Effect of Downsizing on Employees Morale 1

TABLE OF CONTENTS
1. INTRODUCTION
2. LITERATURE REVIEW
 Conceptual approach to employee downsizing
Downsizing and employee attitude
 Employee morale during downsizing
 Organizational climate also affects employee retention rate
and positively affects employee downsizing rate

Tips for creating an effective organizational climate for
minimum employee down sizing
 Organizational vital signs-a leading indicator of satisfaction
measuring Of employees
 Organizational climate-employee satisfaction survey
 Employee down sizing & employee motivation are closely
knitted
 Employee down-sizing & employee engagement
 Diagnostic tool
3. RESEARCH OBJECTIVES
4. RESEARCH METHODOLOGY

 Methodology

 Research design

 Nature of data

 Data collection

 Sample size
1

 Sampling technique
 Sampling procedure actually employed
 Analytical tools
5. DATA ANALYSIS
6. CONCLUSION & IMPLICATIONS
7. RECOMMENDATIONS
8. BIBLIOGRAPHY
9. APPENDIX
2

INTRODUCTION
What Is Employee Down Sizing
Employee downsizing is a nightmare feared by most of the employees working in the corporate

world. A downsizing strategy reduces the scale (size) and scope of a business to improve its

financial performance
In management parlance, the term downsizing refers to pruning (including layoffs and
retrenchments) of the size of workforce for a variety of reasons:

⇒ Obsolescence of skills consequent upon up gradation of technology,

⇒ Shift in the organizational requirements;

⇒ Outsourcing;

⇒ Modernizing,

⇒ Restructuring or even reducing the activities of industrial units; and

⇒ Redesigning the job in an organization.

Employees, nowadays, will have to reconcile with the ugly realities of the corporate world and they

may have to be prepared for alternative employment as the axe may fall on anyone at any time.

Due to the globalization of business, organizations are able to develop a number of approaches by

which to employ human resources, technology, and capital to implement innovative projects in

different parts of the world. They are able to derive maximum advantage due to these possibilities.
While the larger goals appear justifiable and in the interest of most stakeholders, they lead to

frequent changes at the organizational, functional, and individual levels.

At the organizational level, such changes can lead to closure of businesses, off-shoring, merging

with another organization, outsourcing, restructuring, etc. At the functional level, it can imply

changes in the availability of resources, changes in the scope of

activities, etc. As a sequel to these developments, employees can be redeployed, transferred,

rendered redundant, or let go within a very short span, without adequate preparation for these

changes. Such changes take their toll in terms of organizational productivity, nature of employer-

employee relationships and the associated social costs. People who contribute to the organizational

goals are the organization's assets. These assets are turned into liabilities due to reasons mentioned

earlier. The challenge is to what is morale manage employee exit without disrupting the

organization's functioning. Those individuals who lose jobs are the hardest hit. For the affected

employee, the emotional trauma of losing a job is very difficult to cope with. Aside from the financial

implications of a job loss, they have to reconcile with the loss of self-esteem, self-confidence, and a

breach of trust between the employer and the employee. Along with the individual, his/her family

also gets deeply affected with the involuntary job loss of a family member. The pain is not limited to

the individual alone but affects a number of others. The effect is also felt by other employees who

remain in the organization as they suffer from the guilt and are also faced with the fear of job

insecurity.

The fundamental reason to resize the organization is to improve organizational performance and to

reduce costs of operation. While these changes are expected to fetch significant gains for the

companies in the long run, an analysis of corporate experiences of downsizing shows that such

measures are not always implemented with careful consideration of all the implications. Downsizing

also brings, in its wake, a number of associated hidden costs, which companies tend to overlook in

pursuit of short-term gains. The flip side of downsizing is that the organizations lose expertise, skills,

knowledge, experience and valuable relationships, which walk out of the door every time somebody

leaves. A number of alternative approaches can be implemented to achieve the over- riding goal of

enhancing business performance. At the same time, it is true that downsizing in many cases is an

inevitable option. However, downsizing should be considered not as the first but the last option. If the
axe has to fall, it should be preceded by a careful consideration of the consequences of such a

drastic action.
4
Need to reduce
Costs
Alternatives
To Layoffs
Voluntary
Quits
Involuntary
Separations
Early
Retirements
Voluntary
Workforce
Reductions
Layoffs
Outplacement
5

What is Morale
Morale, also known as esprit de corps, is an intangible term used for the capacity of
people to maintain belief in an institution or a goal, or even in oneself and others.
According to Alexander H. Leighton, "morale is the capacity of a group of people to pull
together persistently and consistently in pursuit of a common purpose".
Morale in the workplace

Workplace events play a large part in changing employee morale, such as heavy layoffs,

the cancellation of overtime, cancelling benefits programs, and the lack of union

representation. Other events can also influence workplace morale, such as sick building

syndrome, low wages, and employees being mistreated.

Factors influencing morale within the workplace include:
•

Job security.
•

Management style.
•

Staff feeling that their contribution is valued by their employer.

•

Realistic opportunities for merit-based promotion.

•

The perceived social or economic value of the work being done by the
organization as a whole.
•

The perceived status of the work being done by the organization as a whole.
•

Team composition.
•
The work culture.
6

How Down-Sizing Affects Employees’ Morale

Every year companies spend millions in recruitment due to employee turnover. Turnover and its

associated costs are a burden that used to be just the cost of doing business. But more and more

companies are investing time and effort in making better hiring decisions and doing more to keep the

employees they do hire. Employee retention is now a buzz word in today’s business world.

Over two-thirds (70%) of HR managers state that employee retention is a primary business concern.

HR managers currently find employee retention a business challenge, long-term demographic

changes, such as the retiring Baby Boomer population have the potential to aggravate this issue. All

companies, regardless of size, are struggling with how to keep employees from leaving for more

money or better opportunities. Studies consistently show that even though employees may say they

are leaving for more money, when those same employees are asked several months later why they

really left, the money factor is about 5th or 6th on the list. The first few reasons include lack of

recognition, disagreement with the culture or direction of the company, poor treatment by their boss,

lack of excitement about their growth prospects, and poor relationships with co-workers. ?

How much? When you add the costs of finding an employee, training the new employee, lost

productivity and filling in for the employee who leaves, the cost can easily equal 150% of the base

salary of the person who left. So, if you are paying someone $50,000, the cost to replace that person

will be approximately $75,000. This money comes out of your hard-earned profits.

This is one of the key reasons that companies are focusing so much effort on keeping their current

employees. Some of the steps taken by companies to retain their work force are:
•

Ensure you offer competitive compensation.

•

Ensure you offer basic health care benefits at reasonable rates. Consider adding
lifestyle benefits that are cost effective (read easy on the cash flow).
7
•

Find out what employees want from their career and do what you can to provide
for their needs.
•

Be as flexible as possible about how the work gets done.

•

Be as flexible as possible as to when and where the work gets done. Can it be OK for an

employee to take a few hours off to attend to a family or personal matter if they can accomplish the

job at their home in the evening?

•

Take a real and genuine interest in people’s career aspirations and personal lives.
•

Recognize positive contributions to the company. Communicate company progress, financial

news, major customer or sales activities on a regular basis. Follow up on your commitments to

provide information or answers.

•

Have regular (bi-weekly or monthly) meetings with all employees where they can ask you

questions about your plans, company progress, new developments to look for, etc. Be accessible to

them so you can learn their needs. If you can respond to their needs before they become real

issues, they won’t begin looking for greener grass.

•

Ask former employees why they resigned. Even if they left six months ago, they
still have a valid perspective.
•

Routinely ask employees what you can do to make the company a better place to work. Set

boundaries if necessary as to what items are not negotiable; such as ownership in the company or

50% per year salary increases.

8
LITERATURE REVIEW
Conceptual Approach To Employee Downsizing
“Reflective Restructuring”

According to Theo Blackwell of The Work Foundation, in 1980s and 1990s many companies

resorted to downsizing their human resources in order to cope with economic pressures. But what

most of these companies do not realize is that downsizing does not always lead to savings in reality

or increase in the market worth of the company. On the contrary, the downsizing companies may be

branded anti-people. It usually leads to repetitive downsizing and results in the loss of employee

morale and loyalty and thereby affects overall productivity levels. However, they can adopt

alternative approaches to cope with economic uncertainties. Wayne Cascio had proposed a new

strategy termed as "reflective restructuring", which enables companies to offer a range of smarter

options to employees. The article explains the significance of this new concept and provides

examples of companies in the US and UK which have adopted the strategy. It also explains that

while companies in the US are at a greater liberty to downsize, the UK business environment is not

amenable to such measures.

Kalyan Chakravarti in the article, "Downsizing and Outsourcing: An Indian
Perspective", explains the economic situation of India since Independence (post-1947)

and in the aftermath of the economic liberalization (post-1991). Against this backdrop, the author

analyses the performance of the Indian Public Sector Undertakings (PSUs). He outlines the causes

that resulted in surplus manpower among PSUs. However, after India opened up its economy, most

PSUs were compelled to streamline their operations to increase their efficiency. One of the major

steps taken to achieve this goal was to shed the excess staff on their payrolls through the "golden

handshake," by floating Voluntary Retirement Schemes (VRS) and Compulsory Retirement Scheme

(CRS). The other major step was to outsource non-core activities and focus on their core

competencies. The
9
article provides a snapshot of the Indian experience of downsizing and also discusses
the
social implications of these drastic measures.
Barbara L Davison
explains, in "The Difference Between Rightsizing and
Wrongsizing",the differences among the terms used in conjunction with downsizing,

i.e., rightsizing, resizing, upsizing, sidesizing, and wrongsizing. The author clarifies that rightsizing

need not imply reduction of personnel. In certain cases, it can also mean increase in the numbers.

The article explains the need for tying rightsizing efforts with the overall strategy, identifying critical

growth areas as well as those needing consolidation, analyzing the effects of rightsizing on all

functional areas, evaluating the financial implications, and ensuring that each department and

employee adds measurable value. The author illustrates how to carry out a rightsizing exercise with

the help of a process example, which describes the most important steps. In this connection, it cites

the examples of a few companies, such as Ernst & Young, Cisco, Agilent Technologies, and

Schwab, which have implemented rightsizing. The article also illustrates a few alternatives to

downsizing and highlights new workforce concepts, i.e., "Just-in-time" workforce and the "Portfolio"

workforce, to cope with fluctuations in business cycles.

Rick Maurer of Maurer & Associates emphasizes the need for organizations to act swiftly to cope

with changing business conditions and on their requirement of human resources. Business leaders

need to continuously assess the mix of skills required as well as the number of employees required

for the present and the future. In addition, they should engage in a process of benchmarking with

companies in the same industry. The article explains that downsizing may prove to be a risky

strategy that may not always bring about much improvement in terms of the productivity or revenues

to the organizations. Hence, to cope with changing requirements of staff, companies should consider

a number of different alternatives to downsizing. Further, it is of the utmost importance to plan

workforce requirements keeping in view the turbulent business environment.

Implementation Of Employee Down Sizing
Sumati Reddy of the ICFAI University, Hyderabad, India outlines ways in which employers can

implement a well-considered downsizing program. If downsizing is inevitable, organizations must

pay due attention to the rationale for downsizing,

10
involvement of employees in designing the program, formulation of a fair and equitable policy, Equal

Employment Opportunity (EEO) guidelines, legal counsel, etc. The article also suggests the use of

objective data to formulate the downsizing plan. In conclusion, it points to a few indicators to assess

the effectiveness of a downsizing program.

Carlton Becker of ORC enumerates a number of lessons from the collective experience of layoffs by

companies across the globe. These lessons largely pertain to the need to remain lean and mean in a

fast-changing global business environment, rightsizing the right way, considering scientific

alternatives to downsizing, paying attention to the after- effects of downsizing, and being aware of

the legal implications of downsizing. The author points out those mass layoffs should be viewed as a

change process to be implemented by adopting a systems approach. It explains the strategic role of

HR executives during the whole process, especially during the initial stages of rightsizing. It further

explains the step-by-step guidelines that HR executives can adopt in the downsizing process. The

article shares the experiences of a few companies such as MacMillan Bloedel, Canada,

DaimlerChrysler AG's US unit Motorola, Hallmark Cards, and Lucent Technologies.

Ann E Feyerherm of Graziado School of Business and Management, Pepperdine University, CA,

USA, also provides guidelines based on the first-hand experience of a manager involved in a

downsizing effort in a company in South California. Although, her team of management consultants

explored several alternatives to avoid downsizing, they had to face the inevitable reality of the

downsizing spectre. Since the axe had to fall, the best approach adopted was to downsize with

dignity and to ensure that those who were let to go were equipped with new skills to enhance their

career prospects. Also, the author describes specific measures undertaken to achieve these twin

goals and enumerates the lessons learnt through these difficult times. She concludes that during

these difficult times, she had no other principle to live by other than the one she had within.

Robert M Tomasko, provides guidelines to be adopted while implementing a downsizing strategy.

Many organizations are beginning to realize the adverse effects of employee downsizing and are

looking for ways to do so in a more humane manner. Lessons can be

11
learnt from those organizations that have been able to maintain, and sometimes even enhance,

employee morale. Such organizations give due attention to each of the three phases of downsizing,

i.e., planning, its implementation, and managing the results. The author adds a few essential aspects

to be considered while downsizing. These suggestions pertain to the importance of adopting

participative downsizing, managing the rumor mill, providing continual and frequent communication,

and paying special attention to the results. The article concludes by saying that those organizations,

which have been active in managing the human side of downsizing would find that they have laid the

groundwork for new and stronger relationships with their employees.

Seymour Siegel focuses on the need for organizations to take care of two things in order to gain

competitive advantage in the 21st century. The first pertains to the management of knowledge

workers and the second to the appropriate management of knowledge itself. In an era of downsizing,

organizations need to pay special attention to the fact that with downsizing, organizations also stand

to lose on the vital and tacit knowledge inherent in the outgoing employees. Managers are always

confronted with the challenge of capturing and codifying explicit and tacit knowledge and then

converting it into innovative products and services. The article describes a number of organizational

practices, which, if managed on an ongoing basis, can offset the loss that can occur as a result of

downsizing. It also discusses a number of steps to manage knowledge assets.

Coping With Downsizing
Neela Radhika of the ICFAI University, Hyderabad, India, describes a new phenomenon observed in

the aftermath of downsizing - Pink Slip Parties. It describes how Pink Slip Parties came into practice

and the reason for using the term `Pink Slip'. The article elucidates the special features of these

parties with respect to attendees, the kind of music played during these parties, the colour of

wristbands or badges, message boards, and activities. Pink Slip Parties offer a number of benefits to

both job seekers, who had lost jobs on account of downsizing, as well as the recruiters. The

effectiveness of these parties are analysed vis-à-vis the nature of support gained by laid-off workers

in restarting their careers. The article also points to new developments in this area, such as Layoff

Lounges.
12
Mika Kivimäki, Jussi Vahtera, Jaana Pentti, and Jane E Ferrie reports the results of a study

conducted to investigate the effect of the psychosocial work environment on employee health. This

study was conducted among 1,110 municipal staff in Raisio, Finland, between 1990 and 1995. It

encompasses the period prior to downsizing, during downsizing, and when downsizing had slowed

down. The downsizing exercise was a reactive one, conducted through retirement and hiring

freezes, and letting go the temporary employees. Some of the significant findings of the study are:

downsizing results in changes in work, social relationships, and health-related behaviours that lead

to increase in certificated sickness due to increases in physical demands, job insecurity, and

reduction in job control; sickness absence increases twofold in a major downsizing as compared with

sickness absence during a minor downsizing; downsizing was associated with negative changes in

work, impaired support from spouse, increased prevalence of smoking, and sickness absence. It has

been found that this study was unique in the area of employee downsizing and employee health as it

studied a natural experiment, which is rarely feasible.

Jonathan Kelley explains that the significance of downsizing depends on its long-term impact on

workers. It presents a model to study the probability of re-employment among workers shed by

downsizing firms as compared with those departing from stable or growing firms. This model can

also be used to examine the impact of downsizing on the duration of jobless spells, continuity or

change in occupation, on earnings, and on job satisfaction among workers who obtain employment.

The model combines three factors: re-employment by age, gender, and education. Some of the

significant findings of the study are: downsizing is not a disaster for most of the workers; 75% of the

downsized employees find jobs, and most of them do so quickly; workless spells between jobs are

short or non-existent; and the most serious grounds for concern relate to groups of vulnerable

workers, such as older workers and women.

Carl Van Horn, William M Rodgers III, Neil Ridley, and Laurie M Harrington of Rutgers, offers

glimpses of the consequences of involuntary job loss for workers and their employers. It describes

the evident patterns of worker dislocation: it affects both blue-collar and white-collar employees,

workers of all races, ages, education levels, occupations and industries; and it happens at very short

notice (usually one week or less,

13
and many do not receive any advance warning). The report describes the impact of job loss on

individuals and their families, the most significant being emotional distress and financial hardship. It

delineates the differences in approaches by small and large firms. Large firms offer more assistance

and better severance pay as compared with smaller firms. It also provides guidelines for employers,

employees and policymakers to deal with the consequences of job dislocation. The experience of

downsizing employees during the last few years points to the need for employees to be prepared for

a job loss at any point of time in their career. This report also includes examples of effective

practices of a few companies to bring succour to the displaced workers.

14
Downsizing And Employee Attitude
In today's competitive market, many companies have found that staying in business means

downsizing. However, this everyday event in the business world is a unique (hopefully) event for you

and your employees. It is important to remember that this event affects not only the "downsized," but

also those who remain.

Why Is this Important?
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. As a result, employers often underestimate the need to provide support to employees,

both those who are being released and the 'survivors.' 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.

