The meanings, consequences and implications of the management of downsizing and redundancy: a review
| Date | 01 August 1998 |
| Published date | 01 August 1998 |
| DOI | https://doi.org/10.1108/00483489810213874 |
| Pages | 271-295 |
| Author | Adrian Thornhill,Mark N.K. Saunders |
| Subject Matter | HR & organizational behaviour |
Management of
downsizing and
redundancy
271
Personnel Review,
Vol. 27 No. 4, 1998, pp. 271-295.
#MCB University Press, 0048-3486
Received January 1997
Revised June 1997
Accepted October 1997
The meanings, consequences
and implications of the
management of downsizing
and redundancy: a review
Adrian Thornhill and Mark N.K. Saunders
Cheltenham and Gloucester College of Higher Education,
Cheltenham, UK
Introduction
The study of downsizing and redundancy has assumed greater significance in
the literature used by human resource management academics and
practitioners in recent years. A recent search of one of the many databases
available, Anbar Electronic Intelligence, revealed 565 references to downsizing
and almost 300 for redundancy. A narrower search related to the management
of each reveals over 330 for downsizing and over 140 for redundancy.
Although there is a degree of ``double counting'' in respect of those references
which appear in both downsizing and redundancy categories, the selective
nature of the abstract means that other references exist. A considerable
literature has thus been developed to reflect the significance of downsizing
and redundancy in countries like the USA and the UK in the 1980s and 1990s.
This literature has emerged from a number of disciplines and draws on a wide
range of management and organisational theories (Brockner, 1988; Kozlowski
et al., 1993). Given the absence of a unifying definition of downsizing, it is
therefore possible to search in one domain of this literature without realising,
at least for some time, the multifaceted nature of this subject area.
This paper draws on the various disciplinary and theoretical strands used
to analyse and evaluate downsizing and redundancy practices, in an attempt
to show how they may be linked. It does not seek to provide a unifying theory
of downsizing since this would be an unrealistic proposition given the need to
recognise and account for the wide contextual variations between downsizing
events in different organisations, industries and countries. Some level of
generalisation is, of course, possible and the paper draws out those which we
believe to be valid. Cameron (1994a) recognises that downsizing may be
approached from three perspectives. These focus on an industry or global
level, an organisational strategy level and a micro or individual level
perspective. The first of these levels examines the consequences of downsizing
resulting from the impact of merger activity, acquisitions or strategic alliances
between organisations (e.g. Gutknecht and Keys, 1993; Newman and
Krzystofiak, 1993), or the impact of downsizing on a particular industry
(e.g. Turnbull and Wass, 1997; Wass, 1996). The second level examines
Personnel
Review
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alternative downsizing strategies and the respective effects of these
approaches on organisational performance and effectiveness. The third level
evaluates the consequences of downsizing, particularly arising from its
implementation, through the reactions of those who are affected as either
organisational leavers or stayers ± the latter category known as the
``survivors'' of downsizing and redundancy.
This paper uses this categorisation, with the exception of the industry or
global level, to structure its content and integrate the different strands of the
literature and the theories on which they draw. The following (second) section
of this paper, therefore, seeks to define downsizing from an organisational
strategy perspective, and to consider the relationship between choice of
strategy, performance and effectiveness at the level of the organisation. The
third section of the paper outlines methods to implement downsizing and
explores further the relationship between this aspect and organisational
performance and effectiveness. The fourth section of the paper relates to the
micro or individual perspective and draws on organisational psychology
literature to recognise and discuss the consequences of downsizing related to
the reactions of survivors. The final section then considers how this literature
helps us to understand the implications for the management of these
psychological and behavioural reactions, with the intention of mitigating
negative responses which adversely affect organisational performance and
effectiveness.
The meaning of downsizing: an organisational and strategic
analysis
In popular usage ``downsizing'' is frequently used as a synonym for
redundancy (Vollmann and Brazas, 1993). It is also used interchangeably
with a range of other, sometimes oxymoronic, terms such as ``de-recruiting'',
``de-massing'', ``re-engineering'', ``re-sizing'', ``restructuring'', ``reorganisation''
and ``rightsizing'', to name but a few (Cameron, 1994b; McCune et al., 1988;
Turnbull and Wass, 1997). The practice of organisational downsizing, where
the term is invoked, lends support to this association with redundancy.
Quality newspapers carry frequent reports about downsizing associated with
redundancies, leading to the situation where terms such as those mentioned
above are ``generally understood to be no more than pseudonyms for the more
ubiquitous, unambiguous, but unappealing `re'-word, redundancy'' (Turnbull
and Wass, 1997, p. 44). However, the literature which describes downsizing
and seeks to evaluate its consequences develops a broader image related to
organisational choice and conceptual complexity (e.g. Cameron, 1994a, 1994b;
Greenhalgh et al., 1988; Kozlowski et al., 1993; Shaw and Barrett-Power, 1997).
As the result of the high incidence of organisational downsizing over recent
years, at least in the context of Britain and North America (e.g. Brockner, 1992;
Cameron, 1994b; Doherty 1997; Doherty et al., 1993; Kozlowski et al., 1993;
Turnbull and Wass, 1997), a considerable body of literature related to this
subject has emerged. The nature of much of this literature has led to the
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