If You Must Downsize, Do It Right

 

 

If You Must Downsize, Do It Right

Wayne F. Cascio

The Business School

University of Colorado Denver

 Note: Much of this paper is excerpted from the author’s broader treatment of these issues in Employment Downsizing and Its Alternatives (2010). Alexandria, VA: Society for Human Resource Management Foundation.

HR matters enormously in good times.

It defines you in the bad.”

 – Jack and Suzy Welch, BusinessWeek (March 11, 2009, p. 104)

Employment downsizing has become a fact of working life as companies struggle to cut costs and to adapt to changing market demands. Indeed, Given the speed and depth of the economic crisis that began in 2007, many companies experienced precipitous drops in sales and revenue. Those drops hit single-line businesses especially hard, because the drops could not be offset by stable revenues or even increases in other lines of business. That led many such businesses to consider downsizing their workforces. Consider this simple, fundamental truth expressed by a small-business owner in recent testimony before Congress: “My ability to maintain employment levels and hire workers depends on whether revenue exceeds costs.”[i] Suppose it does not? With credit markets frozen, many organizations had little choice but to downsize their workforces in an effort to save the jobs of those remaining. In this case, downsizing was a reaction to an emergency situation.

Downsizing can also be part of a broader workforce strategy designed to align closely with the overall strategy of the business. Layoffs become just one tool in a portfolio of alternatives to improve firm performance. Management may view this as an opportunity to enhance the organization’s medium- and long-term agility through well-planned and targeted coaching, change and career-management interventions.[ii]

Cisco Systems, a company that has changed its workforce strategy in recent years, laid off 20 percent of its workforce in 2001 due to tough times. In 2008, the firm implemented employment downsizing only as a last resort, after deploying several other alternatives. The new, measured approach was more consistent with Cisco’s long-term talent-management strategy of building internal talent rather than buying it in the external labor market.[iii] In other cases, businesses adopt new strategies that require them to pursue different products or services and new types of customers. The new strategies may motivate firms to lay off employees with obsolete skill sets and to hire new employees with the skills to implement the revised business strategy. In such cases, downsizing makes sense.

Does Downsizing Pay Off?

If we consider the extent of employment downsizing in the United States alone, it is a very common practice, since 8.6 million jobs have been lost since the Great Recession began in 2007.[iv] But does this practice achieve the desired results? Studies have tracked the performance of downsizing firms versus non-downsizing firms for as long as nine years after a downsizing event. The findings: As a group, the downsizers never outperform the non-downsizers. Companies that simply reduce headcounts, without making other changes, rarely achieve the long-term success they desire.[v]

In contrast, stable employers do everything they can to retain their employees. Consider what happened in the depths of the economic recession in 2008.  While more than three million Americans lost their jobs that year, 81 percent of the top 100 companies in Fortune’s 2009 list of “Best Employers to Work For” had no layoffs in 2008.

Missed Opportunities

In addition to a smaller payroll, a downsized organization often means:

• Lost business as a result of fewer salespeople.

• Lack of new products since there are fewer R&D staff members.

• Reduced productivity when high performers leave as morale decreases.

Such missed opportunities—resulting from downsizing—can have a huge negative impact on the fortunes of an organization. Beyond missed opportunities, large layoffs tend to result in a substantial decline in employee morale and commitment and a significant increase in stress.[vi]And for the bottom line, research indicates

that companies with very deep layoffs underperform the market by as much

as eight percent over the ensuing three years.[vii]

Direct and Indirect Costs

The direct costs of layoffs can be significant. Laying off highly paid technology workers in the United States, Europe and Japan results in direct costs of about $100,000 per worker. In 2008, for example, IBM spent $700 million in employee restructuring actions.[viii] Surprisingly, however, the indirect costs — often longer-term — of employment downsizing may be even larger than the direct costs. Consider the opportunity costs of lost sales, for example. This hidden cost occurs when experienced sales and marketing representatives with strong client relationships are let go or leave out of concern that they will lose their jobs. In domestic or multinational businesses, where relationships with customers and suppliers have to be nurtured over long periods of time in order to inspire enough trust to transact business, the opportunity costs of lost sales may be considerable.