Effects on Work Effort
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. In this study,

Brockner decided to use work effort as a measure of job attitudes. The study found that high job

insecurity coupled with high need to work, resulted in increased work effort following a layoff. High

job insecurity, coupled with low need to work resulted in no change in the level of work effort. This

seems to indicate that when there are high levels of job insecurity, as would be expected during

downsizing, employees with a high need to work will increase their work effort, while those with a low

need to work will have no change in work effort.

15
While this result is interesting, of more interest was the finding that variables moderated this

observed relationship. Specifically, Brockner found that the remaining employees' perception of the

fairness of the lay-off process and their attachment to the lay-off victims colored their views. This

issue of fairness has been found to be related to a number of other work-related variables and has

its roots in theories of organizational justice.

The Justice Theory
Theories of organizational justice propose that people attend to the processes used to determine

outcomes as well as to the end result in determining "fairness." For example, as Brockner's study

reported, the remaining employees considered the way in which their co-workers were treated during

the downsizing process as well as the outcome (i.e., losing their jobs). From this perspective, layoff

survivors can be expected to exhibit the most negative reactions when they identify with the layoff

victims, and feel the victims have not been well compensated.

"When survivors perceived that those laid off had been dismissed with little or no compensation, they

reacted more negatively (from an organizational perspective) to the extent that they felt some prior

sense of psychological kinship with the laid-off parties." (Brockner et al., 1987).

What Brockner's study would indicate is that employees are affected by more than just the fact of

layoffs. They are affected by how the layoffs are managed and by what is done for the individuals in

those positions. Brockner found that negative attitudinal changes were reflected in survivors'

reduced work performance and lowered commitment to the organization. Conversely, the study

showed that employee commitment can actually increase during a layoff process when the company

shows some commitment to displaced workers.

The post-layoff setting provides organizations with a rather unique...situation in which to express

their commitment to employees; that is, if organizations show commitment to their dismissed

workers (through caretaking activities of providing severance pay and outplacement counseling,)—

even as they are in the process of becoming uncommitted to

16
them by laying them off--the more committed to the organization are survivors apt to
be"
(Brockner et al., 1987).

Brockner's study indicates organizations can proactively affect surviving employees' attitudes during

periods of downsizing. The next section describes some steps that can be taken to minimize the

negative effects of downsizing.

Strategies for Maintaining Positive Employee Attitudes
According to survey results from a study on employee loyalty conducted by Industry Week, there are

eight factors affecting employee loyalty. They are, in descending order: equity, security, good

management, integrity, empowerment, good communications, benefits and personal support

(McKenna, 1991).

Downsizing is a stressful time for employees, and is a time in which they will question each of the

eight factors mentioned in the above quote by McKenna. By communicating with employees, making

them feel part of the organization, and working to restore loyalty, it is possible to avoid some of the

most dangerous pitfalls of downsizing.

Communicate
During downsizing, the losses due to decreased employee loyalty, morale and lost productivity are

compounded by the complexity of the layoff process. For example, the rumor mill that develops, or

intensifies, during the preliminary planning stages results in employees spending significant amounts

of time gossiping and worrying about what may happen. Unfortunately, many managers in the

position of being "in the know" are guided by a policy in which they are to avoid talking about rumors

with employees. While this policy may seem appropriate, the associated costs, in terms of lost

productivity and employee loyalty, may be significant. Communication will help to curb the worry and

re- direct employee energies to the job at hand (Fisher, 1988).

"If you don't know something, or you do know but SEC rules or other legal constraints have

momentarily sealed your lips, come out and say that. Silence is the worst policy" (Fisher, 1988).
The most preferred method of communication is personal appearances from upper
management; however, any communication at all will be helpful.
17
Ensure that communications cover the following topics:

Talk about the fact that changes are coming; employees already know, but it will increase

their trust level if they hear it from you;

•

explain the purpose of the downsizing;

•

explain the need for growth and profitability (which can be perceived as legitimate
reasons when presented in an appropriate manner);
•

if possible, explain future plans including detailed plans for restructuring, upgraded
technology, or some processes to increase efficiency;
•

communicate, whenever possible, that though employee downsizing is necessary, each employee

who is let go will receive appropriate severance pay and (if you intend to offer it) job placement

assistance;
•

emphasize that laid-off employees will be treated with respect and dignity; this is important for

managing and maintaining remaining employees' moral and company commitment.

•

Most importantly, listen carefully to employee concerns and adequately address each concern to

whatever degree possible. This must be done with sincerity and no sense of condescension, such as

"calming the mob."

In addition, justification for the layoffs is extremely important, especially if times are good and the

downsizing is a part of strategic growth and profitability. Employees need to understand that you

sincerely need to make these cuts and it is not a whim or a mistake.

Make Valuable Employees Part of a Progressive Organization
To stay or not to stay? That is the question some remaining employees ask in the aftermath of their

company's downsizing process—particularly those who have other employment opportunities

outside the company. When these employees see some top managers leave voluntarily, they may

question the long-term prospects for the company and consider an immediate job change. This is

something to watch out for, as the people who leave under these circumstances are generally those

with valuable skills and training.

18
A former West Coast bank manager who left when he saw his manager leave made this comment

for an article in Fortune: "If you let people get the idea that the company is not just cutting back but is

sinking into mediocrity, morale really goes to hell" (Fisher, 1988). This quotation highlights the

importance of managing perceptions with "positive press" and communication from upper

management. Discuss the downsizing as a step towards a more efficient and profitable business

with an attractive future.

Rebuild Loyalty
Long after downsizing is completed, continue communicating with employees to re-build security and

trust. Do not allow management to assume remaining employees are merely grateful to still have

jobs. Employees need to feel they are valued, that they have a place in the company, and that

management believes that they are an important part of the success of the organization. To

emphasize this point, talk about where the company is headed, and describe any plans for growth

and prosperity.
19
Employee Morale During Downsizing
Why Morale Matters
Of course employees will feel unsettled during downsizing. However, just accepting loss of morale

as an inevitable consequence may undermine the very productivity gains intended by the change.

So employers should seek to minimize the unwanted impact of downsizing. They also need to

recognize the extent to which the manner of managing such change affects how employees feel

about the change and their future relationship with the company.

Downsizing can threaten employees’ sense of well being in several ways. They may see the

company as having behaved unjustly or unfairly. They obviously feel less secure. They may also

lose the belief that their contribution to the business will be rewarded in future. These responses

may easily threaten business performance. Survivors of downsizing can become unduly risk averse

and narrowly focused, and therefore less creative and open to change.
But ‘morale’ is not a simple concept. It consists of many facets and may be manifest in
many outcomes. These outcomes include:
•

whether employees stay with the organization

•

whether they achieve organizational or personal goals

•

whether they are able to adopt new working practices and learn new skills
•

how they respond to customers

It is a useful start to identify specific outcomes of morale which the organization wishes
to address.
The organizations involved in the study suggested three common strands to a strategy
for
influencing morale. They were the ability to:
•

anticipate likely employee response

•

identify interventions to impact morale

•

Monitor and evaluate morale and the impact of actions taken.

20
Anticipating Employee Response
A number of ‘risk factors’ were identified as indicating circumstances in which
downsizing was most likely to hit morale. They included:
•

failure to convince the workforce that job reductions were necessary

•

apparent lack of clarity or unfairness in deciding on individual redundancies

•

lack of care over redundant staff

•

lack of alternative career development options if promotion becomes unlikely

•

changes which leave survivors unclear of what is expected of them, or how they will
acquire the new skills they may need
•

Managers who are unwilling or unable to provide adequate time and support to
individuals.

Anticipating impact also means understanding that individuals in different job groups or career

stages may respond differently to downsizing. Although it is often difficult to address interventions to

particular workforce groups, they can sometimes be tailored with varying needs in mind.
Interventions To Build Morale
It is difficult to target interventions with any precision to influence morale. However, the participating

organizations identified several broad kinds of action which they saw as particularly relevant.

Communicating with employees during downsizing is vital. Conveying the reasons for such a painful

change is central. Employees need to understand the business reason for reducing headcount, and

how the change will be managed. Breaks in communication are seen as sinister, and lead to rumors.

Attempts to deny the reality of the painful aspects of the change are seen as insensitive. So

communication has to be honest in dealing with the negative feelings of employees. It is important to

communicate throughout the period of change, not just at the beginning.

Giving direct support to the ‘survivors’ as well as the ‘victims’ of downsizing leads to other types of

intervention. They may address such areas as Stress Management and Careers Counselling.
21
Organization Development initiatives may be used to try and improve the effectiveness of the

emergent organization. They may include work to rebuild relationships between and within groups

and departments, often through team building activities. Enhanced access to training and work

experience may be needed to help staff adjust to new job demands.

Performance Management often needs attention to ensure that staff feels that the new demands are

realistic in terms of the reduced staff resource. They also need to be clear what is expected of them

in the new organization. Reward strategies may also need realigning, but there is a lack of clarity at

present about the link between alternative reward strategies and morale.

The employee’s relationship with their line manager may have a significant effect on how well they

cope with downsizing. For line managers to support staff effectively at a time of difficult change, they

in turn have to feel as though they know how to handle queries and problems. It can help for

managers to share their concerns with their peers and discuss how to deal with staff issues. Some

companies use regular forums for managers to do this throughout the change period, and avoid

them feeling isolated.

Monitoring And Evaluation
Evaluating the success of attempts to influence morale during downsizing is not easy. There is a

natural tendency not to want to ask people how they are feeling when you expect negative

responses. Also we know relatively little about cause and effect in the area of morale. Ownership of

the issue may be difficult to establish — senior management itself often being in a state of flux

during periods of downsizing.

Many managers believe — or like to believe — that the general level of staff morale is outside their

control. There are indeed many limitations to controlling morale including the variation in individual

response, the impact on individuals of what they see happening to other employees, and the

variation in response over time. Separating the impact of different interventions can be difficult, and

downsizing is seldom the only organizational change going on. In spite of the difficulties of

evaluating the impact of specific responses on morale, organizations are using a range of measures

to monitor some of the outcomes of morale. For example, staff turnover, absence from work and

performance indicators (egg customer service) is often monitored numerically.

22
‘Softer’ measures of attitudes and perceptions of employees are obtained through the increasing use

of employee attitude surveys. These can be used both to identify variations in response within the

workforce, and track changing perceptions over time. Managers need to understand how employees

are feeling in their part of the organization as well as in aggregate. Upward feedback is another way

of collecting information on employee morale and response to initiatives. It can also be used as a

starting point for improving relationships within teams in the wake of downsizing.
23
 ORGANIZATIONAL CLIMATE ALSO AFFECTS EMPLOYEE
RETENTION RATE AND POSITIVELY AFFECTS EMPLOYEE
DOWNSIZING RATE
Organizational Climate
Litwin and Stringer define organizational climate as 'a set of measurable properties of the work

environment, perceived directly or indirectly by people who live and work in this environment and

assumed to influence their motivation and behaviour'. Traditionally, organizational climate alms to

capture a snapshot of an organization at one point in time. Organizational climate research has had

a long and active history, with much of its foundation drawn from psychology. Because of space

constraints and the availability of excellent articles which review the extensive history of the

organizational climate literature, we will only briefly review the organizational climate literature here.

Organizational climate is largely based on Lewinian field theory, which is a result of Lewin's work on

experimentally-created social climates This work was advanced by several early key studies

including Litwin and Stringer and Tagiuri and Litwin. Litwi n and Stringer investigated how

organizational climate affects individual motivation. They also suggested that organizational climate

was comprised of nine dimensions: structure, responsibility, reward, risk, warmth, support,

standards, conflict, and identity. Taguiri and Litwin's book was comprised of a series of essays that

treated climate in ways ranging from a subjective interpretation of organizational characteristics to an

objective set of organizational characteristics. Other early studies were aimed at identifying the

dimensions comprising organizational climate

After the 1960s and early 1970s, the focus of the organizational climate field became more clearly

defined. More recently, organizational climate researchers have begun to consider how

organizational climates develop. Three schools of thought have developed: the subjectivist,

objectivist, and interactionalist perspectives. Probably the most troubling issue that the

organizational climate literature continues to face is defining the appropriate dimensions that

comprise organizational climate. Organizational climate is a fairly general term which refers to a

class of dimensions which can be critiqued for being too diverse . In addition, the multidimensional

nature24
of organizational climate makes it more difficult to define sharp borders. Organizational climate

scholars have responded by making empirical and theoretical arguments to distinguish

organizational climate from various other const ructs, such as structure and individual satisfaction.

While these and other efforts have been helpful, some fuzziness around the borders and

differentiation of the organizational climate construct still remains.

Research on organizational climate has continued more recently, including Joyce and Slocum's

study of person and organizational fit, Joyce and Slocum's investigation of the extent to which

organization members agree about their organizational climate, Glick's discussion of the difficulties

of measuring organizational climate, Denison's investigation of the relationship between

organizational climate and performance, and Koyes and DeCotis's work on measuring organizational

climate. Even more recently, Denison has investigated the difference between organizational culture

and organizational climate, and Griffin and Mathieu have looked at how perceptions of organizational

climate vary with the hierarchical level in an organization. Anderson and West contributed to the

literature by exploring the link between organizational climate and innovation.

Measuring Organizational Climate
At its most basic level, organizational climate refers to employee perceptions of their work

environment. Generally, these perceptions are descriptively based rather than value based. For

example, the phrase, "I have more work to do than I can possibly finish" is a description of a

person’s workload, while the phrase "I like my job" is a positive evaluation of one’s job. Thus,

organizational climate is more than simply a summary of employee likes and dislikes.

The assessment of organizational climate typically occurs via an off-the-shelf or customized survey

containing questions about he work environment. Although administration procedures used when

conducting a survey can vary, ideally employees are asked to report to a designated work site at a

scheduled time to complete the survey, and employee participation is voluntary.

25
Selecting a Survey
Once a decision is made to conduct an organizational survey, it can be difficult to identify the "right"

survey to use. Although not a comprehensive list, the following factors may be helpful in reducing the

number of survey choices:

Determine the scope of information included in the survey. As might be imagined, there are a large

number of organizational climate areas that exist. Recent research has identified more than 460

different types of work environment characteristics that have been measured. Many of these

characteristics can be classified into the following major areas: job, role, leader, organization and

work group. In many companies there are particular areas where employee feedback would be

useful. For example, a company concerned about the impact of recent managerial downsizing may

want to ensure that leadership/supervisory components are included in the survey.

Make sure the number of climate areas included is kept to a manageable level. Not only will

including too many areas on the survey increase the time and effort needed to administer the

survey, but it also can make the interpretation process more difficult. On a related issue, many users

of organizational surveys find it useful to add a few customized items to the survey. Although adding

items does not always add to the scientific value of a survey, it can go a long way in generating

support from the company’s management team.

It can be extremely helpful to choose a survey that offers some flexibility in its
administration capabilities.

For example, some companies may require the ability to administer the assessment using a paper-

and-pencil format, while others may prefer an intranet format. Factors such as employee

demographics can be important, also. Some companies may require both an English and Spanish

version of the survey to accommodate all of their employees.

Finally, identify some general pieces of information you would like to see in a report once the survey

responses have been analyzed. For example, some companies may have an interest in only

reviewing the average levels of item responses within the company,

26
 while others may want to see how the company scored compared to other companies
throughout the nation.

In addition, some companies may want to have results broken down department-by- department or

item-by-item while others may want one set of analyses based on the entire set of employee

responses. In any event, the publisher/director of an organizational survey should assist a company

in selecting an instrument that will meet their specific reporting needs.

Benefits
Companies that conduct organizational climate surveys may experience one or more of
the following benefits:

•Employee involvement- By administering an organizational survey, employees are given an

opportunity to be involved in the company at a different level than is typically defined in their job

descriptions. Research has shown that employees who are more involved in the company also may

be more satisfied with their job, miss fewer days of work, stay with a company longer, and perform

better on the job.

•Positive work outcomes- In the last 30 years, a significant amount of evidence has been accumulated

documenting the importance of the work environment in relation to organizational performance. In

general, research has shown that factors in the work environment are related to outcomes such as

employee motivation, job satisfaction, intentions to quit, job performance and even organizational

productivity. In addition, an emerging area of research has indicated that organizational climate can

influence customer perceptions of the quality of goods or services delivered by a company.

•Communication forum- In many companies it can be very difficult to communicate with the majority of

employees. Recent trends such as organizational restructuring and/or merging of companies has

resulted in "flat" organizational responsibility charts, which increases the number of employees for

which each manager is accountable. As a result, some managers only have limited amounts of time

to talk to employees about day-to-day activities. Conversations regarding an employee’s work

environment can fall to the wayside, and in some instances, never take place.
27
 Organizational surveys that occur on a scheduled basis (e.g., annually, biannually,
etc.) can be a more efficient way for managers to gather important information.

•Industry comparisons- Organizations often look to other companies when determining organizational

policies and procedures. It is quite common for companies to "explore the market" or conduct

benchmark studies when considering issues such as new product development, salary or employee

benefit policies, marketing strategies, etc. A common question is "How do we compare to others?"

One advantage of conducting an organizational survey is that it can provide an opportunity to

compare the company’s work environment to that of other companies. Many surveys offer a national

normative database that can be used to facilitate comparisons across a variety of conditions and

industries.

