Organizational Change: the Effect on Employee Morale and Motivation

8238 Words Apr 6th, 2013 33 Pages
Abstract
News of job losses (whether we label them as downsizing, layoffs, or restructuring) reaches us daily. And sometimes the reality hits close to home – loss of a job of a family member, a close friend, a valued coworker or someone you supervise. According to McKinley, Sanchez and Schick (1995), “This process of deliberate personnel reduction has been justified as a cost-cutting measure and as an incentive to increase productivity. However, evidence has shown that downsizing negatively affects employee morale and productivity.” While people who lose their jobs can be strongly impacted by loss of financial security, fear for the future, and even decreased self-esteem, it’s important to recognize that people who survive job cuts face
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Abbasi and Hollman (1990) point out that throughout the early 1990s, the newspapers and airwaves were filled with stories of major American companies announcing layoffs of several thousand additional employees. Companies large and small were cutting jobs at a rate never seen before in American economic history. The trend toward downsizing is so pervasive, and its impact so profound, that it literally shapes the business strategy of many companies. In a study by Watson Wyatt Worldwide, it was reported that fewer than half of the companies it surveyed after the 1990 recession met profit goals after downsizing. Furthermore, study after study has challenged and often contradicted the long-term benefit of staffing cutbacks as a means to return to profitability. However, according to Carol W. Garnant, “The number one issue that companies immediately face when downsizing is employee morale.” She adds that “prompt resolution of staffing and organizational issues is essential to the first step in change. The longer the process takes, the more painful it becomes, and the greater the chance of losing key employees in the disruptive environment.” Abbasi and Hollman (1990) contend that today’s organizations no longer provide workers with a secure and stable workplace. It’s an unstable environment where workers work for managers who often find their
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