TABLE OF CONTENTS

1. INTRODUCTION
2. LITERATURE REVIEW
(2.1) Conceptual approach to employee downsizing
(2.2) Downsizing and employee attitude
(2.3) Employee morale during downsizing
(2.4) Organizational climate also affects employee retention rate and
positively affects
(2.5) Tips for creating an effective organizational climate for minimum
employee downsizing
(2.6) Organizational vital signs-a leading indicator of satisfaction
measuring Of employees
(2.7) Employee downsizing & employee motivation are closely knitted
(2.8) Employee down-sizing & employee engagement
(2.9) Diagnostic tool

3. RESEARCH OBJECTIVES
4. RESEARCH METHODOLOGY
(4.1) Methodology
(4.2) Research design
(4.3) Nature of data
(4.4) Data collection
(4.5) Sample size
(4.6) Sampling technique
(4.7) Sampling procedure actually employed
(4.8) Analytical tools

5. DATA ANALYSIS
6. CONCLUSION & IMPLICATIONS
7.

RECOMMENDATIONS

8. BIBLIOGRAPHY

Page | 1

9. APPENDIX

1. 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.

Page | 2

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

Page | 3

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.

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.

Page | 4

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.

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 todays 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

Page | 5

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).

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 peoples 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

Page | 6

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 wont 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.

2. LITERATURE REVIEW
(2.1) 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

Page | 7

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 noncore activities and focus on their core competencies. The article
provides a snapshot of the Indian experience of downsizing and also
discusses the social implications of these drastic measures.
Barbara L Davison

explains,

Rightsizing and Wrongsizing",

in

"The

Difference

Between

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

Page | 8

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

well-considered

downsizing

program. If downsizing is inevitable, organizations must pay due

attention to the rationale for downsizing, 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

Page | 9

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 fastchanging 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

Page | 10

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 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

Page | 11

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--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.
Mika Kivimki, 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

Page | 12

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, 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.
(2.2) Downsizing And Employee Attitude
In today's competitive market, many companies have found that
staying in business means downsizing. However, this everyday event

Page | 13

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

Page | 14

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.
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

Page | 15

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

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 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

Page | 16

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.
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;

Page | 17

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.
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.

Page | 18

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.
(2.3) 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

Page | 19

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.

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.

Page | 20

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.
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.

Page | 21

The employees 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.
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

Page | 22

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.
(2.4)

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
suggested

climate

that

affects

organizational

individual
climate

motivation.

was

They

comprised

of

also
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

Page | 23

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:
perspectives.

the

subjectivist,

Probably

the

objectivist,
most

and

troubling

interactionalist
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 nature 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

Page | 24

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 persons workload, while the phrase "I like my job" is a
positive evaluation of ones 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.
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

Page | 25

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 companys 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, 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.

Page | 26

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 employees work environment can fall

to the wayside, and in some instances, never take place.
Organizational surveys that occur on a scheduled basis (e.g.,

Page | 27

annually, biannually, etc.) can be a more efficient way for managers

to gather important information.
Industry

comparisons-

companies

when

Organizations

determining

often

look

organizational

to

other

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 companys 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.
(2.5) 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.

Page | 28

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,

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.

Page | 29

(2.6) 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.

Page | 30

(2.7) 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 its 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.

Page | 31

Respect For The Dignity Of The Employee And The Sensitivities

Of Human Beings
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.

Page | 32

(2.8) EMPLOYEE DOWN SIZING & EMPLOYEE MOTIVATION ARE

CLOSELY KNITTED
A managers 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 individuals 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 workers 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.

Page | 33

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 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

Page | 34

him challenging work for which he can assume responsibility (and

thus drive at least partial satisfaction of his higher need). Hertzbergs
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 Gregors Theory Y.

In spite of limitations,

Hertzbergs contribution to study of motivation cannot be ignored.

Hertzbergs theory is widely real and his recommendations followed by
many managers.
(2.9) EMPLOYEE DOWN-SIZING & EMPLOYEE ENGAGEMENT

Employees Engagement
In todays 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

Page | 35

recognition motives. Its 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 organizations 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.
The

evidence

of

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 organizations longterm 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.

