The Implications of Downsizing (Rightsizing) to the Employees, Communities, and Families of the Employees - Research Paper Example

The Implications of Downsizing (Rightsizing) to the Employees, Communities, and Families of the Employees Overview In the recent global financial crisis, tens of thousands of companies around the world have downsized in an attempt to cut down the in-house expenses and maximize the profitability of the business so as to counter the effect caused by the financial crisis. As a result of this, millions of employees have lost their jobs. Those that have managed to stay employed have rendered their services for lesser compensation than before while the work-load was increased. “[M]ost organizational downsizing actions have affected survivors negatively” (West, 2000, p. 82). Downsizing exposes the employees, communities, and the families of employees to psychological, emotional, and physical distress whether they remain employed or get fired. Generally speaking, the implications of downsizing include embarrassment, lack of source of income, depression, low self-esteem, emotional abuse, social exclusion, and poverty. In this paper, I hope to identify the most significant causes of psychological, emotional, and physical distress for the employees, their families, and communities that arise as a result of downsizing for both kinds of employees i.e. those that get fired and others that remain employed. I shall also identify the relative importance of the three kinds of stressors, so that the most significant, the significant, and the least significant stressors are identified separately. The expected outcome of the result is a list of contributors of psychological, emotional, and physical distress for the identified populations, along with the relative importance of each category of stressors. Knowledge of these stressors is the preliminary step towards the identification of the potential ways in which the effect of these stressors can be reduced. Effect of Downsizing on the Fired Employees Downsizing has a lot of negative implications on the life of the employees that are fired in the process. All physical, psychological, social, and financial implications of unemployment apply in the case of the fired employees as they become unemployed. “Some of the effects of downsizing is poor morale, lack of credibility (as an employer), and broken trust” (more-for-small-business.com, n.d.). The first challenge in front of these employees is to seek employment somewhere else. Since they have not left the organization on their own and have rather been fired, this serves as a very negative point if the employees cannot somehow manage to prove that they left the organization on their own. The recruiters tend to suspect the eligibility of such employees for job because they were rejected by their previous employers. Downsizing is mostly a consequence of the deteriorating political and socioeconomic conditions in a country, so when one organization downsizes, most of the other organizations are also doing the same. Finding a job in these circumstances becomes even more difficult for the employees. The process of searching for job is not only physically tiring but is also emotionally demanding as one has to face the high expectations of the friends and family members who depend financially on one with no job in hand. The second challenge in front of the unemployed employee is the constant feeling of embarrassment in front of the friends and family members. Owing to the shortage of money, it is not very uncommon for one to decline to the level that one has to ask friends for money, which in itself is a very embarrassing process, and often the loan is not granted without interest that puts the individual into an even greater financial stress for the time to come. The employees have to meet the daily needs in an increasingly tough environment wherein the prices of things are skyrocketing. All of these factors mutually function to negatively affect the individual’s health and psychology. Effect of Downsizing on the Survivors While the effects of downsizing are undoubtedly negative on the employees that are fired, the practice has mixed effects on the employees that remain employed and have to work in the downsized organization. However, in a vast majority of cases, the negative effects on the remaining employees usually outnumber the positive effects. “Interestingly enough, almost all surveys and research examining the long term effects of downsizing indicate that companies that downsized ended up disappointed in the results” (work911.com, 2012). Negative effects of downsizing on the remaining employees include but are not limited to increase in work load, lesser human resource, lesser vacations, overstaying after the break-off time, distress, fear of expulsion, job insecurity, physical and psychological distress whereas the positive effects include increased opportunities to show individualistic performance and hence move up in position, power, and privileges, and simpler organizational structure with lesser hindrances, politics, and communication problems. Employees that sustain the downsizing have to work under very tough circumstances. They have to do much more than what they were doing in the presence of other employees. Doing more work than they are capable of not only reduces their efficiency in work, but also makes them psychologically more distressed because of their fear that they might be fired like others if they do not improve their performance. Loss of employees as a result of downsizing is no less challenging for the organization itself as workforce is the fundamental knowledge base of an organization and reduction in workforce means reduction in knowledge base. Organizations with insufficient human resource lose their tendency to gain competitive advantage. The shortage of personnel brings along with it the shortage of skills, talents, competencies, knowledge, innovative ideas, and successful strategies. Workers that remain suffer from work-life imbalance in their attempt to catch up with the increasing load in the workplace. The only time they have to use for the work purposes is the spare time they used to have with their friends and families of weekends. Continuous work without the break of a single day in the whole week exposes these workers to extreme physical and psychological distress. Many of these workers become the patients of depression, thus end up increasing their risk of getting fired because of the consequential decline in performance. Not only these workers have to work on vacations, they have to work beyond the regular office hours on daily basis. This leaves them with negligible time for their personal and social life, and they more become like working machines without sentiments and emotions of their own. Downsizing has a deteriorating effect on the morale of these survivors. They no longer trust their employers because they think that they can be fired any time just like their colleagues were fired. This lack of trust leads to employee dissatisfaction that reflects in their declined performance, lost efficiency, and poor productivity. In the present age when organizations are adopting new and innovative measures to increase the morale of the employees and raise their level of satisfaction and motivation, such a dissatisfaction can be a potential threat to the competitive advantage of the organization. Effect of Downsizing on Organizations There are occasional cases of improvement in