The shock of changing from a non-downsizing organization to a downsizer is a major reason why rates of voluntary turnover increase among remaining workers. An organization that lays off 10 percent of its workforce can expect to see a 15.5 percent rate of voluntary turnover among surviving employees, compared with a 10.4 percent turnover rate among companies with no layoffs.[ix]Since the fully loaded costs of turnover (separation, replacement and training) can be 1.5 to 2.5 times the annual salary paid for the job, those additional costs can be huge.[x]

Layoffs at high-involvement workplaces—those with management strategies that give employees the skills, information, and motivation to be competitive—can be markedly more detrimental than layoffs at an average company.[xi]All in all, the significantindirect costs associated with employment downsizing may wipe out the direct savings in labor costs. In light of the serious short- and long-term consequences that typically accompany employment downsizing, it behooves senior executives to consider carefully the strategic impact of such a strategy. The next section presents ten such questions.

Ten Tough Questions To Consider Before Downsizing Employees

If employment downsizing still makes sense after answering these ten questions, then by all means implement it. If not, consider other alternatives.

Why does employment downsizing make sense for the organization? What are the short-term and long-term rationales? Will the company be able to serve its customers better, to innovate, or to penetrate new markets after downsizing its employees?

What is the business case for employment downsizing? Are there sound business reasons for closing an operation or worksite, for example, lack of customer demand, excess capacity, or obsolete equipment?

What is the problem that the organization is trying to solve? Is it short-term cash flow, overstaffing, or lines of business that no longer fit the company’s business strategy?

If the problem is short-term cash flow, are there alternative ways to cut costs? Such alternatives might include options such as cutting temporary staff, eliminating overtime, voluntary retirement offers, reducing work hours, freezing salaries and new hiring, temporary layoffs (furloughs), or reducing travel and entertainment expenses, among others. As part of a broader effort to reducecosts at Commercial Vehicle Group, Inc., for example, the CEO asked four employeesto devise a plan to save an additional $50,000. The group identified $600,000 in potential savings, including office supplies and cell phones. “They went after everything,” said the CEO.[xii]

Do prospective layoffs include hard-to-find skill sets? When the economy turns around, as it will, will your organization be faced with the problem of trying to re-recruit people with the very same skill sets that you laid off?

How will the downsizing affect high performers who are difficult to replace? Employee morale is the first casualty in a downsizing. Beyond that, high performers are always in demand, regardless of economic conditions. What will you do to retain them?

What are the short-term payoffs from a downsizing strategy? You may see increased cash flow from savings in fixed costs (of labor), but don’t expect to see a spike in your company’s stock price. Investors want to see a long-term strategy, not just a short-term knee-jerk reaction.

What long-term threats to the organization’s strategic success might be associated with employment downsizing? Such threats may take the form of loss of mission-critical skills, loss of institutional memory, inability to meet increases in demand as the economy recovers, and a sustained drop in innovation, as survivors become narrow-minded, risk averse, and self-absorbed.

What long-term costs might the organization incur by implementing employment downsizing? American firms can expect to see increases in their unemployment tax rates, and almost all firms can expect to see increased rates of voluntary turnover in the year following the downsizing. They may also experience the opportunity costs of lost sales, and brand-equity costs – damage to the company’s brand as an employer of choice.

Do the long-term benefits associated with employment downsizing outweigh its short-term costs?In some cases, the answer may be yes, if an organization disposes of unproductive assets that another firm can use more productively – such as IBM’s former PC and printer businesses – now operating successfully as Lenovo and Lexmark.

As one observer noted, “Anyone can layoff personnel, cut budgets, and change an organization chart. It takes true genius and creativity to grow a business.”[xiii]  Assuming, however, that an organization decides that downsizing its employees is in its short- and long-term best interests, how should it proceed? What does the research tell us about the best ways for managers to execute this strategy? The next sections address those issues.

Downsizing Strategies

Generally speaking, an organization that decides to eliminate redundant employees does so by using four broad strategies: attrition, voluntary termination (including employee buy-outs and early-retirement offers), compulsory termination, and across-the-board cuts.[xiv]

Attrition, in which firms do not replace people who leave, is the simplest method. With this approach, employees have the opportunity to exercise free choice in deciding whether to stay or leave, and thus the potential for conflict and feelings of powerlessness is minimized. At the same time, however, attrition may pose serious problems for management, because it is unplanned and uncontrollable.