Page | 36

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.
Does Engagement Really Make a Difference?
According to the former GE Chairman and CEO, Jack Welch, a
companys health is determined through its 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.

Page | 37

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 performance and many
organizations have found it to be a definitive measure of the
engagement level of their employees. Standard Chartered, for

Page | 38

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 organizations 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

Page | 39

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
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 organizations leaders.
(2.10) 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.
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.

Page | 40

4. Regular feedback and dialogue with superiors. Feedback is the key

to giving employees a sense of where theyre going, but many
organizations are remarkably bad at giving it.
5. Quality of working relationships

with peers, superiors, and

subordinates. if employees 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

Page | 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:

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 Suns 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 lets 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.

Page | 42

Reward Schemes: These form an important part of a companys

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 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 organizations 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.

Page | 43

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.
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 customers 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 dont 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

Page | 44

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.

3. 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 employees
morale
4. To study as to how Employee Down-Sizing, Employee Retention
and employee commitment are inter related

4. 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

Page | 45

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.
Data Collection
Primary data: Primary data was selected from the sample by a selfadministrated 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

Page | 46

SECONDARY DATA:

Secondary

data

has

been

used

which

is

collected through

Articles,

Reports,

Journals,

Magazines,

Newspapers and

Internet

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.
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.

Page | 47

5. 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
4. Job Expectation
5. Pay
6. Reallocation/Move

9.
10

Family Reasons
Not Challenging

11 Personal Reasons
12. Working Conditions

Page | 48

Page | 49

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

Page | 50

3.

How Satisfied Are You With The Company You Work For?
1. Extremely Dissatisfied
3. Neither Satisfied nor Dissatisfied

2. Very Dissatisfied
4. Very Satisfied

5. Extremely Satisfied

Page | 51

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

Page | 52

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

Page | 53

Page | 54

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

Page | 55

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

Page | 56

8. How Satisfied Are You With Your Position At This Company?

1. Very Satisfied
3. Not Satisfied nor Dissatisfied

2. Somewhat Dissatisfied
4. Somewhat Satisfied

5. Very Satisfied

Page | 57

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%

Page | 58

10. Does Working Conditions Affect You To Leave Your Job?

1. Yes

2. No

Page | 59

11. How Would You Rate The Morale In Your Company?

1. Low

2. Very Low

3. High

4. Very High

Page | 60

12. Could This Company Have Done Anything To Encourage You

To Stay?
1. Yes

2. No

Page | 61

6. 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 exemployees back in the company.
7. RECOMMENDATIONS

Page | 62

8. 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.

Page | 63

APPENDIX
QUESTIONNAIRE
NAME:

JOB TITLE:

ORGANIZATION:

CELL NO. :
AGE GROUP:

1. What Is Your Primary Reason For Leaving The Company?

1. Benefits
2. Commute

7. Better Job Opportunity

8. Conflict with Other

Employees
3. Conflict with Manager

9. Family Reasons

4. Job Expectation

10 Not Challenging

5. Pay
6. Reallocation/Move
2.

11 Personal Reasons
12. Working Condition

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

Page | 64

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
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

Page | 65

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
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?

10.

1. 20-40%

2. 40-60%

3. 60-80%

4. 80-100%

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

Page | 66

3. High

4. Very High

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 times 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 todays 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 ones work

Feeling bored or unchallenged by repetitive tasks

Lack of job security

Lack of learning opportunities

Page | 67

More generous compensation or benefits package offered

elsewhere

Concerns about the future of the firm

Its 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 mushroomed,
indicating a strong interest in and recognition of how other aspects of
working life influence peoples 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

peoples 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 companys 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 employers main business concerns.

Page | 68

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.

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
3.

No
If No, What are the alternatives to downsizing?

Employment
Policies
4.

Changes in
Job Design

Pay/Benefits

Training

Policies

Which is a better criteria to use as the basis for downsizing

employees?
seniority

performance

Page | 69

5.

Are the reasons for downsizing communicated well to you?

Yes
6.

No
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
8.

No
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

Page | 70

10.

Does downsizing also have an impact on the survivor

employees?
Yes

No

11. has this Company Done Anything To Encourage You ?

1. Yes

12.

2. No

What are the consequences of employee downsizing?

Page | 71