Past, present and no future—survivors’ perceptions of organizational decline

Abstract

This article investigates the work attitudes of survivors during the ongoing decline of a firm with no prospect of recovery due to external causes. Data from a German firm is used as a case study. In particular, we explore whether transparency is a tool for keeping and regaining trust while decreasing stress and, hence, leads to high and stable employee satisfaction even during adverse times. Analyzing data from both an employee attitude survey and an executive attitude survey with over 25,000 and 1,700 initial responses, we run multiple mediation models and find that transparency is a tool for keeping and regaining trust while decreasing stress and, hence, is associated with increasing satisfaction during a decline. Thus, for both employees and their executives, high levels of transparency and trust seem to be effective in mitigating the negative effects of downsizing. We discuss the results with regard to potential declines in several key industries.