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The effects of downsizing on labor productivity: The value of showing consideration for employees' morale and welfare in high‐performance work systems
Author(s) -
Iverson Roderick D.,
Zatzick Christopher D.
Publication year - 2011
Publication title -
human resource management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.888
H-Index - 94
eISSN - 1099-050X
pISSN - 0090-4848
DOI - 10.1002/hrm.20407
Subject(s) - productivity , welfare , business , work (physics) , human capital , competitive advantage , work systems , labour economics , organizational performance , human resource management , employee morale , sample (material) , industrial organization , marketing , economics , management , economic growth , engineering , mechanical engineering , chemistry , chromatography , market economy
Abstract Although downsizing remains a topic of great interest to scholars and practitioners, little research has examined the link between the process and organizational performance. The current study examines whether organizations showing greater consideration for employees' morale and welfare in the downsizing process experience increased labor productivity. Further, because downsizing diminishes human capital and interferes with an organization's social exchange relationships, we posit that attention to employees' morale and welfare will be particularly important for high‐performance work systems (HPWS) that rely on human capital for competitive advantage. We tested our hypothesis with a sample of organizations that had downsized using survey data matched with secondary data. Results support our prediction that organizations with more extensive HPWS can reduce productivity losses from downsizing by heightening their consideration for employees' morale and welfare. We discuss the implications of these findings. © 2011 Wiley Periodicals, Inc.