, , 1998Devine, Reay, Stainton, & Collins-Nakai, 2003;Kets de Vries & Balazs, 1997;Pfeffer, 1998).…”

“…However, several studies have reached the conclusion that the postulated benefits of organisational downsizing are seldom achieved and that the negative side effects have severe consequences for the organisations' vitality and competitive ability (e.g., Beylerian & Kleiner, 2003;Burke & Nelson, 1998;Cascio, 1995Cascio, , 1998Devine, Reay, Stainton, & Collins-Nakai, 2003;Kets de Vries & Balazs, 1997;Pfeffer, 1998). Furthermore, the slimmed-down organisations are more likely to outsource specific tasks and to use an increased number of temporary workers in order to minimise the size of the core organisation (Pfeffer, 1997).…”