Since few years, an economic downturn has been confronted in developing, as well as, developed parts of the globe, which has resulted in efforts made by businesses and companies to cut-off their costs, in order to acquire higher profit accumulations. In this regard, downsizing has been one of the most utilized options by companies to increase their profits. In the result, such step has affected lives of thousands of employees in different parts of the globe, especially, the United States. Some of the scholars believe that an adverse impact on organizational culture and commitment has been observed in recent years due to downsizing of employees.
According to a Forbes article on impact of downsizing, approximately 0.6 million people lost their jobs in January 2009 alone. (Kneale, 2009) Such downsizing has affected the organizational culture in an adverse manner. In this trend, commitment of top performers has changed rapidly, as they are always confident regarding getting a job somewhere else, and thus, downsizing effect has inclined them to leave their current jobs earlier, as compared with poor employees. In other words, downsizing trend has smashed the organizational commitment of top employees in an unpleasant manner.
In the result, more and more companies are now shifting their business processes, specifically, expensive tasks to developing countries by outsourcing them, which has been identified as major factor of job losses in the United States. A study has indicated that more and more US workers feel depressed and insecure regarding their job resulting in poor organizational culture, as well as, health problems affecting organizational performance. (Baurnol, 2003) A positive effect of workforce globalization has allowed companies to cut down their costs in a rapid manner. On the other hand, outsourcing has affected the quality performance in an undesirable manner, and a number of companies are now shutting down their outsourced centers due to low quality performances. (Baurnol, 2003)
According to Dr. John Sullivan, a workforce planner, downsizing is mostly done in a wrongful manner, and companies that go for alternatives confront problems as well. (Kneale, 2009) In addition, downsizing and organizational culture have created an inverse relationship, as increase in downsizing results in decrease in the effectiveness of organizational culture and commitment, as more and more low-level employees feel insecure, whereas, top employees look for other secure jobs. Conclusively, the paper has discussed some of the significant aspects of impact of downsizing on organizational culture and commitment. It is hoped that the paper will be beneficial for students, teachers, and professionals in better understanding of the topic.
Klaus Kneale. (2009). You’re Probably Doing Your Layoffs All Wrong. Forbes Magazine. http://www.forbes.com/2009/02/12/layoffs-workforce-planning-leadership-management_0212_kneale.html Retrieved on April 8, 2009.
William J. Baurnol. (2003). Downsizing in America. Russell Sage Foundation.