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1. INTRODUCTION
2. LITERATURE REVIEW
Conceptual approach to employee downsizing
Downsizing and employee attitude
Employee morale during downsizing
Organizational climate also affects employee retention rate
and positively affects employee downsizing rate
Tips for creating an effective organizational climate for
minimum employee down sizing
Organizational vital signs-a leading indicator of satisfaction
measuring Of employees
Organizational climate-employee satisfaction survey
Employee down sizing & employee motivation are closely
knitted
Employee down-sizing & employee engagement
Diagnostic tool
3. RESEARCH OBJECTIVES
4. RESEARCH METHODOLOGY
Methodology
Research design
Nature of data
Data collection
Sample size
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Sampling technique
Sampling procedure actually employed
Analytical tools
5. DATA ANALYSIS
6. CONCLUSION & IMPLICATIONS
7. RECOMMENDATIONS
8. BIBLIOGRAPHY
9. APPENDIX
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INTRODUCTION
In management parlance, the term downsizing refers to pruning (including layoffs and
retrenchments) of the size of workforce for a variety of reasons:
At the organizational level, such changes can lead to closure of businesses, off-shoring,
merging with another organization, outsourcing, restructuring, etc. At the functional
level, it can imply changes in the availability of resources, changes in the scope of
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activities, etc. As a sequel to these developments, employees can be redeployed,
transferred, rendered redundant, or let go within a very short span, without adequate
preparation for these changes. Such changes take their toll in terms of organizational
productivity, nature of employer-employee relationships and the associated social costs.
People who contribute to the organizational goals are the organization's assets. These
assets are turned into liabilities due to reasons mentioned earlier. The challenge is to what
is morale manage employee exit without disrupting the organization's functioning. Those
individuals who lose jobs are the hardest hit. For the affected employee, the emotional
trauma of losing a job is very difficult to cope with. Aside from the financial implications
of a job loss, they have to reconcile with the loss of self-esteem, self-confidence, and a
breach of trust between the employer and the employee. Along with the individual,
his/her family also gets deeply affected with the involuntary job loss of a family member.
The pain is not limited to the individual alone but affects a number of others. The effect
is also felt by other employees who remain in the organization as they suffer from the
guilt and are also faced with the fear of job insecurity.
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Need to reduce
Costs
Early Voluntary
Workforce Layoffs
Retirements
Reductions
Outplacement
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What is Morale
Morale, also known as esprit de corps, is an intangible term used for the capacity of
people to maintain belief in an institution or a goal, or even in oneself and others.
Workplace events play a large part in changing employee morale, such as heavy layoffs,
the cancellation of overtime, cancelling benefits programs, and the lack of union
representation. