Workforce Downsizing Research Articles

Workforce Diversity: Downsizing in the NYPD and its Effect on Minority Integration

Workforce downsizing (ie, the reduction or elimination of positions) may have a significant positive or negative impact on minority employment and the level of diversity that exists within a public agency. This study examines the impact that downsizing has had on the employment of minority police officers and civilians, and levels of diversity in the New York City Police Department (NYDP) from 2000 to 2012 as the agency has reduced its workforce. The findings show that minority integration has increased despite the workforce downsizing. As the NYPD reduced the number of police and civilian positions since 2000, the number of minorities the agency hired increased, while the number of White employees declined, contributing to an increase in the level of workforce diversity.

Workforce Downsizing and Firm Performance: An Organizational Routine Perspective

AbstractWhile there is an extensive body of work on how organizational routines emerge and evolve over time, there is a scarcity of research on what happens when routines are disrupted or disbanded through the elimination of key individuals involved in them. This study is the first to theorize and empirically examine the relationship between the magnitude of workforce downsizing and firm performance applying an organizational routine perspective. Consistent with prior research on organizational routines, we posit that small‐scale downsizing leads to efficiency improvements without disrupting the existing routines. While larger routine disruptions occur in both medium‐ and large‐scale downsizing, we further argue and find that large‐scale downsizing tends to be more beneficial than medium‐scale downsizing. Building on prior research on routines, we reason that in medium‐scale downsizing employees try to salvage the impaired, partially functioning routines, while large‐scale downsizing requires a more fundamental rethinking and re‐creation of routines leading to more positive outcomes. Our study contributes to downsizing research through the application of the organizational routine perspective to explain the financial outcomes of downsizing. In doing so, we depart from the widely held assumption in the downsizing literature that the relationship between the magnitude of downsizing and firm performance is linear. Our study also extends prior research on organizational routines by highlighting the usefulness of conceiving routines as mindful accomplishments where the pressure to engage in path‐breaking cognitive effort may lead to better results than path‐dependent repairing of routines.

Keeping the sparkle on

PurposeThe Indian diamond cutting and polishing (CPD) industry enjoys a global leadership position, but at the same time is vulnerable to economic shifts in the global market. Historically, such shocks have resulted in shake down of the industry, including closures, bankruptcies, job losses and labour unrest. Most recently, the vulnerability was experienced during the economic recession of 2008, which impacted both entrepreneurs and diamond workers alike. The shock elicited different adaptation strategies from individual firms. The paper aims to understand the adaptation strategies of large and formally organized diamond enterprises in Surat, India, with particular reference to “labour hoarding” as a strategy for workforce management.Design/methodology/approachUsing case studies of four large CPD firms, the paper investigates patterns in managerial decision making pertaining to workforce management and adaptation strategies taken during recession. The authors also traced the subject companies' performance post‐recession. The tool used for data collection was semi‐structured, in‐depth interviews with entrepreneurs and human resource managers. For additional inputs and triangulation of findings, content analysis of news reports, along with interactions with several knowledgeable persons from both industry and government, were conducted.FindingsThe authors' study of the sample firms neither supports the popular notion of “workforce retention by large diamond enterprises, in spite of recession” nor the generalized statements about “massive lay‐offs by all”, as reported in popular media. The authors found that, due to recessionary pressure, there was a deep managerial dilemma in the companies about how to strike the right trade‐off between workforce retention (labour hoarding) and downsizing. The paper argues that, post‐recession, the companies whose decisions were pro‐labour retention (hoarding) oriented were able to come back in business stronger and perform better.Originality/valueThe diamond industry of India is ethno‐bound in its functioning, where community and regional/linguistic affiliations of both workers and entrepreneurs traditionally played a vital role. Therefore, the employee management practices adopted do not strictly fall within the general realm of western management practices or popular HRM frameworks. The study shows that context‐dependent employee management strategies, suiting the need for maintaining the traditional ethno‐bound values even during recessionary pressure, created long‐term positive effects for the firm.