•Proactive management- Administering organizational climate surveys allows managers to be much

more proactive in managing their employees and work environments. When used on a scheduled

basis, organizational surveys can help pinpoint problem areas within the work environment before

they grow into a crisis needing immediate attention. Problems that require a reactive posture

interrupt the normal workflow, and typically cause delays in providing products or services to

customers.
28
TIPS FOR CREATING AN EFFECTIVE ORGANIZATIONAL
CLIMATE FOR MINIMUM EMPLOYEE DOWN SIZING
•
Listen to the entire organization with ease.
•
Collect perceptions in real-time.
•
Reduce organizational bias.
•
Validate the questions and thus improve the results.
•
Facilitate candid and open feedback from employees who respond anonymously.
•
Identifying areas of inefficiency or performance gaps.
•
Identify root causes for poor productivity (such as poor communication or poor
process efficiency).
•
Reduce transition time during changes in the organization (such as reorganization,
relocation, a change in ownership, new products/services, or rapid growth).
•
Inform leaders with the information needed to make the best decisions.
•
Give employees an organized voice to assist leaders in taking actions.
•
Gain a fresh perspective of the organization.
•
Facilitate, track and execute informed action steps in one system.
•
Increase productivity.
29
 ORGANIZATIONAL VITAL SIGNS-A LEADING
INDICATOR OF SATISFACTION MEASURING OF
EMPLOYEES
Organizational Vital Signs:
•

identifies the readiness for, commitment for, and skills for change;
•

identifies the values, emotional competencies, and behaviors needed for success;
•

alerts managers to needs and opportunities for training, communication, and

development;
•

helps build strategies for sustainable growth;

•

is scalable, measurable, and practical.

30
ORGANIZATIONAL CLIMATE-EMPLOYEE SATISFACTION
SURVEY
The Organizational Climate Assessment is a powerful instrument, especially when provided

organization-wide with specific departmental demographic separation and analysis. Each category

has been designed to assess one of the key categories, which affect employee performance. This

assessment should be administered anonymously company wide, broken out by departments of 6 or

more people to protect the identities of respondents. Every precaution should be taken to insure

confidentiality in order that respondents will feel comfortable sharing their true opinions and

perspectives

The objective of performing an employee climate assessment is to identify the key areas which are

hindering production, reducing effectiveness and which might generate unexpected costs in the near

future. The idea and approach is for the organization not to simply perform an academic exercise,

simply because they ‘do it at this time every year’, but to critically examine themselves to see where

the company and it’s employees might be finely tuned to generate higher levels of performance.

Once identified, opportunities to strengthen existing approaches, which are working well, as well as

select appropriate interventions for addressing the weakest areas, should be aggressively pursued

for the maximum benefit of everyone.

This assessment is designed with the following assumptions in mind:
Fundamental care of the employee as an asset
Organizations are successful because of the quality of work employees perform. When employees

are cared for, and the right environment is created where there are no barriers to performance, their

true value to the organization can be fully realized.

Respect For The Dignity Of The Employee And The Sensitivities Of
Human Beings
31
Humans have fundamental needs for safety and security, affiliation and acceptance, involvement as

well as self-actualization. The extent to which these and other human needs are fulfilled lead to

higher levels of commitment, initiative and performance. Organizations, who include an emphasis on

fulfilling the needs of their employees to some extent, will enjoy a more productive and stable

workforce.
Full Understanding Of The Realities Of Business
This assessment is written with full realization of the realities of business, and not an unrealistic

utopian view of an idealized work environment. The factors emphasized and measured in this

assessment are the important levers to optimizing employee workplace performance, not just

creating an environment where everyone feels better.

Embracing Optimization And Improvement
An irrefutable trend in business today, continuous improvement and increasing levels of efficiency

are a way of life, and these factors are given appropriate emphasis in this assessment because they

represent an ever present dynamic with which every employee must deal.
Keys To Motivation And Commitment
Rather than only identifying potential problem areas to be avoided, this assessment focuses on

areas where human behavior can be leveraged more positively to create employees with higher

levels of motivation and commitment.

32
EMPLOYEE DOWN SIZING & EMPLOYEE
MOTIVATION ARE CLOSELY KNITTED
A manager’s job is to influence the people in the organization to accomplish the goals and objectives

with optimal efficiency and effectiveness. One of the most critical and vexing concerns of

management and supervisory personnel in any organization understands of motivation and its role in

performance. Motivation is the desire within an individual that stimulates him or her to action. Higher

the motivation, higher the moral of productive work force.

For motivation, we have to attempt to identify the factors that influence

behavior,

particularly the ways in which people respond to the action of those around them and to other stimuli

in their environment. Today, we no longer have a socially simple world. The powerful forces are

making it more complex all the times. People are products of experiences they have never

relinquished. Personal history will always make its claim even though it operates silently and usually

beyond the individual’s awareness.

One of the earliest approaches to motivation was Frederick Taylor Theory that the employer

essentially bought or exchanged the purchasing power of his wage dollars for the worker’s time,

interest, effort and contribution. This was the first widely accepted motivation theory. At that time, it

seemed to accurately describe workers responses to existing environments. As time passes, it

become clear that monitory rewards, including the plethora of incentive wage and bonus plans, did

not by themselves buy interest, commitment and motivation. In post World War II ear, new

motivation theories evolved by behavioral sciences in response to the changing environment of time.

Especially noteworthy were the conceptual contributions of Douglas Mc Gregor, Abraham Maslow,

Herzbeg, David Mc clelland, Johan Morse and Jay Lorsch.

Motivation – Hygine Theory
The motivation – TWO FACTOR THEORY – proposed by Herzberg postulates that:
The factors causing job satisfaction (and presumably motivation) were different from
that
causing job dissatisfaction. He developed the motivation-Hygiene theory to explain
33
these results. He called the satisfiers motivators and the dissatisfied hygiene factors, using the term

“hygiene” in the sense that they are considered maintenance factors that are necessary to avoid

dissatisfaction but that by themselves do not provide satisfaction. Herzberg reasoned that because

the factors causing satisfaction are different from those causing dissatisfaction, the two feelings

cannot simply be treated as opposites of one another.

Therefore, managers who seek to eliminate factors that create job dissatisfaction can
bring about peace but not necessary motivation.
Motivators Hygiene Factors
•
Achievement Company Policy & Administration.
•
Recognition, Leadership.
•
International relation, welfare & salary.
•
Challenge, growth, Working condition status & security.
•
Responsibility and accomplishment.
•
Motivation through job rotation and security.
•
Satisfaction by communication.
•
Appraisal & feedback.
When hygiene factors are adequate, people will not be dissatisfied, but neither will they
be satisfied.

To the question “HOW do you motivate employees? “ Hertzberg has but one answer “the only way to

motive the capable employees is to give him challenging work for which he can assume

responsibility” (and thus drive at least partial satisfaction of his higher need). Hertzberg’s concept

can be viewed as special application of Maslow in a highly complex industrialized society, in

organization having tasks and people more appropriate to Mc Gregor’s Theory ‘Y’. In spite of

limitations, Hertzberg’s contribution to study of motivation cannot be ignored. Hertzberg’s theory is

widely real and his recommendations followed by many managers.

34
EMPLOYEE DOWN-SIZING & EMPLOYEE
ENGAGEMENT
Employees Engagement
In today’s technologically advanced World, employees are aware of what services should they

deliver for a particular return from their employer. On the other side employer has no choice but to

satisfy his employees by identifying and fulfilling his wants, the employer has to use the motivation

theories as these provide a good idea of how and in what way they will get motivated and satisfied.

The above logic applies to every industry whether it is politics, economics, technology or society. For

instance, in a society the same person who is an employee plays a role of a member of the family.

His duties are to control his children so that they do not get into a bad company and they should

concentrate on their studies. Now the same question comes How to motivate them to study? Here

the employee acts as an employer and the children act as his employees.
What Do Workers Want?
"Supervisors generally ranked good wages, job security, promotion and good , working conditions as

the things workers want from their jobs. While workers felt they want most is full appreciation for

work done, felling "in" on things, and sympathetic understandings of personal problems -all

incentives that seem to be related to affiliation and recognition motives. It’s not only good money but

there is lot of other needs, which an employee wants to fulfill for being satisfied and committed

towards the job. These needs vary from one employee to another, workers needs are totally different

from the managers and are rated as least important by Mana

Employee engagement goes beyond the employees’ intent to leave. It includes the employees’

commitment to the organization and motivation to contribute to the organization’s success. By

creating a workforce that is passionately involved with the company, the organization can create a

sustainable competitive advantage for itself. This article throws light on the issues to be addressed

by the organizations for creating an engaged workforce.

35
The evidence of a significant relationship between employee engagement and financial
performance is undeniable.
-Towers Perris

Talking about the engagement and commitment of an employee to an organization, most companies

are of the opinion that they do have a few, but they still want more. Why? It is merely because these

companies have come to the realization that their organization’s long-term success relies on

employee performance, which is directly impacted by the level of employee engagement and

commitment to an organization. Well, some organizations think that simply making people happy

and paying them handsome pay packets is the solution. But it is not so. These are things which an

organization need to consider to attract and retain the most qualified individuals, however, when it

comes to engaging employees in their work, there are definitely some more issues that need to be

worked out. Engagement requires engaging not only the employees’ minds but their hearts as well

and this is something that the organizations can neither force not buy in order to succeed in the

marketplace.
What is employee engagement?
An engaged employee is a person who is fully involved in and is enthusiastic about, his or her work.

Such employees are attracted to, and inspired, committed and fascinated by their work. In a recent

research by Hewitt Associates, it was found that engaged employees are not only intellectually

committed to the organization but are also emotionally attached to it, as is measured by three

primary behaviors: Say, stay and strive.

The age old business dictum goes that “satisfied employees create satisfied customers” by

constantly striving for the best, contributing to the bottom line of the company success by their

motivation and enhanced performance. It is believed that an engaged employee always acts

positively in the interest of the company and takes unconcealed pride in the success and prosperity

of his employer. The engaged employees and the organizations go that extra mile for each other,

thereby realizing the benefits that flow through an investment in such a relationship.
36
Does Engagement Really Make a Difference?
According to the former GE Chairman and CEO, Jack Welch, a company’s health is determined

through it’s energized workforce who not only realize the mission of the organization and have an

understanding of how to achieve it, help the organization win in the long run. Engaged employees

care about the future of the company and are willing to study entitled, The War for talent, reported

that a shortage of skilled employees was an emerging trend and it was more so due to the fact that

the organizations fail in their attempts to create a workforce that is not only cognitively vigilant but

also emotionally connected to the organization.

Research has proven that wholly engaged employees tend to be more self-motivated, reliable, and

have higher levels of organizational loyalty. They are capable of delivering sustained affecting the

key results areas such as employee turnover, sales, innovation and customer satisfaction, engaged

employees in customer facing roles are more likely to treat customer is ways that positively influence

customer satisfaction and are more than twice as likely to be company advocates. They share

information with colleagues and pass on ideas that speak up for the organization. Engaged

employees are much more likely to feel secure and stable in their position and are in fact the

ambassadors for the company, singing its praises to everyone, and taking the best foot forward to

deliver and over-deliver for customers and the colleagues alike.

How to measure employee engagement?
To determine the level of employee engagement, the organizations should make use of a

comprehensive employee feedback and to improve levels of productivity and commitment by

identifying the root causes of workplace attitudes. They also help in developing an understanding of

the extent to which employees are passionate about their work and emotionally committed to their

company and to their co-workers.

There are several standardized tests, toolkits and instruments available which can help determine

the level of employee engagement in an organization. survey of the Gallup Organization Identifies

strong feelings of employee engagement in four key areas – customer satisfaction / loyalty,

profitability, productivity and employee turnover. The questionnaire has been administered to a

multitude of companies across the world. Results from the survey show a strong correlation between

high scores and superior job

37
performance and many organizations have found it to be a definitive measure of the engagement

level of their employees. Standard Chartered, for example, introduced annual survey to measure

improvement in the engagement of teams. The results are used to develop action plan and

continually monitor the follow-through of the teams. This focus has seen a continuous rise in both

the number of engaged teams and extent to which the employees are engaged at Standard

Chartered.

Many organization use employee satisfaction survey to identify the root causes of job issues and

create solutions for improvements with due consideration given to the viewpoints of employees.

Certain employee opinion surveys are also in practice that offers accurate identification of employee

behaviors, feelings, and thoughts for improved organizational development. The other ways used to

measure the employee engagement levels is through tracking changes in the attrition rate and

growth in productivity and business. The data collected from these surveys can furnish information

that can help the management in the following ways:

•
Identifying cost-saving opportunities
•
Improving productivity
•
Reducing turnover
•
Curbing absenteeism
•
Strengthening supervisor
•
Evaluating customer – service issues
•
Assessing training needs
•
Streamlining communication
•
Benchmarking the organization’s progress in relation to the industry
•
Gauging employees understanding of and agreement with the company mission.

The surveys must also be integrated with the culture survey s and since the culture varies within the

organization, the companies must aim at measuring the engagement at work group level. The

organization also needs to keep in mind that it is not just about the surveys; whatever follows is of

great importance. After evaluating the results from these surveys it is imperative for the management

to work out the problem areas and take an appropriate action. Many a times it so happens that the

good news is communicated expeditiously to all concerned but the key challenges tend to be

avoided. This makes the

38
employees feeling unheard, thus leading to resentment and this poses a significant
threat
to engagement levels within the organization.

The survey findings must aim at behavioral changes required to improve desired outcomes at the

organizational, team and individual levels. While HR plays an instrumental role in the survey

process, the extent to which the change program can be successful is the responsibility of an

organization’s leaders.
39
DIAGNOSTIC TOOL
The diagnostic tool
Current studies suggest that employee engagement will be influenced by:
1. Employee perceptions of job importance. This study has found that “…an employees
attitude toward the job [‘s importance] and the company had the greatest impact on
loyalty and customer service then all other employee factors combined.”
2. Employee clarity of job expectations. “If expectations are not clear and basic
materials

and equipment not provided, negative emotions such as boredom or resentment may result, and the

employee may then become focused on surviving more than thinking about how he can help the

organization succeed.”
40
3. Career advancement/improvement opportunities. “Plant supervisors and managers

indicated that many plant improvements were being made outside the suggestion system, where

employees initiated changes in order to reap the bonuses generated by the subsequent cost

savings.”
4. Regular feedback and dialogue with superiors. “Feedback is the key to giving
employees a sense of where they’re going, but many organizations are remarkably
bad at giving it.”
5. Quality of working relationships with peers, superiors, and subordinates. “…if

employee’s relationship with their managers is fractured, then no amount of perks will persuade the

employees to perform at top levels. Employee engagement is a direct reflection of how employees

feel about their relationship with the boss.”

6.Perceptions of the ethos and values of the organization. “‘Inspiration and values’ is

the most important of the six drivers in our Engaged Performance model. Inspirational leadership is

the ultimate perk. In its absence, [it] is unlikely to engage employees.”

Approaches suggested for creating an engaged workforce
Employee engagement can occur when the organizations work on removing the blockades to work

which necessitates having a clear understanding of the levers required to improve the key employee

attitudes of satisfaction and engagement so as to create an optimally functioning system.

There can be more than one way to improve the level of employee engagement in a company. In

fact, there are many different things that companies not only can do, but also need to do. Most

organization have a range of practices to improve the engagement level of their employees. Best

practice recommends starting right at the selection or recruitment stage by having the right

employees working in the right jobs and having a strong induction and orientation program in place.

Besides giving the employees clarity on the vision and goals of the organization, it is essential for

organizations to put into place regular technical / soft – skill training and development programs and

the
41
certification programs to drive people towards excellent performance as it so happens
at
HCL info systems.

Once the employees become a part of the system, efforts have to be put into place to engage

employees to their highest level. This includes giving emphasis on certain areas which go a long

way in affecting the level of engagement of the employees and includes:

•
Communication: A proper communication system helps employees in finding out

what is going on within the company outside their immediate team. They also help to create an

environment of trust and openness within the organizations where they are able to talk openly.

Employees who feel they are listened to are able to express dissatisfaction and work together to

resolve their causes, without it affecting their performance.

The initiative must be taken by the leaders at the top as it happens at the Sum Microsystems where

the CEO interacts with Sun employees through WSUN, a forum on Sun’s intranet. He uses this to

sustain an active, an ongoing dialog on the corporate goals and direction.

The organizations must work towards implementing the communication forums to provide regular

feedback to all people, including team meetings and conferences. 3M for example encourages

employees to bring forward their questions or concerns through such programs as let’s talk It Over,

Between Us and various internal and external help lines.

Besides using the regular employee opinion and satisfaction surveys, an update on the various

organizational issues can be tracked by the organizations through the usage of in-house magazines

and online communications, including discussion boards by company personnel including the senior

management.
•
Reward Schemes: These form an important part of a company’s overall employee

engagement program. Studies have long shown that while money in itself is not a motivating factor

the absence of financial reward can be a significant demotivator. Thus the role of reward schemes in

boosting. Thus the roles of reward schemes in boosting employee engagement are? To remove

barriers to satisfaction in the organization and provide a framework for rewarding everyone in the

organization for their performance. This may be achieved through right compensation and benefit
42
programs, stock ownership and profit sharing plans and recognition programs. People want to know

if their input matters and that they are contributing to the organization’s success in a meaningful way,

for which there must be performance based reward scheme in place.

In fact, organizations must have flexible benefit schemes, as Hewitt Associates does, to attract and

retain their talent, which provides employees with the freedom to choose how they receive their

benefits tailoring a package to suit their lifestyle.

•
Developing the right culture: The organizations must have clear and humane HR

policies and take initiatives to maintain the quality of work life of its employees. Opportunities must

be provided for social interaction such as family gathering barbeques, and trips to the cinema or

picnics. At HCL Info systems, a balance between personal / professional lives of employees is

maintained through recreational activities like festivities @ HCL, get-togethers @HCL, sport@HCL.

The company also encourages an open and transparent culture to empower its people and develop

entrepreneurs.