Voluntary termination, which includes buy-out and early-retirement offers, is a second approach to downsizing a workforce. The main advantage of a buy-out is that it gives employees a choice, which tends to reduce some of the stigma associated with the loss of a job. At the same time, there are three important downsides to buy-outs. One, they are expensive. Employees with long service find them attractive. Two, the best workers may leave.There is demand for their skills, and low-performers may stay because they are less marketable. Three, both high- and low-performing workers may leave out of fear. Many worry that they could be dismissed later without any financial cushion. To illustrate this approach, consider the buy-out plans recently offered by Ford Motor Company and General Motors.[xv]

At Ford, offers ranged from $35,000 for workers with 30 or more years of service, who could keep their full retiree benefits, to a flat payment of $100,000 to younger workers who agreed to leave the automaker and to give up retiree health care and Ford

pensions. For workers who chose to go to college or vocational school for four years, Ford provided tuition, half their usual pay, and full medical coverage. Workers who chose this plan could keep any accumulated pension but had to leave behind any retiree health benefits. Almost half of Ford’s hourly production workers (38,000 workers) took one of the offers.

At GM, 35,000 workers accepted checks ranging from $35,000 to $140,000 to retire early. Another 12,600 employees at GM’s former parts unit, Delphi, did the same, helping the automaker slash $5 billion in costs. Unfortunately, that was not enough to save the company. As economic conditions deteriorated during the Great Recession, General Motors was forced into bankruptcy in June 2009. A move that once seemed unthinkable became inevitable after years of losses and market-share declines, capped by a dramatic plunge in sales.More than 2,000 dealerships were closed, as GM shed its Pontiac, Saturn, Hummer, and Saab brands. In addition, more than 20,000 U. S. workers lost their jobs, and investors in $27 billion worth of GM bonds, including mutual funds and thousands of individual investors, ended up with new stock in a reorganized GM worth a fraction of their original investment. Owners of current GM shares had their investments essentially wiped out.[xvi]

Early-retirement incentives (ERI), in which a company offers more generousretirement benefits in return for an employee’s promise to leave at a certain time in the future, are often part of a larger buy-out scheme. Sometimes, early-retirement offers are staggered to prevent a mass exodus. Retention bonuses with different quit dates may be used to ensure an orderly exit.

From an organizational viewpoint, managers assume that early retirement opens up promotional opportunities for younger workers, but one research study found that it is difficult to predict accurately how many older workers will take an ERI. Typically, about one-third of those offered ERIs accept them, but there is a great deal of variation.[xvii] Beyond that, high performers may leave if an organization offers open-ended, non-targeted ERIs, and incentives may not work. For example, lump-sum bonuses, such as one-week’s extra pay for each year of service, are relatively ineffective in persuading older workers to retire early. On the positive side, poor performers are more likely to take ERIs because they lack confidence about future pay increases.

Compulsory termination, in which departing employees are given no choice, is a third downsizing strategy. Plant closures and the wholesale elimination of departments or business units are examples of this approach. Although it is, of course, unappealing to employees, the managers who make the decisions do have the opportunity to design and implement criteria based on the needs of the business.[xviii]Eliminating jobs or entire business units also makes it less likely that employees will prevail in lawsuits alleging discrimination.

A final downsizing strategy, across-the-board cuts in every department, is perhaps the least effective downsizing option. Such cuts emphasize standardized treatment of employees, but ignore the strategic importance of different departments to a firm’s overall success and ignore different performance levels ofemployees. Suppose one department iscomprised of superstars, and anotheris comprised of slackers. Why shouldthe same percentage of superstars andslackers be laid off? The Economistmagazine described this problem as“Snip, Snip, Oops!”[xix]

Selecting Employees for Downsizing

Once the decision to implement layoffs has been made, a variety of decision criteria are available to determine who goes and who stays. Generally speaking, in the United States employers are free to use whatever criteria they wish in terminating employees, as long as the criteria do not discriminate based on membership in a protected class, are not arbitrary or capricious, and are based on legitimate business reasons. Here are five important guidelines:

  1. Identify departments and functions that are strategically critical, along with critical employee skill sets going forward.
  2. Identify criteria that reflect legitimate business needs.
  3. Use a “funnel” approach to selection; that is, evaluate employees by critical skill sets first, followed by job performance, disciplinary actions, and seniority (to break ties).
  4. Document the criteria and processes used.
  5. Conduct analyses to ensure that there is not a disproportionate effect of layoffs on members of protected classes, and have all analyses and documentation reviewed by an attorney.

As noted above, begin by identifying specific departments or functions based on their strategic importance. In doing this, companies try toretain pivotal talent — those employees with skill sets needed to execute business strategies in the comingyears.[xx]A firm may move in stages, first selecting specific departments or functions, and then turning to amultiple-hurdle or funnel approach. In this approach, managers identify critical skill sets and then take explicit steps to retain employees with those skills, letting them know how important theyare to the organization’s future success.

Job performance becomes the most important factor when there are more people with critical skill sets than there are available positions in thedownsized organization. Generally speaking, employers tend to retain people who have performed well in the past and who have not had disciplinary problems. Unfortunately, in some organizations, the lack of reliable and valid measurements of performance forces reliance on other criteria.

Once the available pool of employees is limited to those with critical skills, high performance, and few, if any, disciplinary problems, and the firm still has more workers than required — what is the next step? At this point, many employers use seniority or tenure with the organization as the criterion for decision-making.

Ultimately, reducing the workforce can be an opportunity to address performance problems that have festered over the years and to terminate employees whose performance has been weak. However, in all downsizing scenarios, sound professional practice requires that firms conduct adverse-impact analyses before implementing such a strategy. Document the criteria and processes used in downsizing, and have results and materials reviewed by an attorney who specializes in employment law.

Note that even when some adverse impact is expected from downsizing, this option is still viable if the criteria used are job-related and reflect legitimate business needs. Having identified who will go and who will stay, the next step is to manage the downsizing process in a dignified, respectful manner. Our next section addresses that important issue.

Managing the Downsizing Process

Despite a variety of styles and strategies used to let employees go, there is a core set of sound professional practices. Here is one such set.[xxi]

Be transparent about the current conditions that the organization faces, and the potential impact on the workforce. Employees want to hear the truth, and they want to hear it from the CEO. In small businesses, employees often sense when a company is in trouble; pretending things are fine will only hurt a leader’s credibility. Provide regular updates at least every 4-6 weeks that include reports on year-over-year revenue, net income, current business strategy, and future prospects. Invite employees to ask questions and raise concerns. Allow them to identify redundant jobs, wasted activities, and bloated cost structures that will improve efficiency and cut costs. People who know what is going on can be part of the solution. Beyond that, if people know that their employers tried to use other options to preserve jobs, and use downsizing as a last resort, that will help to ease the pain. At Reflexite, a company that makes reflective safety products and films, the CEO regularly communicated the effects of the downturn, and employees had been involved in discussions about the business. After exhausting all other options, the firm cut 75 positions in one division. The employees’ general reaction? “Losing our jobs is painful, but at least we know you did all you could.”[xxii]

Treat laid-off employees with respect and sensitivity. Give soon-to-be-terminated employees plenty of advance notice, and, if appropriate, tell them that the organization will write a strong letter of reference on their behalf. Be sure that immediate supervisors — not HR professionals — deliver the news of the layoff to affected employees and that they do so in private. The immediate supervisor must be able to make the business case about the need for layoffs, and the criteria for dismissals. Some companies have an HR representative present along with the immediate supervisor during that process. Allow employees to vent, and always treat them respectfully. The role of HR in this situation is to listen and to empathize, not to argue.  Finally, create a severance plan that provides tangible economic benefits, and that reflects management’s compassion and understanding of the impact of the termination. Although the trend is for companies to offer less in severance payments, fully 93 percent of them require employees to sign releases of liability in order to receive severance pay.[xxiii] Outplacement assistance that can assist employees in job-hunting and networking can be particularly valuable, but ensure that severance arrangements are consistent across units and divisions.[xxiv]

This is precisely what eBay did when it reduced 10 percent of its global workforce in 2008, almost 1,000 people. U. S. employees were allowed to stay on for up to four weeks to take care of personal needs, to say good-bye to their colleagues, and decide when they would leave. This element of personal control is critical. It provides laid-off employees at least some sense that they are still in command of events that affect them. In addition, all U.S. employees received at least five months of severance pay, plus four months of paid health-care benefits, plus 1-3 months of outplacement services. According to Beth Axelrod, eBay’s senior vice-president of HR, “How you treat the leavers has a strong impact on how the stayers feel about the company.”

Ensure that procedures used to make decisions are seen as just and fair. Research has demonstrated time and again that the procedures used to select, notify, and support employees are critically important. This is known as “procedural justice.” When laid-off employees perceive downsizing procedures to be fair, they tend to file fewer claims of wrongful termination, and voluntary turnover among surviving employees is much less frequent. So also are incidents of theft, violence, and sabotage. Indeed, procedurally fair treatment has been demonstrated to result in reduced stress and increased performance, job satisfaction, commitment to an organization, and trust.[xxv] Conversely, when employees feel that they have not been treated fairly, they may retaliate in the form of theft, sabotage, and even violence. One way to promote perceptions of fairness, as we saw in the eBay example earlier, is to give employees a sense of personal control by offering options that might include choice in the forms of severance, actual departure date, and outplacement assistance. The lesson is clear: sound HR practices, as reflected in procedural justice throughout the process, and practices that facilitate commitment and fit with the organization, can reduce the negative effects of downsizing considerably.[xxvi]

On the day of discharge, give employees options on how they want their exit handled. That includes when and how to collect their personal things, say their good-byes, and depart with as much grace and dignity as possible. Don’t allow an unwarranted fear of sabotage to govern the exit process. Here are some sensible security measures to consider: Protect computer systems by taking away access codes from terminated employees, and have terminated employees turn in their building-access cards to thwart them from returning to the premises. Don’t allow long-time, loyal employees to be marched out of the building by security personnel, carrying boxes of their personal belongings and passing by surviving co-workers.

Give survivors a reason to stay, and new hires a reason to join. Both groups will experience transitions. Explain how the decision to cut staff is necessary for the organization’s long-term health. Give survivors hope by describing future business plans, targets, and details. Describe a future full of promise, one that will allow the company to seize business opportunities – with everyone’s determination and buy-in. Encourage everyone to participate in inventing the future. Explain that you will be investing in those who remain, building skills by retraining everyone in the new ways of operating.

Carefully examine the impact of employment downsizing on all HR systems. Recognize that downsizing is just one tool in a portfolio of strategies to improve firm performance. That portfolio includes workforce planning, staffing, compensation, performance management, training, job safety, and employee relations. How should each area change in light of the new strategy or environment facing the organization? Let the 3 C’s — care of customers, constant innovation, and committed people – guide that examination. Japanese electronics giant, Matsushita Electric Industrial Co. did just that. It shaved billions of dollars from its cost base by cutting its domestic workforce by 19 percent from 2001-2005, and by closing 30 factories. At the same time it boosted spending on research and development, and renewed its focus on creating innovative products (Panasonic cameras, DVD recorders, and flat-screen televisions). Two years later, its stock was up 33 percent.

Consequences of Downsizing on Those Who Remain

Clearly there are ripple effects of employment downsizing for a variety of stakeholders, from survivors who remain, to those laid off, to the larger communities affected. For purposes of this article, we focus particularly on the consequences of downsizing for survivors and their organizations. Examinations of the broader effects of employment downsizing on other stakeholders are available elsewhere.[xxvii]

            Those who remain often feel guilty and depressed.[xxviii] Many studies have found that morale, loyalty, and trust in management decline after a downsizing. So also does organizational commitment, job satisfaction, and job involvement. At the same time, stress levels, intentions to quit, and actual levels of voluntary turnover all increase, due  at least in part — to the lossof a sense of personal control over importantevents in one’s life. This constellation of symptoms is known as“survivor syndrome.”[xxix]

Two groups of survivors that are often overlooked are the managers who do the firing, and the HR professionals who are often present at layoff meetings. The process is highly stressful and exhausting for them, and many require counseling subsequently.[xxx] Here is how David Pottruck, former co-CEO of Charles Schwab & Co., Inc., described his experience after the firm’s first layoff.

“Facing up to our first layoff was probably the worst feeling that I ever had in business. I went through a period of incredible sadness and sense of failure. I couldn’t imagine the way we had let down these people and these families who had to depart. We made every effort to undertake that process with as much dignity and generosity for employees as we could. We wanted to make sure that those who were still here respected the way the company dealt with those who left. Because if there were other layoffs…We don’t want to see any destruction of employees’ loyalty to the company.”[xxxi]

 

For both laid-off employees and survivors, keep in mind that there is something known as the psychological contract that guides the relationship between workers and employers. Employees infer a set of expectations from their employer’s actions, including the expectation of fair treatment. Downsizing is often interpreted by workers as a breach of the psychological contract, and surviving employees may respond by withholding effort and involvement, or through absences or quitting. For example, high-performing employees often take jobs elsewhere in order to avoid the uncertainties and ambiguities in a downsizing environment.[xxxii]

Keeping workers engaged and involved. A recent study [xxxiii] examined how layoffs moderate the relationship between high-involvement work practices and productivity, and how continued investments in high-involvement work practices through the period of layoffs maintain workforce productivity. High-involvement work practices are those that create firm-specific employee capabilities that are difficult for other firms to imitate or transfer. They cover a wide range of systems and routines, from team-based production and semi-autonomous work groups, to gainsharing and flexible work design, to information sharing and opportunities for training and development.

Using a large sample of Canadian firms that responded to a Workplace and Employee Survey conducted by Statistics Canada over a 4-year period, the researchers found a negative relationship between high-involvement work practices and productivity in workplaces with higher layoff rates. Workplaces that continued to invest in high-involvement work practices, however, were able to avoid productivity losses, as compared to workplaces that discontinued such investments.

At the most basic level, survivors want answers to three important questions.

  1. Were departing employees treated fairly, with dignity and respect? As we have seen, how an organization treats the leavers sends important signals to those who remain.
  2. Why should I stay? This is a “me-question” that survivors want answered. What will be the impact on my career and professional development? Is there a future here worth working towards?
  3. Is there a new business strategy? Will the organization ultimately be better off as a result of the downsizing?

 

Conclusion

Employment downsizing is not a cost-cutting cure-all, nor does it guarantee that short-term savings will exceed long-term costs. At the same time, cash flow is the lifeblood of organizations, and to preserve it, some level of employment downsizing may be necessary. If that is the case, use the research-based findings outlined here to downsize employees humanely and with dignity, and be proactive in dealing with the predictable reactions of survivors. Do the layoffs early rather than later in a recession, in order to avoid dismissing workers just before demand picks up again. Late-recession layoffs can be especially costly in terms of severance and other payments to departing employees, coupled with rehiring costs later. Avoid doing downsizing just because it seems trendy, or because all of your competitors seem to be doing it. Above all, be very conscious of its consequences.

 

 

 

 

References



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[ii] I would like to thank Gerald Purgay of Right Management for this helpful

insight. See, for example, Right Management. (2009). Restructuring for

growth. Philadelphia, PA: Right Management.

 

[iii]Zatzick, C. D., Marks, M. L., & Iverson, R. D. (2009, Fall). Which way

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[iv] Zuckerman, M. (2010, Jan. 22). The great recession continues. The Wall Street Journal, p. A19.

 

[v] Cascio, W. F., & Young, C. E. (2003).  Financial consequences of employment-change decisions in major U.S. corporations:  1982-2000.  In K. P. De Meuse & M. L. Marks (Eds.), Resizing the organization:  Managing layoffs, divestitures, and closings (pp. 131-156).  San Francisco:  Jossey-Bass. De Meuse, K. P., Bergmann, T. J., Vanderheiden, P. A., & Roraff, C. E. (2004).  New evidence regarding organizational downsizing and a firm’s financial performance:  A long-term analysis.  Journal of Managerial Issues, 16, 155-177.

 

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[vii] Cascio, W. F., & Wynn, P. (2004). Managing a downsizing process. Human

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[viii] Bulkeley, W. M. (2009, Jan. 22). IBM employees report job cuts. The Wall Street Journal, p. B7.

 

[ix] Trevor, C. O., & Nyberg, A. J. (2008). Keeping your headcount when all about you are losing theirs: Downsizing, voluntary turnover rates, and the moderating role of HR practices. Academy of Management Journal, 51, 259-276.

 

[x] Cascio, W. F., & Boudreau, J. W. (2008). Investing in people. Upper Saddle River, NJ: Pearson.

 

[xi] Zatzick, C. D., & Iverson, R. D. (2006). High-involvement management and workforce reduction: Competitive advantage or disadvantage? Academy of Management Journal, 49, 999-1015.

 

[xii] Tuna, C. (2009, Feb. 23). Searching for more tools to trim costs. The Wall Street Journal, p. B4.

 

[xiii] Franks, G. F. (2007, Nov. 14). Executives vs. managers. The Wall Street Journal, p. A15.

 

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[xix] Snip, snip, oops! (2001, Oct. 13). The Economist, pp. 59, 60.

 

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[xxii] Holland, K. (2008, Aug. 24). After a downsizing, how to motivate? The New York Times. Retrieved from www.nytimes.com on August 26, 2008.

 

[xxiii] Pressman, A. (2009, Aug. 10). Less for the laid off. BusinessWeek, p. 61.

 

[xxiv] See, for example, Dvorak, P., & Lublin, J. S. (2009, Aug. 20). Outplacement firms struggle to do job. The Wall Street Journal, pp. A1, A10. Institute for Corporate Productivity. (2009). Outplacement pulse survey. Retrieved from www.i4cp.com/contact. Lublin, J. S. (2009, July 7). More jobless execs foot their outplacement bill. The Wall Street Journal, pp. D1, D6. Right Management. (2007). The next evolution of outplacement. Retrieved from www.right.com. Saslow, E. (2009, Aug. 9). The art of letting employees go. Retrieved August 15, 2009, from www.washingtonpost.com.

 

[xxv]Colquitt, J.A., Conlon, D.E., Wesson, M.J., Porter, C.O.L.H. & Ng, K.Y. (2001). Justice at the millennium: A meta-analytic review of 25 years of organizational justice research. Journal of Applied Psychology, 86, 425–445. Elovainio, M., Kivimaki, M. & Helkama, K. (2001). Organizational justice evaluations, job control, and occupational strain. Journal of Applied Psychology, 86, 418–424. Greenberg, J. (1997) The quest for justice on the job. Thousand Oaks, CA: Sage. Kanovsky, M. (2000). Understanding procedural justice and its impact on business organizations. Journal of Management, 26, 489–511. Klein, H. J., Becker, T. E., & Meyer, J. P. (Eds.). (2009). Commitment in organizations. NY: Routledge.

 

[xxvi]Brockner, J. (2006).  Why it’s so hard to be fair.  Harvard Business Review, 84(3), 122-129.  Brockner, J., & Wiesenfeld, B. M. (1996).  An integrative framework for explaining reactions to decisions: Interactive effects of outcomes and procedures.    Psychological Bulletin, 120, 189-208. De Meuse, K. P., Bergmann, T. J., & Vanderheiden, P. A. (1997).  Corporate downsizing:  Separating myth from fact.  Journal of Management Inquiry, 6, 168-176. Mishra, A. K., & Spreitzer, G. M. (1998). Explaining how survivors respond to downsizing: The roles of trust, empowerment, justice, and work redesign. Academy of Management Journal, 23, 567-588. Trevor, C. O., & Nyberg, A. J. (2008). Keeping your headcount when all about you are losing theirs: Downsizing, voluntary turnover rates, and the moderating role of HR practices. Academy of Management Journal, 51, 259-276.