The Effect of the Demand Side’s Confidence on the Supply Side’s Confidence: The Mediating Role of Financial Stress

This paper provides empirical evidence of how financial stress mediates the effect of the demand side’s confidence on the supply side’s confidence in the United States. Using monthly data from 1994:M2 to 2012:M5, the time-series regression analyses show that changes in the demand side’s confidence positively and significantly predicts the supply’s side confidence in the United States. The increased changes in the demand’s side confidence forecasts lower financial stress. When changes in financial stress and demand side’s confidence included in the regression to predict the changes in supply side’s confidence, the demand side’s confidence coefficient becomes statistically insignificant but the changes in financial stress coefficient is negative and statistically significant. The findings of this study imply that in a demand-driven economy, health of the financial sector plays a very important role in economic growth and prosperity because stressful financial sector puts downward pressures on businesses resulting in a higher unemployment rate in the economy due to workforce downsizing and freeze of new hire.

THE IMPLICATIONS OF MAGNITUDE, TIMING, & REALIZATION OF WORKFORCE DOWNSIZING ON FIRM PROFITABILITY.

Few empirical studies have focused on the internal characteristics of the downsizing process that influence the relationship between workforce downsizing and organizational performance. Our study addresses this gap by analyzing the effects of magnitude, timing, & realization of workforce downsizing on downsizing firms' subsequent financial performance. Based on an analysis of the workforce downsizing actions by the largest European firms (Eurostoxx 50/Stoxx50) between 1996 to 2006, we find that the relationship between the magnitude of workforce downsizing and subsequent firm profitability is non-linear.

Surviving Layoffs: A Qualitative Study of Factors Affecting Retained Employees After Downsizing

Workforce downsizing is becoming an increasingly common outcome of organizational restructuring. Recent studies have focused on the victims of downsizing, the employees laid off. Unfortunately, little has been said about what happens to the “survivors” of downsizing. This qualitative report documents the perspectives of a small company's layoff survivors. It examines factors that affect retained employees' performance. A conceptual framework for evaluating how downsizing impacts job performance is presented. Three main factors–need for security, desire for justice, and level of job enrichment–found to have an impact on employees' ability to actively support the company in its quest for competitive edge, are discussed.

Dumb and Dumber: The Impact of Downsizing on Firm Performance as Moderated by Industry Conditions

Workforce downsizing through employee layoffs has become commonplace in American businesses over the last 20 years. While these initiatives are typically undertaken in the quest for improved firm performance and competitiveness, empirical research to date has been equivocal in supporting the efficacy of these initiatives. In addition, extant research has not thoroughly examined factors or conditions that may influence or moderate the performance impact of workforce downsizing. In this paper, we address the question: Do industry conditions moderate the impact of workforce downsizing on firm performance? We examine this question using matched primary and secondary data on a sample of U.S. manufacturing firms. After controlling for a set of industry and firm-level variables, including firms' prior performance levels, our results indicate that downsizing is associated with decreases in subsequent firm profitability and that these negative effects are more pronounced in industries characterized by research and development (R&D) intensity, growth, and low capital intensity.

Downsizing, competition, and organizational change in government: Is necessity the mother of invention?

One answer to the question of why government organizations don't perform better—common in academic “public choice” literature but also in folk wisdom—is that resources come too easily, independent of performance. Some businessmanagement literature suggests that a crisis in resource flows can force successful change—”necessity is the mother of invention.” However, the literature also presents an alternative view: that crisis promotes rigid preprogrammed responses, not new ways of behaving. This paper examines the impact of crisis on organizational change in government by examining an organizational change effort in the U.S. federal government (procurement reform during the 1990s) that occurred simultaneously with an organizational crisis involving workforce downsizing and introduction of competition for some buying offices. Using a dataset consisting of a survey of approximately 1,600 frontline government contracting officials, the impact of variation in crisis at different buying offices on variation in behavior change is examined. Necessity was found to be the mother of invention, not rigidity. However, these effects were counteracted by two negative effects of crisis on organizational change: 1) employee resentment over violation of a “social contract at work” reduced behavior change, 2) employee association of the change effort with downsizing reduced attitudinal support for the change, which translated into reduced behavior change. On balance, crisis inhibited organizational change, rather than promoting it. © 2006 by the Association for Public Policy Analysis and Management

Managing Learning Disability Services in the United States

The effects of privatisation, public work force downsizing and schemes to re‐invent government have eroded the middle management capacity that is crucial to the success of many community development programmes and complex public and private partnerships for learning disability services in the US. The impact of these factors has been accelerated by reform proposals from within the learning disability field that associate government and management with the perceived ills of traditional specialised service agencies and assume that market and other approaches to providing services will be superior. In addition, the consolidation of learning disability within broader health and human services, at state and local levels, along with large losses in the number of managers in learning disability services, has added to the problems of managing community services. Managing community services is therefore an important challenge in the US, and attention needs to be paid to the unique problems in this environment, with the roles middle managers play in the large and complex organisational environment of community services crucial to their stability and success. Managers more than management frameworks are especially important in the US, as comprehensive administrative arrangements at local level are unlikely to emerge. Disappointment about traditional approaches in specialised provision should not lead to uncritical assumptions about the superiority of alternative arrangements for managing learning disability services.