The organizations must demonstrate a commitment to employees’ well –being by providing

opportunities for career advancement and be developing a safe, clean and inspiring work

environment for their all-round growth. The employees must be provided with enough resources to

solve their day-to-day problems or to do a job well. Culture – building activities are great for

generating a feeling of belongings. Giving employees a feeling of belongingness is crucial in creating

a thriving organization that people feel committed to and others want to join.
•
Leadership: Effective leaders who help in setting the tone for creating an engaged

workforce can really differentiate an organization from its competitors. Everyone in the organization

with leadership responsibility must have the emotional intelligence and leadership skills needed to

switch and employees on they must act as role models, demonstrate and set high standards to

which others can aspire. Good practices include effective performance management and a fair

evaluation of performance. The leaders must act as coaches and mentors and must give an honest

feedback and guidance to their employees.

43
Ideas should be sought from all employees and the frontline employees should be allowed to

exercise a degree of discretion during service delivery E.g., allowing employees to spend up to a

certain amount to correct a customer’s problem or handle a complaint. The success of Microsoft, for

example, stems in part from Bill gates’ belief that smart people anywhere in the company should

have the4 power to drive an initiative. Initiatives such as Six Sigma are dependent, in part on the

active participation of employees on the shop floor.

For great managements, the path towards engaging employees and keeping them engaged beings

with asking them what they want and what is important in order to be effective in their roles. Effective

leaders don’t wait to get the resignation to know that an employee is dissatisfied.

An organization can always gain a competitive advantage by creating an engaged workforce. It

therefore, becomes, imperative for the organizations to identify the level of engagement in their

organization, strive to eliminate the reasons behind the disengaged workforce and implement

strategies to make them fully engaged. Employee engagement is something that is very difficult to

accomplish but if efforts are made on an ongoing basis, it can shrivel with relative ease.
44
RESEARCH OBJECTIVES
The objective of the study is:-
1.To make a conceptual study of Employee Down-Sizing
2. To study as to what cause this Employee Down-Sizing
3. To study the impact of Employee Down-Sizing on the employee’s morale
4.To study as to how Employee Down-Sizing, Employee Retention and employee
commitment are inter related
45
RESEARCH METHODOLOGY
A Research Methodology defines the purpose of the research, how it proceeds, how to measure

progress and what constitute success with respect to the objectives determined for carrying out the

research study. The appropriate research design formulated is detailed below.

Exploratory research: this kind of research has the primary objective of development of insights into

the problem. It studies the main area where the problem lies and also tries to evaluate some

appropriate courses of action.

The research methodology for the present study has been adopted to reflect these realties and help

reach the logical conclusion in an objective and scientific manner. The present study contemplated

an exploratory research
Research Design
The research design is the basic framework, which provides guidelines for the rest of the research

process. The present research can be said to be exploratory. The research design determines the

direction of the study throughout and the procedures to be followed. It determines the data collection

method, sampling method, the fieldwork and so on.

Nature of Data
Primary Data: Primary data is basically fresh data collected directly from the target
respondents; it could be collected through Questionnaire Surveys, Interviews, Focus
Group Discussions Etc.
Secondary Data: Secondary data that is already available and published .it could be
internal and external source of data. Internal source: which originates from the specific
field or area where research is carried out e.g. publish broachers, official reports etc.
External source: This originates outside the field of study like books, periodicals,
journals, newspapers and the Internet.
46
Data Collection
Primary data: Primary data was selected from the sample by a self-administrated
questionnaire in presence of the interviewer.
Sample Size:

The survey is conducted among 100 respondents

Sample Area:NCR Delhi

Sample unit:Employees of many BIG companies in Nehru Place (Delhi), these people
were requested to fill in the questionnaires during the lunch intervals at the Nehru Place
premises
SECONDARY DATA:
Secondary data has been used which is collected through

⇒ A r t i c l e s ,

⇒ R e p o r t s ,

⇒ J o u r n a l s ,

⇒ M a g a z i n e s ,

⇒ N e w s p a p e r s a n d

⇒ I n t e r n e t
Sampling Technique
Random sampling technique has been employed to extract the fruitful results. This includes the

overall design, the sampling procedure, the data collection methods, the field methods and the

analysis procedures
Sampling Procedure Actually Employed:
The process employed to select the sample was simple random sampling. Simple random sampling

refers to that sampling technique in which each and every unit of the population has an equal and

same opportunity of being on the sample. In simple random sampling, which item gets selected is

just a matter of chance.

47
Analytical Tools:
Simple statistical tools have been used in the present study to analyze and interpret the data

collected from the field. The study has used percentiles method and the data are presented in the

form of tables and diagrams.

48
DATA ANALYSIS
1. What Is Your Primary Reason For Leaving The Company?
1. Benefits
7. Better Job Opportunity
2. Commute
8. Conflict with Other Employees
3. Conflict with Manager
9. Family Reasons
4. Job Expectation
10 Not Challenging
5. Pay
11 Personal Reasons
6. Reallocation/Move
12. Working Conditions
49
0%
5%
10%
15%
20%
25%
benefits
commute
conflict with manager
job expectation
pay
reallocation/move
better job opportunity
conflict with other employees
family reasons
notchallenging
personal reasons
working conditions
benefits
5%
commute
5%
conflictwith
manager
5%
jobexpectation
10%
pay
15%
r ll
ti nm v
3%
50
0%
5%
10%
15%
20%
25%
benefits
commute
conflict with manager
job expectation
pay
reallocation/move
betterjobopportunity
conflict with other employees
family reasons
notchallenging
personal reasons
working conditions
benefits
5%
commute
5%
conflictwith
manager
5%
jobexpectation
10%
pay
15%
reallocation/move
3%
better job
opportunity
20%
conflictwithother
employees
5%
family reasons
5%
notchallenging
5%
personal reasons
2%
workingconditions
22%
51
2.How Long Have You Been Thinking About Leaving The Company?
1. One Month or Less
2. One To 5 Months
3. More Than 5 Months
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
onemonthor less
onemonthto5month
more than 5 months
onemonthor
less
10%
onemonthto5
month
40%
morethan5
months
50%
52
3.
How Satisfied Are You With The Company You Work For?
1. Extremely Dissatisfied
2. Very Dissatisfied
3. Neither Satisfied nor Dissatisfied
4. Very Satisfied
5. Extremely Satisfied
0%
5%
10%
15%
20%
25%
extremely dissatisfied
very dis satisfied
neither satisfied nor
dissatisfied
very satisfied
extremely satisfied
extremely dissatisf ied
20%
verydis satisf ied
25%
neithersatisf iednor
dissatisf ied
25%
verysatisf ied
15%
extremely satisf ied
15%
53
4.How Was Your Working Experience?
1. Much More Positive than Negative

2. More Positive than Negative

3. More Negative than Positive

4. Much More Negative than Positive

0%
5%
10%
15%
20%
25%
30%
muchmorepositive than
negative

morepositive thannegative morenegative thanpositive muchmorenegative than

positive
muchmorepositive
thannegative
20%
morepositivethan
negative
30%
morenegativethan
positive
30%
muchmorenegative
thanpositive
20%
54
5. If Your Experiences Are More Negative Than Positive, What Factors Are
Responsible? Select All That Apply.
1. My Performance Evaluation and the Outcome
2. My Role, Responsibility and/ or Title

3. Job Training

4. My Boss

5. My Co-Workers

6. My Compensation

7. Change in Compensation Package

8. Company Savings Plan

9. Medical Benefits and Insurance

10. Relocation

11. Vacation Time

12. Other
55
0%
5%
10%
15%
20%
25%
my performance evaluation
and the outcome
myrole,responsibilityand/or
title
jobtraining
mybos s
myco-workers
my compensation
changein compensation
package
company savingsplan
medical benefits and
insurance
relocation
vacation time
other
myperformance
evaluationandthe
outcome
25%
my role,
responsibility
and/or title
10%
job training
5%
my boss
10%
myco-workers
10%
mycompensation
2%
changein
compensation
package
8%
companysavings
plan
5%
medicalbenefits
and insurance
10%
relocation
5%
vacat
i
ontime
5%

56
6. How Flexible Is The Company With Respect To Your Family Responsibilities?
1. Very Inflexible
2. Somewhat Inflexible
3. Neither
4. Somewhat Flexible
5. Very Flexible
0%
5%
10%
15%
20%
25%
very inflexible
somewhat inflexible
neither
somewhat flexible
very flexible
veryinf lexible
25%
somew hatinf lexible
25%
neither
10%
somew hatf lexible
25%
veryflexible
15%
57
7. Do You Have A Clear Path For Career Advancement?
1. Strongly Disagree
2. Somewhat Disagree
3. Neither Agree or Disagree
4. Somewhat Agree
5. Strongly Agree
0%
5%
10%
15%
20%
25%
30%
strongly disagree
somewhat disagree
neitheragreeor disagree
somewhatagree
strongly agree
stronglydisagree
25%
somew hatdisagree
10%
neitheragreeor
disagree
10%
somew hatagree
25%
stronglyagree
30%
58
8. How Satisfied Are You With Your Position At This Company?
1. Very Satisfied
2. Somewhat Dissatisfied
3. Not Satisfied nor Dissatisfied
4. Somewhat Satisfied
5. Very Satisfied
0%
5%
10%
15%
20%
25%
30%
35%
very satisfied
somewhat dissatisfied
not satisfied nor dissatisfied
somewhat satisfied
very dissatisfied
very satisfied
20%
somew hat
dissatisf ied
30%
notsatisf iednor
dissatisf ied
10%
somew hatsatisf ied
5%
verydissatisf ied
35%
59
9. What Part Of Pay Play In Your Decision To Leave The Organization?
1. 20-40%
2. 40-60%
3. 60-80%
4. 80-100%
0%
5%
10%
15%
20%
25%
30%

20-40% 40-60% 60-80%

80-100%
20-40%
20%
40-60%
25%
60-80%
30%
80-100%
25%

60
10. Does Working Conditions Affect You To Leave Your Job?
1. Yes
2. No
0%
10%
20%
30%
40%
50%
60%
70%
yes
no
yes
65%
no
35%
61
11. How Would You Rate The Morale In Your Company?
1. Low
2. Very Low
3. High
4. Very High
0%
5%
10%
15%
20%
25%
30%
35%
low
verylow
high
veryhigh
low
35%
verylow
20%
high
25%
veryhigh
20%
62
12. Could This Company Have Done Anything To Encourage You To Stay?
1. Yes
2. No
0%
10%
20%
30%
40%
50%
60%
yes
no
yes
40%
no
60%
63
CONCLUSION & IMPLICATIONS
The present report indicates that the following features:-
1. Better job opportunities in outer market & pay are the main reasons for increasing

attrition rate.

2. The employees do not feel valued by their employer.

3. The working environment in the company also make them to leave their job.

4. Performance Appraisals are not given at regular intervals so that the Employee

feel motivated for its work.

5. The work schedule is very much inflexible & Stressful.

However an effective retention policy could be followed to make the employees stay in

the company starting form recruitment and selection of employees, providing an effective

pay packages and compensation, outlining an efficient career development path for

employees and most importantly catering to their emotional, mental and family needs.

Also practices should be followed to bring the ex-employees back in the company.
64
RECOMMENDATIONS
65
 BIBLIOGRAPHY
1. Charles R. Greer, Strategic Human Resource Management: A General Managerial
Approach, Second Edition, Person Education, 2004

2. Tyson, S., Lawrence, P., Poirson P, Manzolini, L., and Seferi, S.V., Human Resource Management –

Strategies, Issues and Cases, Kogan Page, London, 1999.

3. Barney Olmstead and Susanne Smith (2001): Creating a Flexible Workplace:
How to Select and Manage Alternative Work Options
4. Khanewal Rohit (February 2002), "Winning the Retention Game", Human
Capital, Pg. 10-12.

5. Brockner, J., Grover, S., Reed, T., & Dewitt, R.L. (1992). Layoffs, job insecurity, and survivors'

work effort: evidence of an inverted-U relationship. The Academy of Management Journal, 35, 413-

425.

6. Brockner, J., Grover, S., Reed, T., Dewitt, R.L., & O'Malley, M. (1987). Survivors' reactions to

layoffs: We get by with a little help for our friends. Administrative Science Quarterly, 32, pp. 526-541.
7. Fisher, A.B. (1988, May 23). The downside of downsizing. Industry Week, pp.
42-51.
66
APPENDIX
QUESTIONNAIRE
NAME:
-
JOB TITLE:
-
ORGANIZATION: -
CELL NO. :
-
AGE GROUP:
-
1. What Is Your Primary Reason For Leaving The Company?
1. Benefits
7. Better Job Opportunity
2. Commute
8. Conflict with Other Employees
3. Conflict with Manager
9. Family Reasons
4. Job Expectation
10 Not Challenging
5. Pay
11 Personal Reasons
6. Reallocation/Move
12. Working Condition
2. How Long Have You Been Thinking About Leaving The Company?
1. One Month Or Less
2. One To 5 Months
3. More Than 5 Months
3. How Satisfied Are You With The Company You Work For?
1. Extremely Dissatisfied
2.Very Dissatisfied
3. Neither Satisfied nor Dissatisfied
4. Very Satisfied
67
5. Extremely Satisfied
4. How Was Your Working Experience?

1. Much More Positive than Negative

2. More Positive than Negative

3. More Negative than Positive

4. Much More Negative than Positive

5. If Your Experiences Are More Negative Than Positive, What Factors Are
Responsible? Select All That Apply.
1. My Performance Evaluation and the Outcome
2. My Role, Responsibility and/ or Title

3. Job Training

4. My Boss

5. My Co-Workers

6. My Compensation

7. Change in Compensation Package

8. Company Savings Plan

9. Medical Benefits and Insurance

10. Relocation

11. Vacation Time

12. Other
6. How Flexible Is The Company With Respect To Your Family Responsibilities?
1. Very Inflexible
2. Somewhat Inflexible
3. Neither
4. Somewhat Flexible
5. Very Flexible
68
7. Do You Have A Clear Path For Career Advancement?
1. Strongly Disagree
2. Somewhat Disagree
3. Neither Agree or Disagree
4. Somewhat Agree
5. Strongly Agree
8. How Satisfied Are You With Your Position At This Company?
1. Very Satisfied
2. Somewhat Dissatisfied
3. Not Satisfied nor Dissatisfied
4. Somewhat Satisfied
5. Very Satisfied
9. What Part Of Pay Play In Your Decision To Leave The Organization?
1. 20-40%
2. 40-60%
3. 60-80%
4. 80-100%
10. Does Working Conditions Affect You To Leave Your Job?
1. Yes
2. No
11. How Would You Rate The Morale In Your Company?
1. Low
2. Very Low
3. High
4. Very High
69
Practices To Reduce Employee Down-Sizing
Many companies face the challenge of employee turnover, and incur heavy losses. The employers

provide several attractive packages in order to retain the employee. Reasons for employee turnover

constitute several controllable and non-controllable factors.

Good economic time’s means lowered unemployment, increased productivity, and better prospects for

growth in all sectors. However, economic prosperity also means increased job- hopping among the job

seekers. Opportunities abound everywhere with increasing competition for talent among companies.

Frequent job changes are no longer a stigma, but they are becoming norm. The issue of employee

turnover is so pronounced in today’s world, that even in Japan, where life-time employment and high

employee loyalty are the norms, workers are becoming increasingly mobile. Even survival will become

questionable, if the company witnesses higher turnover among the top performer. With the increasing

mobility among the workers, “employee retention” poses a distinct challenge to any company.

Companies that are inflexible, or whose organizational culture is characterized by domination and

autocracy are likely to have dissatisfied employees no matter how good the incentives to stay may be Or,

at the very least, the tenure of their employees is likely to be highly sensitive to changes in specific

(usually monetary) incentives: small changes in compensation may lead to numerous departures. There

are however other aspects of the work environment or particular jobs that can act as strong ‘de-

motivators’ that can cause people to leave their employment. These include
Lack of control over one’s work
•

Feeling bored or unchallenged by repetitive tasks

•

Lack of job security

•

Lack of learning opportunities

•

More generous compensation or benefits package offered elsewhere

•

Concerns about the future of the firm

It’s Not Just the Pay …

While remuneration and other types of benefits continue to be an important factor in the retention

equation, it is important to note that the current HR literature treats them as only one potential area for

retention, and not always in and of themselves, sufficient to ensure strong employee commitment. Over

the past 10 or 15 years, the business literature dealing with employee participation, workplace wellness,

work-life balance and other topics has

70
mushroomed, indicating a strong interest in and recognition of how other aspects of working
life influence people’s decisions to stay with or leave a company.
Why do people choose to leave or stay?

Setting aside list of retention policies and programs, it is clear that there is broad agreement in the HR

literature about the general features of any potential HR program that contributes to good retention. Most

of these are directly related to creating a satisfactory work environment for employees and thus, in turn, to

good retention. These features

•

A stimulating work environment that makes effective use of people’s skills and knowledge, allows

them a degree of autonomy on the job, provides an avenue for them to contribute ideas, and allows them

to see how their own contribution influence the company’s well-being.

•

Opportunities for learning and skills development and consequent advancements

in job responsibilities.
•

Effective communications, including channels for open, two-way communication, employee

participation in decisions that affect them, an understanding of what is happening in the organization and

an understanding of the employer’s main business concerns.

•

Good compensation and adequate, flexible benefit plans.

•

Recognition on the part of the employer that employees need to strike a good
balance between their lives at work and outside of work.
Respect and support from peers and supervisors.
71
1. What are the reasons for employee downsizing?