 

[xxvii] See, for example, Granatstein, S., & Young, N. (Producers). (2009, Jan. 25). The winter of our hardship. 60 Minutes (CBS). Available at www.cbsnews.com/video/watch/?id=4752321n&tag=related;photovideo. Leana, C. R., & Feldman, D. C. (1992). Coping with job loss: How individuals, organizations, and communities respond to lay-offs. NY:Macmillan/Lexington Books. Uchitelle, L. (2006). The disposable American: Layoffs and their consequences. NY: Vintage Books. Zaslow, J. (2006, April 1–2). Down and out in Bloomfield Hills, Michigan. The Wall Street Journal, pp. A1, A8.

 

[xxviii] Cullen, L. T. (2002, Nov. 18). Where did everyone go? Time, pp. 64-66. Kimes, M. (2009, March 2). Does your team have PLSD (Post-Layoff Survivor Disorder)? Fortune, p. 24. Kiviat, B. (2009, Feb. 1). After layoffs there’s survivor’s guilt. Time. Available at www.time.com. Steen, M. (2002, Oct. 31). Worker morale has suffered with economy. The Mercury News, available at www.bayarea.com.

 

[xxix] Allen, T. D., Freeman, D. M., Russell, J. E. A., Reizenstein, R. C., & Rentz, J. O. (2001).  Survivor reactions to organizational downsizing:  Does time ease the pain?  Journal of Occupational & Organizational Psychology, 74, 145-164. Brockner, J., Grover, S. & Blonder, M.D. (1988). Predictors of survivors’ job involvement following layoffs: A field study. Journal of Applied Psychology, 73, 436–442. Brockner, J., Grover, S., Reed, T., De Witt, R., & O’Malley, M. (1987). Survivors’ reactions to layoffs: We get by with a little help for our friends. Administrative Science Quarterly, 32, 526–541. Cascio, W.F. (1993). Downsizing: What do we know? What have we learned? Academy of Management Executive, 7, 95–103. Devine, K., Reay, T., Stainton, L., & Collins-Nakai, R. (2003). Downsizing outcomes: Better a victim than a survivor? Human Resource Management, 42 (2), 109–124. Knudsen, H. K., Johnson, J. A., Martin, J. K., & Roman, P. M. (2003). Downsizing survival: The experience of work and organizational commitment. Sociological Inquiry, 73, 265–283. Luthans, B. C. and Sommer, S. M. (1999). The impact of downsizing on workplace attitudes. Group and Organization Management, 24, 46–70. O’Neil, H. M., & Lenn, D. J. (1995). Voices of survivors: Words that downsizing CEOs should hear. Academy of Management Executive, 9 (4), 23–34. Wiesenfeld, B.M., Brockner, J., & Thibault, V. (2000).  Procedural fairness, managers’ self-esteem, and managerial behaviors following a layoff.  Organizational Behavior and Human Decision Processes, 83, 1-32.

 

[xxx] McConnon, A. (2007, Oct. 22). I dodged the ax. Now I’m in agony. BusinessWeek, p. 94. See also McGregor, J. (2009, July 27). Human resources: they’re human too. BusinessWeek, p. 19.

 

[xxxi] Pottruck, D. (2002, Nov. 18). Laying people off. Fortune, p. 44. See also Morris, B. (2003, Dec. 8). When bad things happen to good companies. Fortune, pp. 78-88.

[xxxii] Dabos, G., & Rousseau, D. M. (2004). Mutuality and reciprocity in the psychological contracts of employee and employer, Journal of Applied Psychology, 89, 52-72. Iverson, R.D, & Pullman, J. A. (2000). Determinants of voluntary turnover and layoffs in an environment of repeated downsizing following a merger: An event-history analysis. Journal of Management, 26, 977–1003. Rosenblatt, Z., & Sheaffer, Z. (2001). Brain drain in declining organizations: Toward a research agenda. Journal of Organizational Behavior, 22, 409–424. Rousseau, D.M. (In press). The individual-organization relationship: The psychological contract. In S. Zedeck (ed.), Handbook of Industrial/Organizational Psychology. Washington, D. C.: APA Books. Rousseau, D. M., & Schalk, R. (2000). Psychological contracts in employment: Cross-national perspectives.  Newbury Park:  Sage.

 

[xxxiii] Zatzick & Iverson, 2006, op. cit.