If you have any questions about any of the information in this document, use our on-line form to ask your question. This Research Note focuses on how to reassure the employees not displaced by downsizing. In today's competitive market, many companies have found that staying in business means downsizing. Downsizing has become a common occurrence in today's business world. Because of this, and many other factors, many employers and employees no longer believe in the concept of lifetime employment.
Many employers feel that the only support they can provide is expensive outplacement services.
The decision to downsize is made for strategic and financial reasons. The expectation is that the expense reduction will lead to a positive impact on the bottom line and will ultimately be reflected in improved profitability and productivity. However, many organizations neglect to factor in the psychological impact of downsizing on those who remain. In fact, if downsizing is handled improperly, the problems it was designed to correct may be intensified due to the impact on the loyalty and attitudes of the survivors. In an attempt to determine the impact of downsizing, the effects of job insecurity and economic need to work on employee attitudes was examined by Brockner and his colleagues in 1992.