Obsolescence of skills

Shift in organizational requirements;

Outsourcing;

Modernizing,

Redesigning the job

Restructuring or reducing the activities of industrial units

2. Is downsizing the only way out for the above problem?
Yes
No
3. If No, What are the alternatives to downsizing?
Employment
Changes in
Pay/Benefits
Training
Policies
Job Design
Policies
4. Which is a better criteria to use as the basis for downsizing employees?
seniority
performance
5. Are the reasons for downsizing communicated well to you?
Yes
No
6. When should the employers convey about downsizing to their employees?
give future notice
tell them on the day they are expected to leave
7. Does downsizing affect the motivation of the employees?
Yes
No
72
8. In what circumstances the employee morale is most hit during downsizing?
•

failure to convince that job reductions were necessary

•

lack of clarity in deciding on redundancies

•

lack of care over redundant staff

•

lack of alternative career development options

•

changes which leave survivors unclear of what is expected of them, or how they will
acquire the new skills they may need
•

Managers who are unwilling to provide adequate time and support to individuals.
9. What helps to build the morale of the employees during downsizing?

Effective communication

Psychological support

Counseling

Alternative career options

10. Does downsizing also have an impact on the survivor employees?
Yes
No
11. has this Company Done Anything To Encourage You ?
1. Yes
2. No
12. What are the consequences of employee downsizing?
73
74

Top of Form

342119620fbfee9

Bottom of Form
activities, etc. As a sequel to these developments, employees can be redeployed, transferred,

rendered redundant, or let go within a very short span, without adequate preparation for these

changes. Such changes take their toll in terms of organizational productivity, nature of employer-

employee relationships and the associated social costs. People who contribute to the organizational

goals are the organization's assets. These assets are turned into liabilities due to reasons mentioned

earlier. The challenge is to what is morale manage employee exit without disrupting the

organization's functioning. Those individuals who lose jobs are the hardest hit. For the affected

employee, the emotional trauma of losing a job is very difficult to cope with. Aside from the financial

implications of a job loss, they have to reconcile with the loss of self-esteem, self-confidence, and a

breach of trust between the employer and the employee. Along with the individual, his/her family

also gets deeply affected with the involuntary job loss of a family member. The pain is not limited to

the individual alone but affects a number of others. The effect is also felt by other employees who

remain in the organization as they suffer from the guilt and are also faced with the fear of job

insecurity.

The fundamental reason to resize the organization is to improve organizational performance and to

reduce costs of operation. While these changes are expected to fetch significant gains for the

companies in the long run, an analysis of corporate experiences of downsizing shows that such

measures are not always implemented with careful consideration of all the implications. Downsizing

also brings, in its wake, a number of associated hidden costs, which companies tend to overlook in

pursuit of short-term gains. The flip side of downsizing is that the organizations lose expertise, skills,

knowledge, experience and valuable relationships, which walk out of the door every time somebody

leaves. A number of alternative approaches can be implemented to achieve the over- riding goal of

enhancing business performance. At the same time, it is true that downsizing in many cases is an

inevitable option. However, downsizing should be considered not as the first but the last option. If the

axe has to fall, it should be preceded by a careful consideration of the consequences of such a

drastic action.
4
Need to reduce
Costs
Alternatives
To Layoffs
Voluntary
Quits
Involuntary
Separations
Early
Retirements
Voluntary
Workforce
Reductions
Layoffs
Outplacement
5
What is Morale
Morale, also known as esprit de corps, is an intangible term used for the capacity of
people to maintain belief in an institution or a goal, or even in oneself and others.
According to Alexander H. Leighton, "morale is the capacity of a group of people to pull
together persistently and consistently in pursuit of a common purpose".
Morale in the workplace

Workplace events play a large part in changing employee morale, such as heavy layoffs,

the cancellation of overtime, cancelling benefits programs, and the lack of union

representation. Other events can also influence workplace morale, such as sick building

syndrome, low wages, and employees being mistreated.

Factors influencing morale within the workplace include:
•

Job security.
•

Management style.
•

Staff feeling that their contribution is valued by their employer.

•

Realistic opportunities for merit-based promotion.

•

The perceived social or economic value of the work being done by the
organization as a whole.
•

The perceived status of the work being done by the organization as a whole.
•

Team composition.
•

The work culture.

6
How Down-Sizing Affects Employees’ Morale
Every year companies spend millions in recruitment due to employee turnover. Turnover and its

associated costs are a burden that used to be just the cost of doing business. But more and more

companies are investing time and effort in making better hiring decisions and doing more to keep the

employees they do hire. Employee retention is now a buzz word in today’s business world.

Over two-thirds (70%) of HR managers state that employee retention is a primary business concern.

HR managers currently find employee retention a business challenge, long-term demographic

changes, such as the retiring Baby Boomer population have the potential to aggravate this issue. All

companies, regardless of size, are struggling with how to keep employees from leaving for more

money or better opportunities. Studies consistently show that even though employees may say they

are leaving for more money, when those same employees are asked several months later why they

really left, the money factor is about 5th or 6th on the list. The first few reasons include lack of

recognition, disagreement with the culture or direction of the company, poor treatment by their boss,

lack of excitement about their growth prospects, and poor relationships with co-workers. ?

How much? When you add the costs of finding an employee, training the new employee, lost

productivity and filling in for the employee who leaves, the cost can easily equal 150% of the base

salary of the person who left. So, if you are paying someone $50,000, the cost to replace that person

will be approximately $75,000. This money comes out of your hard-earned profits.

This is one of the key reasons that companies are focusing so much effort on keeping their current

employees. Some of the steps taken by companies to retain their work force are:
•

Ensure you offer competitive compensation.

•

Ensure you offer basic health care benefits at reasonable rates. Consider adding
lifestyle benefits that are cost effective (read easy on the cash flow).
7
•

Find out what employees want from their career and do what you can to provide
for their needs.
•

Be as flexible as possible about how the work gets done.

•

Be as flexible as possible as to when and where the work gets done. Can it be OK for an

employee to take a few hours off to attend to a family or personal matter if they can accomplish the

job at their home in the evening?

•

Take a real and genuine interest in people’s career aspirations and personal lives.
•

Recognize positive contributions to the company. Communicate company progress, financial

news, major customer or sales activities on a regular basis. Follow up on your commitments to

provide information or answers.

•

Have regular (bi-weekly or monthly) meetings with all employees where they can ask you

questions about your plans, company progress, new developments to look for, etc. Be accessible to

them so you can learn their needs. If you can respond to their needs before they become real

issues, they won’t begin looking for greener grass.

•

Ask former employees why they resigned. Even if they left six months ago, they
still have a valid perspective.
•

Routinely ask employees what you can do to make the company a better place to work. Set

boundaries if necessary as to what items are not negotiable; such as ownership in the company or

50% per year salary increases.

8
LITERATURE REVIEW
Conceptual Approach To Employee Downsizing
“Reflective Restructuring”

According to Theo Blackwell of The Work Foundation, in 1980s and 1990s many companies

resorted to downsizing their human resources in order to cope with economic pressures. But what

most of these companies do not realize is that downsizing does not always lead to savings in reality

or increase in the market worth of the company. On the contrary, the downsizing companies may be

branded anti-people. It usually leads to repetitive downsizing and results in the loss of employee

morale and loyalty and thereby affects overall productivity levels. However, they can adopt

alternative approaches to cope with economic uncertainties. Wayne Cascio had proposed a new

strategy termed as "reflective restructuring", which enables companies to offer a range of smarter

options to employees. The article explains the significance of this new concept and provides

examples of companies in the US and UK which have adopted the strategy. It also explains that

while companies in the US are at a greater liberty to downsize, the UK business environment is not

amenable to such measures.

Kalyan Chakravarti in the article, "Downsizing and Outsourcing: An Indian
Perspective", explains the economic situation of India since Independence (post-1947)

and in the aftermath of the economic liberalization (post-1991). Against this backdrop, the author

analyses the performance of the Indian Public Sector Undertakings (PSUs). He outlines the causes

that resulted in surplus manpower among PSUs. However, after India opened up its economy, most

PSUs were compelled to streamline their operations to increase their efficiency. One of the major

steps taken to achieve this goal was to shed the excess staff on their payrolls through the "golden

handshake," by floating Voluntary Retirement Schemes (VRS) and Compulsory Retirement Scheme

(CRS). The other major step was to outsource non-core activities and focus on their core

competencies. The
9
article provides a snapshot of the Indian experience of downsizing and also discusses
the
social implications of these drastic measures.
Barbara L Davison
explains, in "The Difference Between Rightsizing and
Wrongsizing",the differences among the terms used in conjunction with downsizing,

i.e., rightsizing, resizing, upsizing, sidesizing, and wrongsizing. The author clarifies that rightsizing

need not imply reduction of personnel. In certain cases, it can also mean increase in the numbers.

The article explains the need for tying rightsizing efforts with the overall strategy, identifying critical

growth areas as well as those needing consolidation, analyzing the effects of rightsizing on all

functional areas, evaluating the financial implications, and ensuring that each department and

employee adds measurable value. The author illustrates how to carry out a rightsizing exercise with

the help of a process example, which describes the most important steps. In this connection, it cites

the examples of a few companies, such as Ernst & Young, Cisco, Agilent Technologies, and

Schwab, which have implemented rightsizing. The article also illustrates a few alternatives to

downsizing and highlights new workforce concepts, i.e., "Just-in-time" workforce and the "Portfolio"

workforce, to cope with fluctuations in business cycles.

Rick Maurer of Maurer & Associates emphasizes the need for organizations to act swiftly to cope

with changing business conditions and on their requirement of human resources. Business leaders

need to continuously assess the mix of skills required as well as the number of employees required

for the present and the future. In addition, they should engage in a process of benchmarking with

companies in the same industry. The article explains that downsizing may prove to be a risky

strategy that may not always bring about much improvement in terms of the productivity or revenues

to the organizations. Hence, to cope with changing requirements of staff, companies should consider

a number of different alternatives to downsizing. Further, it is of the utmost importance to plan

workforce requirements keeping in view the turbulent business environment.

Implementation Of Employee Down Sizing
Sumati Reddy of the ICFAI University, Hyderabad, India outlines ways in which employers can

implement a well-considered downsizing program. If downsizing is inevitable, organizations must

pay due attention to the rationale for downsizing,

10
involvement of employees in designing the program, formulation of a fair and equitable policy, Equal

Employment Opportunity (EEO) guidelines, legal counsel, etc. The article also suggests the use of

objective data to formulate the downsizing plan. In conclusion, it points to a few indicators to assess

the effectiveness of a downsizing program.

Carlton Becker of ORC enumerates a number of lessons from the collective experience of layoffs by

companies across the globe. These lessons largely pertain to the need to remain lean and mean in a

fast-changing global business environment, rightsizing the right way, considering scientific

alternatives to downsizing, paying attention to the after- effects of downsizing, and being aware of

the legal implications of downsizing. The author points out those mass layoffs should be viewed as a

change process to be implemented by adopting a systems approach. It explains the strategic role of

HR executives during the whole process, especially during the initial stages of rightsizing. It further

explains the step-by-step guidelines that HR executives can adopt in the downsizing process. The

article shares the experiences of a few companies such as MacMillan Bloedel, Canada,

DaimlerChrysler AG's US unit Motorola, Hallmark Cards, and Lucent Technologies.

Ann E Feyerherm of Graziado School of Business and Management, Pepperdine University, CA,

USA, also provides guidelines based on the first-hand experience of a manager involved in a

downsizing effort in a company in South California. Although, her team of management consultants

explored several alternatives to avoid downsizing, they had to face the inevitable reality of the

downsizing spectre. Since the axe had to fall, the best approach adopted was to downsize with

dignity and to ensure that those who were let to go were equipped with new skills to enhance their

career prospects. Also, the author describes specific measures undertaken to achieve these twin

goals and enumerates the lessons learnt through these difficult times. She concludes that during

these difficult times, she had no other principle to live by other than the one she had within.

Robert M Tomasko, provides guidelines to be adopted while implementing a downsizing strategy.

Many organizations are beginning to realize the adverse effects of employee downsizing and are

looking for ways to do so in a more humane manner. Lessons can be

11
learnt from those organizations that have been able to maintain, and sometimes even enhance,

employee morale. Such organizations give due attention to each of the three phases of downsizing,

i.e., planning, its implementation, and managing the results. The author adds a few essential aspects

to be considered while downsizing. These suggestions pertain to the importance of adopting

participative downsizing, managing the rumor mill, providing continual and frequent communication,

and paying special attention to the results. The article concludes by saying that those organizations,

which have been active in managing the human side of downsizing would find that they have laid the

groundwork for new and stronger relationships with their employees.

Seymour Siegel focuses on the need for organizations to take care of two things in order to gain

competitive advantage in the 21st century. The first pertains to the management of knowledge

workers and the second to the appropriate management of knowledge itself. In an era of downsizing,

organizations need to pay special attention to the fact that with downsizing, organizations also stand

to lose on the vital and tacit knowledge inherent in the outgoing employees. Managers are always

confronted with the challenge of capturing and codifying explicit and tacit knowledge and then

converting it into innovative products and services. The article describes a number of organizational

practices, which, if managed on an ongoing basis, can offset the loss that can occur as a result of

downsizing. It also discusses a number of steps to manage knowledge assets.

Coping With Downsizing
Neela Radhika of the ICFAI University, Hyderabad, India, describes a new phenomenon observed in

the aftermath of downsizing - Pink Slip Parties. It describes how Pink Slip Parties came into practice

and the reason for using the term `Pink Slip'. The article elucidates the special features of these

parties with respect to attendees, the kind of music played during these parties, the colour of

wristbands or badges, message boards, and activities. Pink Slip Parties offer a number of benefits to

both job seekers, who had lost jobs on account of downsizing, as well as the recruiters. The

effectiveness of these parties are analysed vis-à-vis the nature of support gained by laid-off workers

in restarting their careers. The article also points to new developments in this area, such as Layoff

Lounges.
12
Mika Kivimäki, Jussi Vahtera, Jaana Pentti, and Jane E Ferrie reports the results of a study

conducted to investigate the effect of the psychosocial work environment on employee health. This

study was conducted among 1,110 municipal staff in Raisio, Finland, between 1990 and 1995. It

encompasses the period prior to downsizing, during downsizing, and when downsizing had slowed

down. The downsizing exercise was a reactive one, conducted through retirement and hiring

freezes, and letting go the temporary employees. Some of the significant findings of the study are:

downsizing results in changes in work, social relationships, and health-related behaviours that lead

to increase in certificated sickness due to increases in physical demands, job insecurity, and

reduction in job control; sickness absence increases twofold in a major downsizing as compared with

sickness absence during a minor downsizing; downsizing was associated with negative changes in

work, impaired support from spouse, increased prevalence of smoking, and sickness absence. It has

been found that this study was unique in the area of employee downsizing and employee health as it

studied a natural experiment, which is rarely feasible.

Jonathan Kelley explains that the significance of downsizing depends on its long-term impact on

workers. It presents a model to study the probability of re-employment among workers shed by

downsizing firms as compared with those departing from stable or growing firms. This model can

also be used to examine the impact of downsizing on the duration of jobless spells, continuity or

change in occupation, on earnings, and on job satisfaction among workers who obtain employment.

The model combines three factors: re-employment by age, gender, and education. Some of the

significant findings of the study are: downsizing is not a disaster for most of the workers; 75% of the

downsized employees find jobs, and most of them do so quickly; workless spells between jobs are

short or non-existent; and the most serious grounds for concern relate to groups of vulnerable

workers, such as older workers and women.

Carl Van Horn, William M Rodgers III, Neil Ridley, and Laurie M Harrington of Rutgers, offers

glimpses of the consequences of involuntary job loss for workers and their employers. It describes

the evident patterns of worker dislocation: it affects both blue-collar and white-collar employees,

workers of all races, ages, education levels, occupations and industries; and it happens at very short

notice (usually one week or less,

13
and many do not receive any advance warning). The report describes the impact of job loss on

individuals and their families, the most significant being emotional distress and financial hardship. It

delineates the differences in approaches by small and large firms. Large firms offer more assistance

and better severance pay as compared with smaller firms. It also provides guidelines for employers,

employees and policymakers to deal with the consequences of job dislocation. The experience of

downsizing employees during the last few years points to the need for employees to be prepared for

a job loss at any point of time in their career. This report also includes examples of effective

practices of a few companies to bring succour to the displaced workers.

14
Downsizing And Employee Attitude
In today's competitive market, many companies have found that staying in business means

downsizing. However, this everyday event in the business world is a unique (hopefully) event for you

and your employees. It is important to remember that this event affects not only the "downsized," but

also those who remain.

Why Is this Important?
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. As a result, employers often underestimate the need to provide support to employees,

both those who are being released and the 'survivors.' 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.

Effects on Work Effort
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. In this study,

Brockner decided to use work effort as a measure of job attitudes. The study found that high job

insecurity coupled with high need to work, resulted in increased work effort following a layoff. High

job insecurity, coupled with low need to work resulted in no change in the level of work effort. This

seems to indicate that when there are high levels of job insecurity, as would be expected during

downsizing, employees with a high need to work will increase their work effort, while those with a low

need to work will have no change in work effort.

15
While this result is interesting, of more interest was the finding that variables moderated this

observed relationship. Specifically, Brockner found that the remaining employees' perception of the

fairness of the lay-off process and their attachment to the lay-off victims colored their views. This

issue of fairness has been found to be related to a number of other work-related variables and has

its roots in theories of organizational justice.

The Justice Theory
Theories of organizational justice propose that people attend to the processes used to determine

outcomes as well as to the end result in determining "fairness." For example, as Brockner's study

reported, the remaining employees considered the way in which their co-workers were treated during

the downsizing process as well as the outcome (i.e., losing their jobs). From this perspective, layoff

survivors can be expected to exhibit the most negative reactions when they identify with the layoff

victims, and feel the victims have not been well compensated.

"When survivors perceived that those laid off had been dismissed with little or no compensation, they

reacted more negatively (from an organizational perspective) to the extent that they felt some prior

sense of psychological kinship with the laid-off parties." (Brockner et al., 1987).

What Brockner's study would indicate is that employees are affected by more than just the fact of

layoffs. They are affected by how the layoffs are managed and by what is done for the individuals in

those positions. Brockner found that negative attitudinal changes were reflected in survivors'

reduced work performance and lowered commitment to the organization. Conversely, the study

showed that employee commitment can actually increase during a layoff process when the company

shows some commitment to displaced workers.

The post-layoff setting provides organizations with a rather unique...situation in which to express

their commitment to employees; that is, if organizations show commitment to their dismissed

workers (through caretaking activities of providing severance pay and outplacement counseling,)—

even as they are in the process of becoming uncommitted to

16
them by laying them off--the more committed to the organization are survivors apt to
be"
(Brockner et al., 1987).

Brockner's study indicates organizations can proactively affect surviving employees' attitudes during

periods of downsizing. The next section describes some steps that can be taken to minimize the

negative effects of downsizing.

Strategies for Maintaining Positive Employee Attitudes
According to survey results from a study on employee loyalty conducted by Industry Week, there are

eight factors affecting employee loyalty. They are, in descending order: equity, security, good

management, integrity, empowerment, good communications, benefits and personal support

(McKenna, 1991).

Downsizing is a stressful time for employees, and is a time in which they will question each of the

eight factors mentioned in the above quote by McKenna. By communicating with employees, making

them feel part of the organization, and working to restore loyalty, it is possible to avoid some of the

most dangerous pitfalls of downsizing.

Communicate
During downsizing, the losses due to decreased employee loyalty, morale and lost productivity are

compounded by the complexity of the layoff process. For example, the rumor mill that develops, or

intensifies, during the preliminary planning stages results in employees spending significant amounts

of time gossiping and worrying about what may happen. Unfortunately, many managers in the

position of being "in the know" are guided by a policy in which they are to avoid talking about rumors

with employees. While this policy may seem appropriate, the associated costs, in terms of lost

productivity and employee loyalty, may be significant. Communication will help to curb the worry and

re- direct employee energies to the job at hand (Fisher, 1988).

"If you don't know something, or you do know but SEC rules or other legal constraints have

momentarily sealed your lips, come out and say that. Silence is the worst policy" (Fisher, 1988).
The most preferred method of communication is personal appearances from upper
management; however, any communication at all will be helpful.
17
Ensure that communications cover the following topics:

Talk about the fact that changes are coming; employees already know, but it will increase

their trust level if they hear it from you;

•

explain the purpose of the downsizing;

•

explain the need for growth and profitability (which can be perceived as legitimate
reasons when presented in an appropriate manner);
•

if possible, explain future plans including detailed plans for restructuring, upgraded
technology, or some processes to increase efficiency;
•

communicate, whenever possible, that though employee downsizing is necessary, each employee

who is let go will receive appropriate severance pay and (if you intend to offer it) job placement

assistance;
•

emphasize that laid-off employees will be treated with respect and dignity; this is important for

managing and maintaining remaining employees' moral and company commitment.

•

Most importantly, listen carefully to employee concerns and adequately address each concern to

whatever degree possible. This must be done with sincerity and no sense of condescension, such as

"calming the mob."

In addition, justification for the layoffs is extremely important, especially if times are good and the

downsizing is a part of strategic growth and profitability. Employees need to understand that you

sincerely need to make these cuts and it is not a whim or a mistake.

Make Valuable Employees Part of a Progressive Organization
To stay or not to stay? That is the question some remaining employees ask in the aftermath of their

company's downsizing process—particularly those who have other employment opportunities

outside the company. When these employees see some top managers leave voluntarily, they may

question the long-term prospects for the company and consider an immediate job change. This is

something to watch out for, as the people who leave under these circumstances are generally those

with valuable skills and training.

18
A former West Coast bank manager who left when he saw his manager leave made this comment

for an article in Fortune: "If you let people get the idea that the company is not just cutting back but is

sinking into mediocrity, morale really goes to hell" (Fisher, 1988). This quotation highlights the

importance of managing perceptions with "positive press" and communication from upper

management. Discuss the downsizing as a step towards a more efficient and profitable business

with an attractive future.

Rebuild Loyalty
Long after downsizing is completed, continue communicating with employees to re-build security and

trust. Do not allow management to assume remaining employees are merely grateful to still have

jobs. Employees need to feel they are valued, that they have a place in the company, and that

management believes that they are an important part of the success of the organization. To

emphasize this point, talk about where the company is headed, and describe any plans for growth

and prosperity.
19
Employee Morale During Downsizing
Why Morale Matters
Of course employees will feel unsettled during downsizing. However, just accepting loss of morale

as an inevitable consequence may undermine the very productivity gains intended by the change.

So employers should seek to minimize the unwanted impact of downsizing. They also need to

recognize the extent to which the manner of managing such change affects how employees feel

about the change and their future relationship with the company.

Downsizing can threaten employees’ sense of well being in several ways. They may see the

company as having behaved unjustly or unfairly. They obviously feel less secure. They may also

lose the belief that their contribution to the business will be rewarded in future. These responses

may easily threaten business performance. Survivors of downsizing can become unduly risk averse

and narrowly focused, and therefore less creative and open to change.
But ‘morale’ is not a simple concept. It consists of many facets and may be manifest in
many outcomes. These outcomes include:
•

whether employees stay with the organization

•

whether they achieve organizational or personal goals

•

whether they are able to adopt new working practices and learn new skills
•

how they respond to customers

It is a useful start to identify specific outcomes of morale which the organization wishes
to address.
The organizations involved in the study suggested three common strands to a strategy
for
influencing morale. They were the ability to:
•

anticipate likely employee response

•

identify interventions to impact morale

•

Monitor and evaluate morale and the impact of actions taken.

20
Anticipating Employee Response
A number of ‘risk factors’ were identified as indicating circumstances in which
downsizing was most likely to hit morale. They included:
•

failure to convince the workforce that job reductions were necessary

•

apparent lack of clarity or unfairness in deciding on individual redundancies

•

lack of care over redundant staff

•

lack of alternative career development options if promotion becomes unlikely

•

changes which leave survivors unclear of what is expected of them, or how they will
acquire the new skills they may need
•

Managers who are unwilling or unable to provide adequate time and support to
individuals.

Anticipating impact also means understanding that individuals in different job groups or career

stages may respond differently to downsizing. Although it is often difficult to address interventions to

particular workforce groups, they can sometimes be tailored with varying needs in mind.
Interventions To Build Morale
It is difficult to target interventions with any precision to influence morale. However, the participating

organizations identified several broad kinds of action which they saw as particularly relevant.

Communicating with employees during downsizing is vital. Conveying the reasons for such a painful

change is central. Employees need to understand the business reason for reducing headcount, and

how the change will be managed. Breaks in communication are seen as sinister, and lead to rumors.

Attempts to deny the reality of the painful aspects of the change are seen as insensitive. So

communication has to be honest in dealing with the negative feelings of employees. It is important to

communicate throughout the period of change, not just at the beginning.

Giving direct support to the ‘survivors’ as well as the ‘victims’ of downsizing leads to other types of

intervention. They may address such areas as Stress Management and Careers Counselling.
21
Organization Development initiatives may be used to try and improve the effectiveness of the

emergent organization. They may include work to rebuild relationships between and within groups

and departments, often through team building activities. Enhanced access to training and work

experience may be needed to help staff adjust to new job demands.

Performance Management often needs attention to ensure that staff feels that the new demands are

realistic in terms of the reduced staff resource. They also need to be clear what is expected of them

in the new organization. Reward strategies may also need realigning, but there is a lack of clarity at

present about the link between alternative reward strategies and morale.

The employee’s relationship with their line manager may have a significant effect on how well they

cope with downsizing. For line managers to support staff effectively at a time of difficult change, they

in turn have to feel as though they know how to handle queries and problems. It can help for

managers to share their concerns with their peers and discuss how to deal with staff issues. Some

companies use regular forums for managers to do this throughout the change period, and avoid

them feeling isolated.

Monitoring And Evaluation
Evaluating the success of attempts to influence morale during downsizing is not easy. There is a

natural tendency not to want to ask people how they are feeling when you expect negative

responses. Also we know relatively little about cause and effect in the area of morale. Ownership of

the issue may be difficult to establish — senior management itself often being in a state of flux

during periods of downsizing.

Many managers believe — or like to believe — that the general level of staff morale is outside their

control. There are indeed many limitations to controlling morale including the variation in individual

response, the impact on individuals of what they see happening to other employees, and the

variation in response over time. Separating the impact of different interventions can be difficult, and

downsizing is seldom the only organizational change going on. In spite of the difficulties of

evaluating the impact of specific responses on morale, organizations are using a range of measures

to monitor some of the outcomes of morale. For example, staff turnover, absence from work and

performance indicators (egg customer service) is often monitored numerically.

22
‘Softer’ measures of attitudes and perceptions of employees are obtained through the increasing use

of employee attitude surveys. These can be used both to identify variations in response within the

workforce, and track changing perceptions over time. Managers need to understand how employees

are feeling in their part of the organization as well as in aggregate. Upward feedback is another way

of collecting information on employee morale and response to initiatives. It can also be used as a

starting point for improving relationships within teams in the wake of downsizing.
23
 ORGANIZATIONAL CLIMATE ALSO AFFECTS EMPLOYEE
RETENTION RATE AND POSITIVELY AFFECTS EMPLOYEE
DOWNSIZING RATE
Organizational Climate
Litwin and Stringer define organizational climate as 'a set of measurable properties of the work

environment, perceived directly or indirectly by people who live and work in this environment and

assumed to influence their motivation and behaviour'. Traditionally, organizational climate alms to

capture a snapshot of an organization at one point in time. Organizational climate research has had

a long and active history, with much of its foundation drawn from psychology. Because of space

constraints and the availability of excellent articles which review the extensive history of the

organizational climate literature, we will only briefly review the organizational climate literature here.

Organizational climate is largely based on Lewinian field theory, which is a result of Lewin's work on

experimentally-created social climates This work was advanced by several early key studies

including Litwin and Stringer and Tagiuri and Litwin. Litwi n and Stringer investigated how

organizational climate affects individual motivation. They also suggested that organizational climate

was comprised of nine dimensions: structure, responsibility, reward, risk, warmth, support,

standards, conflict, and identity. Taguiri and Litwin's book was comprised of a series of essays that

treated climate in ways ranging from a subjective interpretation of organizational characteristics to an

objective set of organizational characteristics. Other early studies were aimed at identifying the

dimensions comprising organizational climate

After the 1960s and early 1970s, the focus of the organizational climate field became more clearly

defined. More recently, organizational climate researchers have begun to consider how

organizational climates develop. Three schools of thought have developed: the subjectivist,

objectivist, and interactionalist perspectives. Probably the most troubling issue that the

organizational climate literature continues to face is defining the appropriate dimensions that

comprise organizational climate. Organizational climate is a fairly general term which refers to a

class of dimensions which can be critiqued for being too diverse . In addition, the multidimensional

nature24
of organizational climate makes it more difficult to define sharp borders. Organizational climate

scholars have responded by making empirical and theoretical arguments to distinguish

organizational climate from various other const ructs, such as structure and individual satisfaction.

While these and other efforts have been helpful, some fuzziness around the borders and

differentiation of the organizational climate construct still remains.

Research on organizational climate has continued more recently, including Joyce and Slocum's

study of person and organizational fit, Joyce and Slocum's investigation of the extent to which

organization members agree about their organizational climate, Glick's discussion of the difficulties

of measuring organizational climate, Denison's investigation of the relationship between

organizational climate and performance, and Koyes and DeCotis's work on measuring organizational

climate. Even more recently, Denison has investigated the difference between organizational culture

and organizational climate, and Griffin and Mathieu have looked at how perceptions of organizational

climate vary with the hierarchical level in an organization. Anderson and West contributed to the

literature by exploring the link between organizational climate and innovation.

Measuring Organizational Climate
At its most basic level, organizational climate refers to employee perceptions of their work

environment. Generally, these perceptions are descriptively based rather than value based. For

example, the phrase, "I have more work to do than I can possibly finish" is a description of a

person’s workload, while the phrase "I like my job" is a positive evaluation of one’s job. Thus,

organizational climate is more than simply a summary of employee likes and dislikes.

The assessment of organizational climate typically occurs via an off-the-shelf or customized survey

containing questions about he work environment. Although administration procedures used when

conducting a survey can vary, ideally employees are asked to report to a designated work site at a

scheduled time to complete the survey, and employee participation is voluntary.

25
Selecting a Survey
Once a decision is made to conduct an organizational survey, it can be difficult to identify the "right"

survey to use. Although not a comprehensive list, the following factors may be helpful in reducing the

number of survey choices:

Determine the scope of information included in the survey. As might be imagined, there are a large

number of organizational climate areas that exist. Recent research has identified more than 460

different types of work environment characteristics that have been measured. Many of these

characteristics can be classified into the following major areas: job, role, leader, organization and

work group. In many companies there are particular areas where employee feedback would be

useful. For example, a company concerned about the impact of recent managerial downsizing may

want to ensure that leadership/supervisory components are included in the survey.

Make sure the number of climate areas included is kept to a manageable level. Not only will

including too many areas on the survey increase the time and effort needed to administer the

survey, but it also can make the interpretation process more difficult. On a related issue, many users

of organizational surveys find it useful to add a few customized items to the survey. Although adding

items does not always add to the scientific value of a survey, it can go a long way in generating

support from the company’s management team.

It can be extremely helpful to choose a survey that offers some flexibility in its
administration capabilities.

For example, some companies may require the ability to administer the assessment using a paper-

and-pencil format, while others may prefer an intranet format. Factors such as employee

demographics can be important, also. Some companies may require both an English and Spanish

version of the survey to accommodate all of their employees.

Finally, identify some general pieces of information you would like to see in a report once the survey

responses have been analyzed. For example, some companies may have an interest in only

reviewing the average levels of item responses within the company,

26
 while others may want to see how the company scored compared to other companies
throughout the nation.

In addition, some companies may want to have results broken down department-by- department or

item-by-item while others may want one set of analyses based on the entire set of employee

responses. In any event, the publisher/director of an organizational survey should assist a company

in selecting an instrument that will meet their specific reporting needs.

Benefits
Companies that conduct organizational climate surveys may experience one or more of
the following benefits:

•Employee involvement- By administering an organizational survey, employees are given an

opportunity to be involved in the company at a different level than is typically defined in their job

descriptions. Research has shown that employees who are more involved in the company also may

be more satisfied with their job, miss fewer days of work, stay with a company longer, and perform

better on the job.

•Positive work outcomes- In the last 30 years, a significant amount of evidence has been accumulated

documenting the importance of the work environment in relation to organizational performance. In

general, research has shown that factors in the work environment are related to outcomes such as

employee motivation, job satisfaction, intentions to quit, job performance and even organizational

productivity. In addition, an emerging area of research has indicated that organizational climate can

influence customer perceptions of the quality of goods or services delivered by a company.

•Communication forum- In many companies it can be very difficult to communicate with the majority of

employees. Recent trends such as organizational restructuring and/or merging of companies has

resulted in "flat" organizational responsibility charts, which increases the number of employees for

which each manager is accountable. As a result, some managers only have limited amounts of time

to talk to employees about day-to-day activities. Conversations regarding an employee’s work

environment can fall to the wayside, and in some instances, never take place.
27
 Organizational surveys that occur on a scheduled basis (e.g., annually, biannually,
etc.) can be a more efficient way for managers to gather important information.

•Industry comparisons- Organizations often look to other companies when determining organizational

policies and procedures. It is quite common for companies to "explore the market" or conduct

benchmark studies when considering issues such as new product development, salary or employee

benefit policies, marketing strategies, etc. A common question is "How do we compare to others?"

One advantage of conducting an organizational survey is that it can provide an opportunity to

compare the company’s work environment to that of other companies. Many surveys offer a national

normative database that can be used to facilitate comparisons across a variety of conditions and

industries.

•Proactive management- Administering organizational climate surveys allows managers to be much

more proactive in managing their employees and work environments. When used on a scheduled

basis, organizational surveys can help pinpoint problem areas within the work environment before

they grow into a crisis needing immediate attention. Problems that require a reactive posture

interrupt the normal workflow, and typically cause delays in providing products or services to

customers.
28
TIPS FOR CREATING AN EFFECTIVE ORGANIZATIONAL
CLIMATE FOR MINIMUM EMPLOYEE DOWN SIZING
•
Listen to the entire organization with ease.
•
Collect perceptions in real-time.
•
Reduce organizational bias.
•
Validate the questions and thus improve the results.
•
Facilitate candid and open feedback from employees who respond anonymously.
•
Identifying areas of inefficiency or performance gaps.
•
Identify root causes for poor productivity (such as poor communication or poor
process efficiency).
•
Reduce transition time during changes in the organization (such as reorganization,
relocation, a change in ownership, new products/services, or rapid growth).
•
Inform leaders with the information needed to make the best decisions.
•
Give employees an organized voice to assist leaders in taking actions.
•
Gain a fresh perspective of the organization.
•
Facilitate, track and execute informed action steps in one system.
•
Increase productivity.
29
 ORGANIZATIONAL VITAL SIGNS-A LEADING
INDICATOR OF SATISFACTION MEASURING OF
EMPLOYEES
Organizational Vital Signs:
•

identifies the readiness for, commitment for, and skills for change;
•

identifies the values, emotional competencies, and behaviors needed for success;
•

alerts managers to needs and opportunities for training, communication, and

development;
•

helps build strategies for sustainable growth;

•

is scalable, measurable, and practical.

