Factors underlying the effect of organisational downsizing on health of employees: longitudinal cohort study

Objective: To explore the underlying mechanisms between organisational downsizing and deterioration of health of employees. Design: Longitudinal cohort study. Data were assembled from before downsizing (time 1); during major downsizing affecting some job categories (time 2); and after downsizing (time 3). Contributions of changes in work, support, and health related behaviours between time 1 and time 2 to the relation between downsizing and sickness absence at time 3 were assessed by multilevel modelling. Mean length of follow up was 4.9 years. Setting: Raisio, a town in Finland. Subjects: 764 municipal employees who remained in employment after downsizing. Main outcome measures: Records of absences from work from all causes with medical certificate. Results: Downsizing was associated with negative changes in work, impaired support from spouse, and increased prevalence of smoking. Sickness absence rate from all causes was 2.17 (95% confidence interval 1.54 to 3.07) times higher after major downsizing than after minor downsizing. Adjustment for changes in work (for instance, physical demands, job control, and job insecurity) diminished the relation between downsizing and sickness absence by 49%. Adjustments for impaired social support or increased smoking did not alter the relation between downsizing and sickness absence. The findings were unaffected by sex and income. Conclusions: The exploration of potential mediating factors provides new information about the possible causal pathways linking organisational downsizing and health. Downsizing results in changes in work, social relationships, and health related behaviours. The observed increase in certificated sickness absence was partially explained by concomitant increases in physical demands and job insecurity and a reduction in job control. A considerable proportion of the increase, however, remained unexplained by the factors measured

Organisational downsizing, sickness absence, and mortality: 10-town prospective cohort study

Objective To examine whether downsizing, the reduction of personnel in organisations, is a predictor of increased sickness absence and mortality among employees.Design Prospective cohort study over 7.5 years of employees grouped into categories on the basis of reductions of personnel in their occupation and workplace: no downsizing ( 18%).Setting Four towns in Finland.Participants 5909 male and 16 521 female municipal employees, aged 19-62 years, who kept their jobs.Main outcome measures Annual sickness absence rate based on employers' records before and after downsizing by employment contract; all cause and cause specific mortality obtained from the national mortality register.Results Major downsizing was associated with an increase in sickness absence (P for trend < 0.001) in permanent employees but not in temporary employees. The extent of downsizing was also associated with cardiovascular deaths (P for trend < 0.01) but not with deaths from other causes. Cardiovascular mortality was 2.0 (95% confidence interval 1.0 to 3.9) times higher after major downsizing than after no downsizing. Splitting the follow up period into two halves showed a 5.1 (1.4 to 19.3) times increase in cardiovascular mortality for major downsizing during the first four years after downsizing. The corresponding hazard ratio was 1.4 (0.6 to 3.1) during the second half of follow up.Conclusion Organisational downsizing may increase sickness absence and the risk of death from cardiovascular disease in employees who keep their jobs

Downsizing implementation and financial performance

In the present study we explore the relationship between downsizing decisions and corporate financial performance after top management has decided to downsize. Our focus is on the financial consequences arising from the amount of downsizing and the use of disengagement incentives. For this purpose, we use a sample of downsizing announcements in the Spanish press from 1995 up to 2001. Although the results show that the amount of downsizing is not significantly related to post-downsizing profitability, the evidence provided supports the finding that the use of disengagement incentives (which motivate workers to leave the organization) is negatively related to firm performance. Our analysis helps to understand the role that strategic downsizing decisions play in explaining observed variance in the performance of downsized firms. Thus, it advances scholarly organizational research by reinforcing the concept that corporate performance is not only contingent on strategies, but also influenced by the means through which these strategies are implemented

Do product innovation-related activities affect downsizing decisions? An organizational efficiency perspective

Firms’ innovation strategy typically involves the need to shape organizational changes within work structures and routines, even those concerning employee downsizing decisions. However, little effort has been directed toward exploring the role of firm innovation strategy as a determinant of downsizing. Drawing on organizational efficiency perspective, this study proposes a framework to examine the impact of product innovation-related activities on downsizing. The model will be tested using data from a longitudinal sample of Spanish innovative manufacturing firms. It is expected that the results show that firms developing product and process innovations are associated with downsizing decisions. Furthermore, companies that use formal protection of intellectual property through patents, utility models, trademarks and copyrights are believed to keep their personnel. The study attempt to unravel the impact of firm innovation on downsizing decisions and to offer guidance on how innovative firms might operate to control negative effects on their workforce

Unravelling Downsizing – What do we know about the Phenomenon?

This downsizing article represents a succinct review of the scholarly work of researchers studying the multifaceted downsizing phenomenon over the past 30 years. Since Cascio’s (1993) article “Downsizing: What do we know? What have we learned?”, the research has burgeoned across several countries. This paper examines what we have learned during the many years of scholarly enquiry. As such, the article is based upon an analysis of the downsizing literature and represents a summation of secondary sources. The research also provides an update on the latest downsizing developments.downsizing; strategy; workforce; literature review.