Caught in the Crossfire: Women and Corporate Restructuring

AbstractSenior women managers who voluntarily left a crown corporation in the midst of corporate restructuring were interviewed to explore the factors leading to their departure. Several themes associated with the restructuring process emerged, some of which appear to be unique to women.RésuméIl s'agit ici d'un entretien mené avec des femmes cadres supérieures qui, de leur plein gré, ont quitté leur poste au sein d'une société de la Couronne en pleine restructuration interne. L'entretien, qui vise à explorer les facteurs qui ont amené ces femmes à partir, fait ressortir plusieurs thèmes associés au processus de restructuration, dont certains semblent ětre spécifiques aux femmes.

Factors Affecting Permanent Workforce Reduction: Evidence from Large Canadian Organizations

AbstractDespite an extensive practitioner literature on workforce reduction, relatively few Canadian studies have empirically examined the determinants of workforce reduction policies. Using data from more than 1,000 organizations across the country, this study investigated factors associated with permanent workforce reduction strategies. Fifty‐three percent of the respondents permanently reduced their workforce during the two‐year period of the study (with an average reduction of almost 15% of the workforce). Multinomial logit was used to compare organizations that had and had not engaged in employee cutbacks. The results revealed that differences in workforce reduction strategies were associated with the economic environment, characteristics of the organization, and human resource management policies.RésuméMalgré l'abondance de la documentation qui existe sur la pratique de la réduction des effectifs, relativement peu d'études canadiennes ont examiné empiriquement les déterminants des politiques de réduction des effectifs. Basée sur les réponses de plus de 1,000 organisations dans tout le pays, cette étude se penche sur les facteurs qui déterminent les stratégies de réduction permanente des effectifs. Cinquante‐trois pour cent des répondants ont réduit leur personnel de façon définitive pendant les deux années de l'étude (réduction moyenne de près de 15% des effectifs). Des organisations qui ont et qui n'ont pas réduit leurs effectifs ont été comparées au moyen d'un logit multinomial. Les résultats montrent que les stratégies de réduction des effectifs dépendent de la con‐joncture, des caractéristiques de l'organisation et des politiques de gestion des ressources humaines.

How to Downsize Legally

To be an effective manager, knowledge of employment laws and how they pertain to terminations, especially mass terminations, is an important attribute. Those selected for termination in a workforce reduction often experience anger, fear, resentment and anxiety. A reduction in force which is carried out in a fair manner and treats the affected individuals with compassion and dignity will go a long way in preventing litigation. The manager must be familiar with how to plan for a reduction in force, the legal aspects involved, and how to go about the actual implementation of the downsizing effort. We have witnessed the workforce downsizing of many organizations within the past few years. The major contributors to this epidemic are plentiful. Economic pressures during the most recent recession and increased global competition have forced organizations to flatten out their organizational structures to enable them to quickly respond to changes in the marketplace. The recent tide of deregulation resulted in mergers and acquisitions creating duplicative positions within the organization. Additionally, the rapid pace of technology has led to databases which displace intermediate level employees whose responsibilities include compiling and analyzing. Unfortunately, corporate reductions may lead to employee lawsuits in the form of “wrongful discharge” cases. Wrongful discharge is a catch‐all phrase for a host of claims made by a former employee against his or her previous employer. The most popular wrongful discharge claims include breach of contract, bad faith, and discrimination of protected groups based on factors such as sex, age, race and many others. Certain employees are covered under the Workers Adjustment and Retraining Notification Act which requires employers to give 60 days advanced notice in the case of mass terminations. While few of these cases ever make it to court, attorney fees, settlement fees and jury awards can be costly. In California, the average damage award exceeded $600,000. Therefore, a comprehensive evaluation of a reduction in force (“RIF”) plan must be performed and the myriad of legal issues must be considered. During this process, it is important to keep in mind that employees selected for downsizing will experience among other things, fear, anxiety and anger. How the actual implementation of the RIF is carried out will have an immense impact on whether an employee will bring forth a wrongful termination lawsuit.