Effective Organizational Leadership during Downsizing

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Effective Organizational Leadership during Times of Downsizing Introduction The past several decades have seen waves of downsizing, restructuring and business reengineering as companies of all sizes and types struggle to remain competitive in an increasingly competitive and globalized marketplace. During downsizing initiatives, companies not only lose the tacit knowledge of the terminated employees, they also run the risk of demoralizing the remaining staff who will naturally wonder if they are next. This paper provides a review of the relevant peer-reviewed literature to develop a background and overview of these issues, and to determine how servant leadership and situational leadership can help address the inevitable problems that are typically associated with downsizing initiatives. Finally, a description of three important values that are needed by leaders today to effectively address these downsizing-related problems is followed by a summary of the research and important findings in the conclusion. Review and Discussion Background and Overview Following the end of World War II, a social contract emerged in the United States where employees would trade their hard work and organizational loyalty for a lifetime of assured employment with a pension at the end. As competition from China and the other Asian Tigers increased, companies of all sizes and types were faced with the need to downsize (Abbasi & Hollman, 2000). According to these authorities, "After two
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