Examining the Incidence of Downsizing and Its Effect on Establishment Performance

The interest in examining job security and job stability has been driven in part by the phenomenon of downsizing. The distinctiveness of downsizing, as opposed to more traditional layoffs, is that the job cuts do not necessarily appear to be driven by shortfalls in demand but instead appear to be driven by the search for operating efficiencies. Despite the interest in downsizing, there has been essentially no serious investigation into its causes. I distinguish downsizing from job cuts associated with shortfalls in demand and find that employment and management practices over which employers have control, such as severance pay and profit sharing, are important predictors of subsequent downsizing and more general job losses. Surprisingly, excess operating capacity is not necessarily related to more general job losses at the establishment level. I also examine the relationship between both job losses associated with shortfalls in demand and downsizing and subsequent financial performance. The results suggest, among other things, that downsizing reduces labor costs per employee but also sales per employee. Job cuts associated with excess capacity appear to be somewhat more successful at improving sales per employee than is downsizing.

Family Management, Family Ownership and Downsizing: Evidence from S&P 500 Firms

Little is known about the relationship between family firms and their employees. This paper aims to close this gap. We distinguish between family management and family ownership as two dimensions of family firms and analyze their respective influence on downsizing. Our findings show that family management decreases the likelihood of downsizing, whereas the extent of family ownership decreases the likelihood of downsizing only with regard to deep job cuts (above 6%). We conclude that family managers have a strong long-term perspective, which is in line with both agency and stewardship theory. Yet, the idea that reputation concerns lead family owners to shy away from downsizing is only partially supported.Family firms, family management, family ownership, job cuts, downsizing; layoffs

Who downsizes for longer? A longitudinal analysis

This contribution investigates why firms keep on downsizing once they have started to do so. From a theoretical standpoint, we develop economic and institutional explanations for explaining corporate downsizing duration. The empirical work is carried out applying event history techniques to a sample of manufacturing firms drawn from the Spanish Survey on Business Strategies from 1994 to 2005. Although results show support for persistence in downsizing over time, repeated personnel reductions is not a widespread tool in managing the workforce in this country. In addition, we find certain key corporate parameters such as profitability, temporality rate, size and employment termination costs (as well as market demand trends) to be important determinants of the continuation of on-going downsizing experiences. This is the first study on this issue using corporate-level data for Spain and multivariate methods

Downsizing implementation and financial performance

In the present study we explore the relationship between downsizing decisions and corporate financial performance after top management has decided to downsize. Our focus is on the financial consequences arising from the amount of downsizing and the use of disengagement incentives. For this purpose, we use a sample of downsizing announcements in the Spanish press from 1995 up to 2001. Although the results show that the amount of downsizing is not significantly related to post-downsizing profitability, the evidence provided supports the finding that the use of disengagement incentives (which motivate workers to leave the organization) is negatively related to firm performance. Our analysis helps to understand the role that strategic downsizing decisions play in explaining observed variance in the performance of downsized firms. Thus, it advances scholarly organizational research by reinforcing the concept that corporate performance is not only contingent on strategies, but also influenced by the means through which these strategies are implemented.Downsizing, Disengagement incentives, Corporate performance, Spanish labour market

Organisational downsizing and musculoskeletal problems in employees: a prospective study

Objectives: To study the association between organisational downsizing and subsequent musculoskeletal problems in employees and to determine the association with changes in psychosocial and behavioural risk factors. Methods: Participants were 764 municipal employees working in Raisio, Finland before and after an organisational downsizing carried out between 1991 and 1993. The outcome measures were self reports of severity and sites of musculoskeletal pain at the end of 1993 and medically certified musculoskeletal sickness absence for 1993-5. The contribution of changes in psychosocial work characteristics and health related behaviour between the 1990 and 1993 surveys was assessed by adjustment. Results: After adjustment for age, sex, and income, the odds ratio (OR) for severe musculoskeletal pain between major and minor downsizing and the corresponding rate ratios for musculoskeletal sickness absence were 2.59 (95% confidence interval (95% CI) 1.5 to 4.5) and 5.50 (3.6 to 7.6), respectively. Differences between the mean number of sites of pain after major and minor downsizing was 0.99 (0.4 to 1.6). The largest contribution from changes in work characteristics and health related behaviour to the association between downsizing and musculoskeletal problems was from increases in physical demands, particularly in women and low income employees. Additional contributory factors were reduction of skill discretion (relative to musculoskeletal pain) and job insecurity. The results were little different when analyses were confined to initially healthy participants. Conclusions: Downsizing is a risk factor for musculoskeletal problems among those who remain in employment. Much of this risk is attributable to increased physical demands, but adverse changes in other psychosocial factors may also play a part