The effects of downsizing on labor productivity: The value of showing consideration for employees' morale and welfare in high‐performance work systems

Abstract

Although downsizing remains a topic of great interest to scholars and practitioners, little research has examined the link between the process and organizational performance. The current study examines whether organizations showing greater consideration for employees' morale and welfare in the downsizing process experience increased labor productivity. Further, because downsizing diminishes human capital and interferes with an organization's social exchange relationships, we posit that attention to employees' morale and welfare will be particularly important for high-performance work systems (HPWS) that rely on human capital for competitive advantage. We tested our hypothesis with a sample of organizations that had downsized using survey data matched with secondary data. Results support our prediction that organizations with more extensive HPWS can reduce productivity losses from downsizing by heightening their consideration for employees' morale and welfare. We discuss the implications of these fi ndings.

Voluntary Turnover in Nonprofit Human Service Organizations: The Impact of High Performance Work Practices

“…While originally developed as a theoretical and practice framework in the business research base, HPWS as a framework places an emphasis on how the development and empowerment of a highly skilled and engaged workforce contributes to the overall productivity and performance of an organization (Iverson & Zatzick, 2011). As noted earlier, HPWS are sets or bundles of HPWPs that influence the knowledge, motivation, and involvement of employees (Bae & Lawler, 2000;Chi & Lin, 2011;Way, 2002).…”

“…Most studies have used one of two approaches to measure HPWS. First, studies have computed an additive unitary measure of HPWS that contains individual measures of high performance work practices (e.g., Chi & Lin, 2011;Gittel et al, 2010;Guthrie, 2001;Hartley, 2002;Iverson & Zatzick, 2011;Messersmith & Guthrie, 2010;Patel & Conklin, 2012). Second, scholars have computed separate additive indices for different sets of HPWPs and included the set of HPWPs in their models to represent the construct, HPWS (e.g., Arthur, 1994;Batt, 2002;Batt, Colvin, & Keefe, 2002;Boslie, 2010;Boxall & Macky, 2014;Delaney & Huselid, 1997;Kim & Ko, 2014).…”

Perceived Post-restructuring Job Insecurity: The Impact of Employees' Trust in one's Employer and Perceived Employability

“…Global competition, the worldwide economic crisis and the advancement of information technology have made organisational restructuring in the form of downsizing, mergers and acquisitions, off shoring and shutdowns an increasingly relevant issue (Spreitzer & Mishra, 2002;Ferres, Connell, & Travaglione, 2005;Hopkins & Weathington, 2006;Iverson & Zatzick, 2011;König, Probst, Staffen, & Graso, 2011). There are improvements that organisations expect from implementing such restructuring strategies: decreased bureaucracy, faster decision making, increased productivity and better earnings (Iverson & Zatzick, 2011).…”

“…There are improvements that organisations expect from implementing such restructuring strategies: decreased bureaucracy, faster decision making, increased productivity and better earnings (Iverson & Zatzick, 2011).…”

Dismissal: Important Criteria in Managerial Decision-Making

“…Dismissal decision-making research includes studies on the practices and strategies in restructuring processes and downsizing (Caldas, 2000;Campion, Guerrero, & Posthuma, 2011;Freitas, 2006;Giniger, Dispenzieri, & Eisenberg, 1983;Harcourt, Hannay, & Lam, 2013;Iverson & Zatzick, 2011;Juhdi, Pa'wan, Hansaram, Kaur, & Othman, 2011;McDonald et al, 2008;Østhus & Mastekaasa, 2010;Shah, 2000;Tonelli, 2000;Tsai & Yen, 2008;Tylcsak, 1991;Tzafrir & Eitam-Meilik, 2005).…”