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Corporate Downsizing. Downsizing Articles Downsizing Kim, Wang-Bae Term Paper

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Downsizing

Kim, Wang-Bae (2003). Economic Crisis, Downsizing and "Layoff Survivor's Syndrome"; Journal of Contemporary Asia, Vol. 33, 2003

This article empirically examines the effects of downsizing on layoff survivors in South Korea to determine if any of the unintended negative consequences of economic restructuring are present. While studies at the macro level on the downsizing that has occurred since the 1997 economic crisis has highlighted changes to the labor market, governmental policies, labor movement, and the flow of foreign capital, research into the socio-psychological impact of downsizing on South Korea using an empirical approach is quite infrequent. This study adopts the broad hypothesis that layoff survivors' perceptions of a past downsizing influence their mental health, but seeks to identify specific factors that affect negatively on survivors' well-being. Layoff survivors' perceptions are evaluated in two key aspects: attitudes toward working conditions and attitudes toward the downsizing process itself. To capture changes in perceptions, the survey asks for layoff survivors' opinions before and after the downsizing.

The respondents to the survey were recruited from layoff survivors in various companies that have been downsized in the several years since the financial crisis. The firms include chaebols and large companies, medium-sized companies, and banks. The total sample size for the survey was 980. Out of this sample, workers in large companies (those with 1,000 or greater employees) represent 47.9%, those in companies with 300-999 employees represent 35.1%, and those in companies with less than 300 workers total 17.0%. Males composed 83.4% of the sample. Males in their 30s were the most numerous in the sample, representing 51.1% of total respondents. Clerical workers constituted 60.2% of the sample. As for marital status, 68.9% of the total sample was married. The sampling method employed was stratification sampling. For survey questions, a five-point Likert scale was primarily used, with 5 = very positive, except for mental health questions with 4 point.

The findings shown show that while perceptions about job autonomy, workload, job security, and leadership have a significantly positive influence on self-confidence as a sub-category...

In this survey, perceptions of job autonomy and security and conflict among coworkers have a coefficient with anxiety/depression, and a positive perception of company leadership contributes to declining anxiety/depression. It has been said that anxiety/depression are considerably influenced by perceptions of job security. However, the present study reveals that anxiety/depression are the result of other factors as well, including low job autonomy, conflict among co-workers, and the leadership of the CEO during downsizing. In the case of self-confidence, job autonomy, conflict among coworkers, and perception of fairness are related as well. In terms of subjective assessment of health status (Vitality), higher job autonomy, job security and fairness all contribute to a higher assessment, while conflict among coworkers has a negative influence. Anxiety/depression are negatively influenced by job autonomy, while there is no impact by the fairness of downsizing.
Appelbaum, Steven H. And Nadia Labib. Strategic Downsizing: A Human Resources Perspective,; Human Resource Planning, Vol. 16, 1993

This paper addresses downsizing as a "problem" because, as will be seen, it is a painful process for all stakeholders, and its success or failure has major implications for all concerned. More especially concerned, are the organizations that must bear the consequences of the decision to downsize. The responsibility primarily falls on them to mitigate the negative effects on all involved. It is of paramount importance for them to succeed in this endeavor in order to maintain a positive corporate image both locally and globally; namely, wherever they market their products and services. The purpose of this article, therefore, is to investigate the effects of current downsizing practices on all human resources and on the organization, and to propose methods by which organizations can mitigate these effects and successfully achieve their restructuring goals. This project began with a literature search to achieve the following objectives:

1) To investigate the specific professional, psychological, and socio-economic effects of downsizing on both surviving and terminated employees (3).

2) To identify the factors that influence the extent to which the effects of downsizing…

Sources used in this document:
2. Hypothesis 2: The financial performance of companies, which terminated three percent or more of their workforce in any one year, will be significantly lower than companies which downsized less than three percent or did not downsize at all.

3. Hypothesis 3: The financial performance of companies, which frequently downsize (i.e., three or more times during an eight-year period) will be significantly lower than companies that downsize less frequently.

The present study examined the long-term relationship of organizational downsizing on five commonly used measures of financial performance from 1987 to 1998. In comparing companies, which did and did not announce layoffs, it was found that downsizing companies performed significantly poorer up to two years following the announcement on several financial indices. However, beginning with the third year, none of the differences reached statistical significance. When analyzing the magnitude of the announced layoff, it was observed that companies that had laid off a relatively small number of employees (three percent or less) performed significantly better on four of the five financial indices in the year of the announcement (i.e., the base year). In contrast, there were no significant financial differences found after this initial base year. For companies that announced large-scale layoffs (10% or higher), many statistically significant differences were observed throughout the eight-year period of investigation. It was found that companies laying off 10% or more of the workforce significantly under-performed firms laying off less on profit margin, ROA, ROE, and market-to-book ratio. The study also investigated the frequency in which companies announced layoffs during the eight-year period. The results indicated that the frequency with which downsizing occurred had a slight negative relationship with financial performance (viz., those firms laying off more often-reported lower financial performance).
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