30
ORGANIZATIONAL CLIMATE-EMPLOYEE SATISFACTION
SURVEY
The Organizational Climate Assessment is a powerful instrument, especially when provided

organization-wide with specific departmental demographic separation and analysis. Each category

has been designed to assess one of the key categories, which affect employee performance. This

assessment should be administered anonymously company wide, broken out by departments of 6 or

more people to protect the identities of respondents. Every precaution should be taken to insure

confidentiality in order that respondents will feel comfortable sharing their true opinions and

perspectives

The objective of performing an employee climate assessment is to identify the key areas which are

hindering production, reducing effectiveness and which might generate unexpected costs in the near

future. The idea and approach is for the organization not to simply perform an academic exercise,

simply because they ‘do it at this time every year’, but to critically examine themselves to see where

the company and it’s employees might be finely tuned to generate higher levels of performance.

Once identified, opportunities to strengthen existing approaches, which are working well, as well as

select appropriate interventions for addressing the weakest areas, should be aggressively pursued

for the maximum benefit of everyone.

This assessment is designed with the following assumptions in mind:
Fundamental care of the employee as an asset
Organizations are successful because of the quality of work employees perform. When employees

are cared for, and the right environment is created where there are no barriers to performance, their

true value to the organization can be fully realized.

Respect For The Dignity Of The Employee And The Sensitivities Of
Human Beings
31
Humans have fundamental needs for safety and security, affiliation and acceptance, involvement as

well as self-actualization. The extent to which these and other human needs are fulfilled lead to

higher levels of commitment, initiative and performance. Organizations, who include an emphasis on

fulfilling the needs of their employees to some extent, will enjoy a more productive and stable

workforce.
Full Understanding Of The Realities Of Business
This assessment is written with full realization of the realities of business, and not an unrealistic

utopian view of an idealized work environment. The factors emphasized and measured in this

assessment are the important levers to optimizing employee workplace performance, not just

creating an environment where everyone feels better.

Embracing Optimization And Improvement
An irrefutable trend in business today, continuous improvement and increasing levels of efficiency

are a way of life, and these factors are given appropriate emphasis in this assessment because they

represent an ever present dynamic with which every employee must deal.
Keys To Motivation And Commitment
Rather than only identifying potential problem areas to be avoided, this assessment focuses on

areas where human behavior can be leveraged more positively to create employees with higher

levels of motivation and commitment.

32
EMPLOYEE DOWN SIZING & EMPLOYEE
MOTIVATION ARE CLOSELY KNITTED
A manager’s job is to influence the people in the organization to accomplish the goals and objectives

with optimal efficiency and effectiveness. One of the most critical and vexing concerns of

management and supervisory personnel in any organization understands of motivation and its role in

performance. Motivation is the desire within an individual that stimulates him or her to action. Higher

the motivation, higher the moral of productive work force.

For motivation, we have to attempt to identify the factors that influence

behavior,

particularly the ways in which people respond to the action of those around them and to other stimuli

in their environment. Today, we no longer have a socially simple world. The powerful forces are

making it more complex all the times. People are products of experiences they have never

relinquished. Personal history will always make its claim even though it operates silently and usually

beyond the individual’s awareness.

One of the earliest approaches to motivation was Frederick Taylor Theory that the employer

essentially bought or exchanged the purchasing power of his wage dollars for the worker’s time,

interest, effort and contribution. This was the first widely accepted motivation theory. At that time, it

seemed to accurately describe workers responses to existing environments. As time passes, it

become clear that monitory rewards, including the plethora of incentive wage and bonus plans, did

not by themselves buy interest, commitment and motivation. In post World War II ear, new

motivation theories evolved by behavioral sciences in response to the changing environment of time.

Especially noteworthy were the conceptual contributions of Douglas Mc Gregor, Abraham Maslow,

Herzbeg, David Mc clelland, Johan Morse and Jay Lorsch.

Motivation – Hygine Theory
The motivation – TWO FACTOR THEORY – proposed by Herzberg postulates that:
The factors causing job satisfaction (and presumably motivation) were different from
that
causing job dissatisfaction. He developed the motivation-Hygiene theory to explain
33
these results. He called the satisfiers motivators and the dissatisfied hygiene factors, using the term

“hygiene” in the sense that they are considered maintenance factors that are necessary to avoid

dissatisfaction but that by themselves do not provide satisfaction. Herzberg reasoned that because

the factors causing satisfaction are different from those causing dissatisfaction, the two feelings

cannot simply be treated as opposites of one another.

Therefore, managers who seek to eliminate factors that create job dissatisfaction can
bring about peace but not necessary motivation.
Motivators Hygiene Factors
•
Achievement Company Policy & Administration.
•
Recognition, Leadership.
•
International relation, welfare & salary.
•
Challenge, growth, Working condition status & security.
•
Responsibility and accomplishment.
•
Motivation through job rotation and security.
•
Satisfaction by communication.
•
Appraisal & feedback.
When hygiene factors are adequate, people will not be dissatisfied, but neither will they
be satisfied.

To the question “HOW do you motivate employees? “ Hertzberg has but one answer “the only way to

motive the capable employees is to give him challenging work for which he can assume

responsibility” (and thus drive at least partial satisfaction of his higher need). Hertzberg’s concept

can be viewed as special application of Maslow in a highly complex industrialized society, in

organization having tasks and people more appropriate to Mc Gregor’s Theory ‘Y’. In spite of

limitations, Hertzberg’s contribution to study of motivation cannot be ignored. Hertzberg’s theory is

widely real and his recommendations followed by many managers.

34
EMPLOYEE DOWN-SIZING & EMPLOYEE
ENGAGEMENT
Employees Engagement
In today’s technologically advanced World, employees are aware of what services should they

deliver for a particular return from their employer. On the other side employer has no choice but to

satisfy his employees by identifying and fulfilling his wants, the employer has to use the motivation

theories as these provide a good idea of how and in what way they will get motivated and satisfied.

The above logic applies to every industry whether it is politics, economics, technology or society. For

instance, in a society the same person who is an employee plays a role of a member of the family.

His duties are to control his children so that they do not get into a bad company and they should

concentrate on their studies. Now the same question comes How to motivate them to study? Here

the employee acts as an employer and the children act as his employees.
What Do Workers Want?
"Supervisors generally ranked good wages, job security, promotion and good , working conditions as

the things workers want from their jobs. While workers felt they want most is full appreciation for

work done, felling "in" on things, and sympathetic understandings of personal problems -all

incentives that seem to be related to affiliation and recognition motives. It’s not only good money but

there is lot of other needs, which an employee wants to fulfill for being satisfied and committed

towards the job. These needs vary from one employee to another, workers needs are totally different

from the managers and are rated as least important by Mana

Employee engagement goes beyond the employees’ intent to leave. It includes the employees’

commitment to the organization and motivation to contribute to the organization’s success. By

creating a workforce that is passionately involved with the company, the organization can create a

sustainable competitive advantage for itself. This article throws light on the issues to be addressed

by the organizations for creating an engaged workforce.

35
The evidence of a significant relationship between employee engagement and financial
performance is undeniable.
-Towers Perris

Talking about the engagement and commitment of an employee to an organization, most companies

are of the opinion that they do have a few, but they still want more. Why? It is merely because these

companies have come to the realization that their organization’s long-term success relies on

employee performance, which is directly impacted by the level of employee engagement and

commitment to an organization. Well, some organizations think that simply making people happy

and paying them handsome pay packets is the solution. But it is not so. These are things which an

organization need to consider to attract and retain the most qualified individuals, however, when it

comes to engaging employees in their work, there are definitely some more issues that need to be

worked out. Engagement requires engaging not only the employees’ minds but their hearts as well

and this is something that the organizations can neither force not buy in order to succeed in the

marketplace.
What is employee engagement?
An engaged employee is a person who is fully involved in and is enthusiastic about, his or her work.

Such employees are attracted to, and inspired, committed and fascinated by their work. In a recent

research by Hewitt Associates, it was found that engaged employees are not only intellectually

committed to the organization but are also emotionally attached to it, as is measured by three

primary behaviors: Say, stay and strive.

The age old business dictum goes that “satisfied employees create satisfied customers” by

constantly striving for the best, contributing to the bottom line of the company success by their

motivation and enhanced performance. It is believed that an engaged employee always acts

positively in the interest of the company and takes unconcealed pride in the success and prosperity

of his employer. The engaged employees and the organizations go that extra mile for each other,

thereby realizing the benefits that flow through an investment in such a relationship.
36
Does Engagement Really Make a Difference?
According to the former GE Chairman and CEO, Jack Welch, a company’s health is determined

through it’s energized workforce who not only realize the mission of the organization and have an

understanding of how to achieve it, help the organization win in the long run. Engaged employees

care about the future of the company and are willing to study entitled, The War for talent, reported

that a shortage of skilled employees was an emerging trend and it was more so due to the fact that

the organizations fail in their attempts to create a workforce that is not only cognitively vigilant but

also emotionally connected to the organization.

Research has proven that wholly engaged employees tend to be more self-motivated, reliable, and

have higher levels of organizational loyalty. They are capable of delivering sustained affecting the

key results areas such as employee turnover, sales, innovation and customer satisfaction, engaged

employees in customer facing roles are more likely to treat customer is ways that positively influence

customer satisfaction and are more than twice as likely to be company advocates. They share

information with colleagues and pass on ideas that speak up for the organization. Engaged

employees are much more likely to feel secure and stable in their position and are in fact the

ambassadors for the company, singing its praises to everyone, and taking the best foot forward to

deliver and over-deliver for customers and the colleagues alike.

How to measure employee engagement?
To determine the level of employee engagement, the organizations should make use of a

comprehensive employee feedback and to improve levels of productivity and commitment by

identifying the root causes of workplace attitudes. They also help in developing an understanding of

the extent to which employees are passionate about their work and emotionally committed to their

company and to their co-workers.

There are several standardized tests, toolkits and instruments available which can help determine

the level of employee engagement in an organization. survey of the Gallup Organization Identifies

strong feelings of employee engagement in four key areas – customer satisfaction / loyalty,

profitability, productivity and employee turnover. The questionnaire has been administered to a

multitude of companies across the world. Results from the survey show a strong correlation between

high scores and superior job

37
performance and many organizations have found it to be a definitive measure of the engagement

level of their employees. Standard Chartered, for example, introduced annual survey to measure

improvement in the engagement of teams. The results are used to develop action plan and

continually monitor the follow-through of the teams. This focus has seen a continuous rise in both

the number of engaged teams and extent to which the employees are engaged at Standard

Chartered.

Many organization use employee satisfaction survey to identify the root causes of job issues and

create solutions for improvements with due consideration given to the viewpoints of employees.

Certain employee opinion surveys are also in practice that offers accurate identification of employee

behaviors, feelings, and thoughts for improved organizational development. The other ways used to

measure the employee engagement levels is through tracking changes in the attrition rate and

growth in productivity and business. The data collected from these surveys can furnish information

that can help the management in the following ways:

•
Identifying cost-saving opportunities
•
Improving productivity
•
Reducing turnover
•
Curbing absenteeism
•
Strengthening supervisor
•
Evaluating customer – service issues
•
Assessing training needs
•
Streamlining communication
•
Benchmarking the organization’s progress in relation to the industry
•
Gauging employees understanding of and agreement with the company mission.

The surveys must also be integrated with the culture survey s and since the culture varies within the

organization, the companies must aim at measuring the engagement at work group level. The

organization also needs to keep in mind that it is not just about the surveys; whatever follows is of

great importance. After evaluating the results from these surveys it is imperative for the management

to work out the problem areas and take an appropriate action. Many a times it so happens that the

good news is communicated expeditiously to all concerned but the key challenges tend to be

avoided. This makes the

38
employees feeling unheard, thus leading to resentment and this poses a significant
threat
to engagement levels within the organization.

The survey findings must aim at behavioral changes required to improve desired outcomes at the

organizational, team and individual levels. While HR plays an instrumental role in the survey

process, the extent to which the change program can be successful is the responsibility of an

organization’s leaders.
39
DIAGNOSTIC TOOL
The diagnostic tool
Current studies suggest that employee engagement will be influenced by:
1. Employee perceptions of job importance. This study has found that “…an employees
attitude toward the job [‘s importance] and the company had the greatest impact on
loyalty and customer service then all other employee factors combined.”
2. Employee clarity of job expectations. “If expectations are not clear and basic
materials

and equipment not provided, negative emotions such as boredom or resentment may result, and the

employee may then become focused on surviving more than thinking about how he can help the

organization succeed.”
40
3. Career advancement/improvement opportunities. “Plant supervisors and managers

indicated that many plant improvements were being made outside the suggestion system, where

employees initiated changes in order to reap the bonuses generated by the subsequent cost

savings.”
4. Regular feedback and dialogue with superiors. “Feedback is the key to giving
employees a sense of where they’re going, but many organizations are remarkably
bad at giving it.”
5. Quality of working relationships with peers, superiors, and subordinates. “…if

employee’s relationship with their managers is fractured, then no amount of perks will persuade the

employees to perform at top levels. Employee engagement is a direct reflection of how employees

feel about their relationship with the boss.”

6.Perceptions of the ethos and values of the organization. “‘Inspiration and values’ is

the most important of the six drivers in our Engaged Performance model. Inspirational leadership is

the ultimate perk. In its absence, [it] is unlikely to engage employees.”

Approaches suggested for creating an engaged workforce
Employee engagement can occur when the organizations work on removing the blockades to work

which necessitates having a clear understanding of the levers required to improve the key employee

attitudes of satisfaction and engagement so as to create an optimally functioning system.

There can be more than one way to improve the level of employee engagement in a company. In

fact, there are many different things that companies not only can do, but also need to do. Most

organization have a range of practices to improve the engagement level of their employees. Best

practice recommends starting right at the selection or recruitment stage by having the right

employees working in the right jobs and having a strong induction and orientation program in place.

Besides giving the employees clarity on the vision and goals of the organization, it is essential for

organizations to put into place regular technical / soft – skill training and development programs and

the
41
certification programs to drive people towards excellent performance as it so happens
at
HCL info systems.

Once the employees become a part of the system, efforts have to be put into place to engage

employees to their highest level. This includes giving emphasis on certain areas which go a long

way in affecting the level of engagement of the employees and includes:

•
Communication: A proper communication system helps employees in finding out

what is going on within the company outside their immediate team. They also help to create an

environment of trust and openness within the organizations where they are able to talk openly.

Employees who feel they are listened to are able to express dissatisfaction and work together to

resolve their causes, without it affecting their performance.

The initiative must be taken by the leaders at the top as it happens at the Sum Microsystems where

the CEO interacts with Sun employees through WSUN, a forum on Sun’s intranet. He uses this to

sustain an active, an ongoing dialog on the corporate goals and direction.

The organizations must work towards implementing the communication forums to provide regular

feedback to all people, including team meetings and conferences. 3M for example encourages

employees to bring forward their questions or concerns through such programs as let’s talk It Over,

Between Us and various internal and external help lines.

Besides using the regular employee opinion and satisfaction surveys, an update on the various

organizational issues can be tracked by the organizations through the usage of in-house magazines

and online communications, including discussion boards by company personnel including the senior

management.
•
Reward Schemes: These form an important part of a company’s overall employee

engagement program. Studies have long shown that while money in itself is not a motivating factor

the absence of financial reward can be a significant demotivator. Thus the role of reward schemes in

boosting. Thus the roles of reward schemes in boosting employee engagement are? To remove

barriers to satisfaction in the organization and provide a framework for rewarding everyone in the

organization for their performance. This may be achieved through right compensation and benefit
42
programs, stock ownership and profit sharing plans and recognition programs. People want to know

if their input matters and that they are contributing to the organization’s success in a meaningful way,

for which there must be performance based reward scheme in place.

In fact, organizations must have flexible benefit schemes, as Hewitt Associates does, to attract and

retain their talent, which provides employees with the freedom to choose how they receive their

benefits tailoring a package to suit their lifestyle.

•
Developing the right culture: The organizations must have clear and humane HR

policies and take initiatives to maintain the quality of work life of its employees. Opportunities must

be provided for social interaction such as family gathering barbeques, and trips to the cinema or

picnics. At HCL Info systems, a balance between personal / professional lives of employees is

maintained through recreational activities like festivities @ HCL, get-togethers @HCL, sport@HCL.

The company also encourages an open and transparent culture to empower its people and develop

entrepreneurs.

The organizations must demonstrate a commitment to employees’ well –being by providing

opportunities for career advancement and be developing a safe, clean and inspiring work

environment for their all-round growth. The employees must be provided with enough resources to

solve their day-to-day problems or to do a job well. Culture – building activities are great for

generating a feeling of belongings. Giving employees a feeling of belongingness is crucial in creating

a thriving organization that people feel committed to and others want to join.
•
Leadership: Effective leaders who help in setting the tone for creating an engaged

workforce can really differentiate an organization from its competitors. Everyone in the organization

with leadership responsibility must have the emotional intelligence and leadership skills needed to

switch and employees on they must act as role models, demonstrate and set high standards to

which others can aspire. Good practices include effective performance management and a fair

evaluation of performance. The leaders must act as coaches and mentors and must give an honest

feedback and guidance to their employees.

43
Ideas should be sought from all employees and the frontline employees should be allowed to

exercise a degree of discretion during service delivery E.g., allowing employees to spend up to a

certain amount to correct a customer’s problem or handle a complaint. The success of Microsoft, for

example, stems in part from Bill gates’ belief that smart people anywhere in the company should

have the4 power to drive an initiative. Initiatives such as Six Sigma are dependent, in part on the

active participation of employees on the shop floor.

For great managements, the path towards engaging employees and keeping them engaged beings

with asking them what they want and what is important in order to be effective in their roles. Effective

leaders don’t wait to get the resignation to know that an employee is dissatisfied.

An organization can always gain a competitive advantage by creating an engaged workforce. It

therefore, becomes, imperative for the organizations to identify the level of engagement in their

organization, strive to eliminate the reasons behind the disengaged workforce and implement

strategies to make them fully engaged. Employee engagement is something that is very difficult to

accomplish but if efforts are made on an ongoing basis, it can shrivel with relative ease.
44
RESEARCH OBJECTIVES
The objective of the study is:-
1.To make a conceptual study of Employee Down-Sizing
2. To study as to what cause this Employee Down-Sizing
3. To study the impact of Employee Down-Sizing on the employee’s morale
4.To study as to how Employee Down-Sizing, Employee Retention and employee
commitment are inter related
45
RESEARCH METHODOLOGY
A Research Methodology defines the purpose of the research, how it proceeds, how to measure

progress and what constitute success with respect to the objectives determined for carrying out the

research study. The appropriate research design formulated is detailed below.

Exploratory research: this kind of research has the primary objective of development of insights into

the problem. It studies the main area where the problem lies and also tries to evaluate some

appropriate courses of action.

The research methodology for the present study has been adopted to reflect these realties and help

reach the logical conclusion in an objective and scientific manner. The present study contemplated

an exploratory research
Research Design
The research design is the basic framework, which provides guidelines for the rest of the research

process. The present research can be said to be exploratory. The research design determines the

direction of the study throughout and the procedures to be followed. It determines the data collection

method, sampling method, the fieldwork and so on.

Nature of Data
Primary Data: Primary data is basically fresh data collected directly from the target
respondents; it could be collected through Questionnaire Surveys, Interviews, Focus
Group Discussions Etc.
Secondary Data: Secondary data that is already available and published .it could be
internal and external source of data. Internal source: which originates from the specific
field or area where research is carried out e.g. publish broachers, official reports etc.
External source: This originates outside the field of study like books, periodicals,
journals, newspapers and the Internet.
46
Data Collection
Primary data: Primary data was selected from the sample by a self-administrated
questionnaire in presence of the interviewer.
Sample Size:

The survey is conducted among 100 respondents

Sample Area:NCR Delhi

Sample unit:Employees of many BIG companies in Nehru Place (Delhi), these people
were requested to fill in the questionnaires during the lunch intervals at the Nehru Place
premises
SECONDARY DATA:
Secondary data has been used which is collected through

⇒ A r t i c l e s ,

⇒ R e p o r t s ,

⇒ J o u r n a l s ,

⇒ M a g a z i n e s ,

⇒ N e w s p a p e r s a n d

⇒ I n t e r n e t
Sampling Technique
Random sampling technique has been employed to extract the fruitful results. This includes the

overall design, the sampling procedure, the data collection methods, the field methods and the

analysis procedures
Sampling Procedure Actually Employed:
The process employed to select the sample was simple random sampling. Simple random sampling

refers to that sampling technique in which each and every unit of the population has an equal and

same opportunity of being on the sample. In simple random sampling, which item gets selected is

just a matter of chance.

47
Analytical Tools:
Simple statistical tools have been used in the present study to analyze and interpret the data

collected from the field. The study has used percentiles method and the data are presented in the

form of tables and diagrams.

48
DATA ANALYSIS
1. What Is Your Primary Reason For Leaving The Company?
1. Benefits
7. Better Job Opportunity
2. Commute
8. Conflict with Other Employees
3. Conflict with Manager
9. Family Reasons
4. Job Expectation
10 Not Challenging
5. Pay
11 Personal Reasons
6. Reallocation/Move
12. Working Conditions
49
0%
5%
10%
15%
20%
25%
benefits
commute
conflict with manager
job expectation
pay
reallocation/move
better job opportunity
conflict with other employees
family reasons
notchallenging
personal reasons
working conditions
benefits
5%
commute
5%
conflictwith
manager
5%
jobexpectation
10%
pay
15%
r ll
ti nm v
3%
50
0%
5%
10%
15%
20%
25%
benefits
commute
conflict with manager
job expectation
pay
reallocation/move
betterjobopportunity
conflict with other employees
family reasons
notchallenging
personal reasons
working conditions
benefits
5%
commute
5%
conflictwith
manager
5%
jobexpectation
10%
pay
15%
reallocation/move
3%
better job
opportunity
20%
conflictwithother
employees
5%
family reasons
5%
notchallenging
5%
personal reasons
2%
workingconditions
22%
51
2.How Long Have You Been Thinking About Leaving The Company?
1. One Month or Less
2. One To 5 Months
3. More Than 5 Months
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
onemonthor less
onemonthto5month
more than 5 months
onemonthor
less
10%
onemonthto5
month
40%
morethan5
months
50%
52
3.
How Satisfied Are You With The Company You Work For?
1. Extremely Dissatisfied
2. Very Dissatisfied
3. Neither Satisfied nor Dissatisfied
4. Very Satisfied
5. Extremely Satisfied
0%
5%
10%
15%
20%
25%
extremely dissatisfied
very dis satisfied
neither satisfied nor
dissatisfied
very satisfied
extremely satisfied
extremely dissatisf ied
20%
verydis satisf ied
25%
neithersatisf iednor
dissatisf ied
25%
verysatisf ied
15%
extremely satisf ied
15%
53
4.How Was Your Working Experience?
1. Much More Positive than Negative

2. More Positive than Negative

3. More Negative than Positive

4. Much More Negative than Positive

0%
5%
10%
15%
20%
25%
30%
muchmorepositive than
negative

morepositive thannegative morenegative thanpositive muchmorenegative than

positive
muchmorepositive
thannegative
20%
morepositivethan
negative
30%
morenegativethan
positive
30%
muchmorenegative
thanpositive
20%
54
5. If Your Experiences Are More Negative Than Positive, What Factors Are
Responsible? Select All That Apply.
1. My Performance Evaluation and the Outcome
2. My Role, Responsibility and/ or Title

3. Job Training

4. My Boss

5. My Co-Workers

6. My Compensation

7. Change in Compensation Package

8. Company Savings Plan

9. Medical Benefits and Insurance

10. Relocation

11. Vacation Time

12. Other
55
0%
5%
10%
15%
20%
25%
my performance evaluation
and the outcome
myrole,responsibilityand/or
title
jobtraining
mybos s
myco-workers
my compensation
changein compensation
package
company savingsplan
medical benefits and
insurance
relocation
vacation time
other
myperformance
evaluationandthe
outcome
25%
my role,
responsibility
and/or title
10%
job training
5%
my boss
10%
myco-workers
10%
mycompensation
2%
changein
compensation
package
8%
companysavings
plan
5%
medicalbenefits
and insurance
10%
relocation
5%
vacat
i
ontime
5%

56
6. How Flexible Is The Company With Respect To Your Family Responsibilities?
1. Very Inflexible
2. Somewhat Inflexible
3. Neither
4. Somewhat Flexible
5. Very Flexible
0%
5%
10%
15%
20%
25%
very inflexible
somewhat inflexible
neither
somewhat flexible
very flexible
veryinf lexible
25%
somew hatinf lexible
25%
neither
10%
somew hatf lexible
25%
veryflexible
15%
57
7. Do You Have A Clear Path For Career Advancement?
1. Strongly Disagree
2. Somewhat Disagree
3. Neither Agree or Disagree
4. Somewhat Agree
5. Strongly Agree
0%
5%
10%
15%
20%
25%
30%
strongly disagree
somewhat disagree
neitheragreeor disagree
somewhatagree
strongly agree
stronglydisagree
25%
somew hatdisagree
10%
neitheragreeor
disagree
10%
somew hatagree
25%
stronglyagree
30%
58
8. How Satisfied Are You With Your Position At This Company?
1. Very Satisfied
2. Somewhat Dissatisfied
3. Not Satisfied nor Dissatisfied
4. Somewhat Satisfied
5. Very Satisfied
0%
5%
10%
15%
20%
25%
30%
35%
very satisfied
somewhat dissatisfied
not satisfied nor dissatisfied
somewhat satisfied
very dissatisfied
very satisfied
20%
somew hat
dissatisf ied
30%
notsatisf iednor
dissatisf ied
10%
somew hatsatisf ied
5%
verydissatisf ied
35%
59
9. What Part Of Pay Play In Your Decision To Leave The Organization?
1. 20-40%
2. 40-60%
3. 60-80%
4. 80-100%
0%
5%
10%
15%
20%
25%
30%

20-40% 40-60% 60-80%

80-100%
20-40%
20%
40-60%
25%
60-80%
30%
80-100%
25%

60
10. Does Working Conditions Affect You To Leave Your Job?
1. Yes
2. No
0%
10%
20%
30%
40%
50%
60%
70%
yes
no
yes
65%
no
35%
61
11. How Would You Rate The Morale In Your Company?
1. Low
2. Very Low
3. High
4. Very High
0%
5%
10%
15%
20%
25%
30%
35%
low
verylow
high
veryhigh
low
35%
verylow
20%
high
25%
veryhigh
20%
62
12. Could This Company Have Done Anything To Encourage You To Stay?
1. Yes
2. No
0%
10%
20%
30%
40%
50%
60%
yes
no
yes
40%
no
60%
63
CONCLUSION & IMPLICATIONS
The present report indicates that the following features:-
1. Better job opportunities in outer market & pay are the main reasons for increasing

attrition rate.

2. The employees do not feel valued by their employer.

3. The working environment in the company also make them to leave their job.

4. Performance Appraisals are not given at regular intervals so that the Employee

feel motivated for its work.

5. The work schedule is very much inflexible & Stressful.

However an effective retention policy could be followed to make the employees stay in

the company starting form recruitment and selection of employees, providing an effective

pay packages and compensation, outlining an efficient career development path for

employees and most importantly catering to their emotional, mental and family needs.

Also practices should be followed to bring the ex-employees back in the company.
64
RECOMMENDATIONS
65
 BIBLIOGRAPHY
1. Charles R. Greer, Strategic Human Resource Management: A General Managerial
Approach, Second Edition, Person Education, 2004

2. Tyson, S., Lawrence, P., Poirson P, Manzolini, L., and Seferi, S.V., Human Resource Management –

Strategies, Issues and Cases, Kogan Page, London, 1999.

3. Barney Olmstead and Susanne Smith (2001): Creating a Flexible Workplace:
How to Select and Manage Alternative Work Options
4. Khanewal Rohit (February 2002), "Winning the Retention Game", Human
Capital, Pg. 10-12.

5. Brockner, J., Grover, S., Reed, T., & Dewitt, R.L. (1992). Layoffs, job insecurity, and survivors'

work effort: evidence of an inverted-U relationship. The Academy of Management Journal, 35, 413-

425.

6. Brockner, J., Grover, S., Reed, T., Dewitt, R.L., & O'Malley, M. (1987). Survivors' reactions to

layoffs: We get by with a little help for our friends. Administrative Science Quarterly, 32, pp. 526-541.
7. Fisher, A.B. (1988, May 23). The downside of downsizing. Industry Week, pp.
42-51.
66
APPENDIX
QUESTIONNAIRE
NAME:
-
JOB TITLE:
-
ORGANIZATION: -
CELL NO. :
-
AGE GROUP:
-
1. What Is Your Primary Reason For Leaving The Company?
1. Benefits
7. Better Job Opportunity
2. Commute
8. Conflict with Other Employees
3. Conflict with Manager
9. Family Reasons
4. Job Expectation
10 Not Challenging
5. Pay
11 Personal Reasons
6. Reallocation/Move
12. Working Condition
2. How Long Have You Been Thinking About Leaving The Company?
1. One Month Or Less
2. One To 5 Months
3. More Than 5 Months
3. How Satisfied Are You With The Company You Work For?
1. Extremely Dissatisfied
2.Very Dissatisfied
3. Neither Satisfied nor Dissatisfied
4. Very Satisfied
67
5. Extremely Satisfied
4. How Was Your Working Experience?

1. Much More Positive than Negative

2. More Positive than Negative

3. More Negative than Positive

4. Much More Negative than Positive

5. If Your Experiences Are More Negative Than Positive, What Factors Are
Responsible? Select All That Apply.
1. My Performance Evaluation and the Outcome
2. My Role, Responsibility and/ or Title

3. Job Training

4. My Boss

5. My Co-Workers

6. My Compensation

7. Change in Compensation Package

8. Company Savings Plan

9. Medical Benefits and Insurance

10. Relocation

11. Vacation Time

12. Other
6. How Flexible Is The Company With Respect To Your Family Responsibilities?
1. Very Inflexible
2. Somewhat Inflexible
3. Neither
4. Somewhat Flexible
5. Very Flexible
68
7. Do You Have A Clear Path For Career Advancement?
1. Strongly Disagree
2. Somewhat Disagree
3. Neither Agree or Disagree
4. Somewhat Agree
5. Strongly Agree
8. How Satisfied Are You With Your Position At This Company?
1. Very Satisfied
2. Somewhat Dissatisfied
3. Not Satisfied nor Dissatisfied
4. Somewhat Satisfied
5. Very Satisfied
9. What Part Of Pay Play In Your Decision To Leave The Organization?
1. 20-40%
2. 40-60%
3. 60-80%
4. 80-100%
10. Does Working Conditions Affect You To Leave Your Job?
1. Yes
2. No
11. How Would You Rate The Morale In Your Company?
1. Low
2. Very Low
3. High
4. Very High
69
Practices To Reduce Employee Down-Sizing
Many companies face the challenge of employee turnover, and incur heavy losses. The employers

provide several attractive packages in order to retain the employee. Reasons for employee turnover

constitute several controllable and non-controllable factors.

Good economic time’s means lowered unemployment, increased productivity, and better prospects for

growth in all sectors. However, economic prosperity also means increased job- hopping among the job

seekers. Opportunities abound everywhere with increasing competition for talent among companies.

Frequent job changes are no longer a stigma, but they are becoming norm. The issue of employee

turnover is so pronounced in today’s world, that even in Japan, where life-time employment and high

employee loyalty are the norms, workers are becoming increasingly mobile. Even survival will become

questionable, if the company witnesses higher turnover among the top performer. With the increasing

mobility among the workers, “employee retention” poses a distinct challenge to any company.

Companies that are inflexible, or whose organizational culture is characterized by domination and

autocracy are likely to have dissatisfied employees no matter how good the incentives to stay may be Or,

at the very least, the tenure of their employees is likely to be highly sensitive to changes in specific

(usually monetary) incentives: small changes in compensation may lead to numerous departures. There

are however other aspects of the work environment or particular jobs that can act as strong ‘de-

motivators’ that can cause people to leave their employment. These include
Lack of control over one’s work
•

Feeling bored or unchallenged by repetitive tasks

•

Lack of job security

•

Lack of learning opportunities

•

More generous compensation or benefits package offered elsewhere

•

Concerns about the future of the firm

It’s Not Just the Pay …

While remuneration and other types of benefits continue to be an important factor in the retention

equation, it is important to note that the current HR literature treats them as only one potential area for

retention, and not always in and of themselves, sufficient to ensure strong employee commitment. Over

the past 10 or 15 years, the business literature dealing with employee participation, workplace wellness,

work-life balance and other topics has

70
mushroomed, indicating a strong interest in and recognition of how other aspects of working
life influence people’s decisions to stay with or leave a company.
Why do people choose to leave or stay?

Setting aside list of retention policies and programs, it is clear that there is broad agreement in the HR

literature about the general features of any potential HR program that contributes to good retention. Most

of these are directly related to creating a satisfactory work environment for employees and thus, in turn, to

good retention. These features

•

A stimulating work environment that makes effective use of people’s skills and knowledge, allows

them a degree of autonomy on the job, provides an avenue for them to contribute ideas, and allows them

to see how their own contribution influence the company’s well-being.

•

Opportunities for learning and skills development and consequent advancements

in job responsibilities.
•

Effective communications, including channels for open, two-way communication, employee

participation in decisions that affect them, an understanding of what is happening in the organization and

an understanding of the employer’s main business concerns.

•

Good compensation and adequate, flexible benefit plans.

•

Recognition on the part of the employer that employees need to strike a good
balance between their lives at work and outside of work.
Respect and support from peers and supervisors.
71
1. What are the reasons for employee downsizing?

Obsolescence of skills

Shift in organizational requirements;

Outsourcing;

Modernizing,

Redesigning the job

Restructuring or reducing the activities of industrial units

2. Is downsizing the only way out for the above problem?
Yes
No
3. If No, What are the alternatives to downsizing?
Employment
Changes in
Pay/Benefits
Training
Policies
Job Design
Policies
4. Which is a better criteria to use as the basis for downsizing employees?
seniority
performance
5. Are the reasons for downsizing communicated well to you?
Yes
No
6. When should the employers convey about downsizing to their employees?
give future notice
tell them on the day they are expected to leave
7. Does downsizing affect the motivation of the employees?
Yes
No
72
8. In what circumstances the employee morale is most hit during downsizing?
•

failure to convince that job reductions were necessary

•

lack of clarity in deciding on redundancies

•

lack of care over redundant staff

•

lack of alternative career development options

•

changes which leave survivors unclear of what is expected of them, or how they will
acquire the new skills they may need
•

Managers who are unwilling to provide adequate time and support to individuals.
9. What helps to build the morale of the employees during downsizing?

Effective communication

Psychological support

Counseling

Alternative career options

10. Does downsizing also have an impact on the survivor employees?
Yes
No
11. has this Company Done Anything To Encourage You ?
1. Yes
2. No
12. What are the consequences of employee downsizing?
73
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