Study of downsizing provides new evidence of impact on survivors

Citation

(1998), "Study of downsizing provides new evidence of impact on survivors", European Business Review, Vol. 98 No. 1. https://doi.org/10.1108/ebr.1998.05498aab.005

Study of downsizing provides new evidence of impact on survivors

Study of downsizing provides new evidence of impact on survivors

New research[1] by Cranfield School of Management examines the impact of downsizing on the attitudes and performance of surviving employees. The findings highlight a "motivational paradox" which, unless addressed, will prevent organisations from realising the long-term benefits of downsizing.

The study sampled 90 large organisations in the UK from a cross-section of industry and commerce in the public and private sectors, which were currently downsizing or had downsized over the last three years. It questioned human resource directors and managers about how they perceived the downsizing process and the responses of the survivors to it.

The findings suggest that downsizing had both positive and negative effects. Just under half (49 per cent) of HR directors/managers questioned felt that performance of survivors had increased in the aftermath of downsizing; 46 per cent felt that downsizing did not make any difference to performance levels and only 5 per cent felt performance had gone down. What is more, 78 per cent of HR managers reported that survivors had become more task focused.

However, the downside is that the workload of survivors had increased in the view of 80.7 per cent of the HR managers. According to 75 per cent of respondents stress levels had also gone up; 63 per cent reported a decrease in feelings of job security and 41 per cent said they thought motivational levels had gone down. Other areas adversely affected were trust in the company, loyalty, career opportunities, fun and control over the workload. Personal satisfaction with the company was also perceived to have dropped among survivors by 60 per cent of the HR managers questioned.

These findings suggest that although downsizing can have a positive impact on performance and efficiency in the short term, it is doubtful whether this can be sustained in the light of the increased pressures placed on survivors. One of the report's authors Kusum Sahdev points to this "motivational paradox": "Organisations downsize in order to work more efficiently and effectively and this relies on the people left in the organisation being creative, flexible and innovative", she says, "Yet they are being asked to do this at the same time as their workloads and stress levels are increasing and their motivation going down. Unless organisations manage this motivational paradox in a structured way, long-term benefits of downsizing are unlikely to emerge".

The research brought to light another irony. The two most common reasons cited for downsizing were restructuring and delayering, and this inevitably will impact on managerial ranks. Yet in the sample studied, it was these same managers who were taking responsibility for counselling survivors. What is more, very few senior and middle managers received any structured support, most of which, according to the research, went to front-line, administrative and operations staff. This calls into question managers' ability to provide adequate counselling to survivors. "Our survey showed that managers are part of the process of implementing downsizing, yet their own positions are threatened and they receive little help. In this respect, they are both executioner and victim", says Kusum Sahdev.

The emotional reactions to downsizing detailed by the HR directors/managers surveyed showed, not surprisingly, that attitudes such as "fearful", "defensive about their roles", "task-focused" and "sense of loss of colleagues" were prevalent among most or some survivors. Emotions such as "let down by the company", "angry", and "bitter" were only applicable to some or few of the survivors, however. Interestingly, although previous studies have suggested guilt is a significant part of survivors' reactions, HR managers in this survey did not perceive that to be the case. "It could be that survivors are coping with feelings of guilt by becoming more task focused and compensating by working harder, hence the performance gains reported", explains Kusum Sahdev.

The changing expectations of the psychological contract between employer and employee were also examined. When it comes to loyalty 59 per cent of HR directors/managers questioned perceived that survivors interpreted loyalty as "responsibility and good work" as opposed to a more traditional view of "remaining with the company" (41 per cent). Furthermore, the way people expect to be managed has changed, with 52 per cent of the responses suggesting that employees now want managers to be empowering, as opposed to 48 per cent which preferred a more paternalistic management style. However, in other respects old beliefs prevail: HR managers questioned perceived that employees have expectations of a long-term employment relationship (61 per cent), believe that the reward for performance should be promotion (63 per cent) and that a life-time career should be an important part of the employment contract.

Kusum Sahdev says:

This research provides a snapshot of downsizing in the UK. Although in many cases survivors' performance levels were raised as a consequence of downsizing, the other side of the coin was increased stress, insecurity and lack of trust, together with decreasing motivation, fun and career opportunities. Any performance gains may therefore be short-lived. The challenge both for HR professionals and for drivers of downsizing is to win people's longer-term commitment in a hostile and uncertain working environment.

Media contact: Andrea Grimshaw, Cranfield School of Management. Tel: 01234 754348; E-mail: p.j.thompson@cranfield.ac.uk

Note

1 "Downsizing and the survivor syndrome: a study of HR's perception of survivors' responses" by Kusum Sahdev and Susan Vinnicombe. Press copies available on request.