the organizational culture and work setup with the reduction of the workforce. This particularly happens when over-staffing creates problems of communication and integration in an organization. Just like under-staffing is bad for an organization, over-staffing is quite as dangerous as well. Over-staffing complicates the decision-making process as there are too many people involved in it whose conflicting individualistic opinions and strategies make it hard for the top management to reach a firm decision in a timely manner. Consumption of a lot of time in the decision-making consequentially delays the operations of the organizations, which in turn reduces the profitability of business as well as of everybody involved in it ranging from the business owners to the staff. Besides, presence of more employees in an organization than required gives rise to a culture of blame game and bad politics. The sharp employees tend to occupy the positions of more power and authority in order to control others as well as the organization as a whole even if they do not have the required skills and competencies to do justice to their position. This makes it difficult for the talented and honest workers to move up the ladder of organizational structure and have better positions in the organization. As a result of this, there occurs a decline in the employees’ morale, satisfaction, and motivation for work which reflects in their poor performance. In addition to that, when the number of employees increases beyond the optimal level in an organization, they tend to deny their responsibilities and assign them to others since they know that there are more people than work in the organization and others can easily take their load. In such circumstances, when the organization misses a certain goal, every department and individual indulges in a blame-game where they accuse one another of poor performance and lack of cooperation during the execution of the task. It becomes hard for the top management to distinguish the really sincere and hard-working employees from the time-passers. In order to keep such conditions from occurring in the organization, there needs to be a very tight supervision of the workers. Owing to the aforementioned negative effects of over-staffing in an organization, downsizing serves as a potential way of improvement in the organizational culture as well as the overall efficiency and performance of the organization. When over-staffed organizations are downsized, there not only occurs a drop in the number of problem-creators, but also the remaining employees become more serious and honest in their work in their attempt to survive the downsizing. Effect of Downsizing on Communities The effects of downsizing on the communities and the socioeconomic conditions of a country are disastrous. There is scarcity of jobs while the ones looking for them are in abundance. This increases the competition in the market and even the highly talented and adequately skilled individuals may fail to find a job. Lack of jobs causes people to adopt unlawful and illegitimate means of acquiring money. Such means include but are not limited to theft and robbery, violence, and bullying. Sometimes, the financial institutions like banks are robbed which is a great loss to the economy of the country as a whole as the banks are liable to compensate the customers for the loss which calls for the involvement of the government in the act of compensation of the loss. Unemployment spreads depression and anxiety among the people and they become easily agitated over petty matters, thus frequently getting engaged in conflicts with other people. The consequences of such conflicts can range from quarrels to deadly fights resulting in murders. Effect of Downsizing on Families The families of both the fired employees and the survivors are no less affected by downsizing than the employees themselves. In the present age when the cost of living is fairly high and where so many people depend on the income of one individual, downsizing is very stressful, and embarrassing for the families of the employees. The distressed employees remain agitated and frequently quarrel with their children and spouses out of their stress and anxiety over petty matters. This may lead to broken trust between the family members, and broken families in some cases. One positive effect of downsizing on the families of employees is that it has motivated more women to start informal businesses in order to help their husbands with the income and management of expenses. In their attempt to reduce their husbands’ financial load and stress, women have started such informal businesses as fabric designing, cloth sewing, and teaching. Many women have even managed to establish these businesses within their homes, so they don’t have to necessarily move out in order to make money. Some unfortunate consequences of downsizing in very few cases can be women or even the former employees entering such unethical and indecent professions as prostitution to make money as there are plenty of opportunities of making money this way in the present age with the availability of internet and social media. Conclusion Concluding, almost all effects of downsizing on the employees who are fired are negative while a vast majority of effects on the employees that remain employed are negative, though some positive effects also occasionally occur. The negative effects of downsizing on the fired employees include the challenge of finding a new job, financial and psychological stress, depression and embarrassment, and the need to cope with the ever-increasing prices of products of everyday use. The negative effects of downsizing on the employees that are left employed include increase in the work load, lesser vacations, the need to overstay after the completion of duty hours, lower efficiency and productivity, dissatisfaction of the employees as well as the managers, and physical stress for the employees. Occasionally, downsizing yields positive results for the organization in terms of improvement in the organizational culture and the flow of communication across all channels. Reduction in the number of employees simplifies the process of decision-making, which in turn improves the productivity as well as the profitability of the business. Downsizing not only lowers the credibility of the employer in the eyes of the employees that have been fired but also in the view of those who survive. Downsizing negatively affects the families of both kinds of employees i.e. the fired and the survivors, as well as the community. The family members get distressed just like the employees and have to make important decisions to reduce the financial load on the employee. Downsizing has caused many women to establish informal businesses to help their husbands, which is one positive outcome. Downsizing also has negative effects on the socioeconomic conditions of the society and increases the load upon the government to address the issues of the society. References: more-for-small-business.com. (n.d.). Firing Employees and Laying Off Employees: Be Respectful. Retrieved from http://www.more-for-small-business.com/firing-employees.html. West, G. B. (2000, May 12). The Effects of Downsizing On Survivors: A Meta-Analysis. Retrieved from http://scholar.lib.vt.edu/theses/available/etd-04202000-14520000/unrestricted/new-etd.pdf. work911.com. (2012). Downsizing -- The Long Term Effects. Retrieved from http://work911.com/articles/downsizinglongterm.htm. Read More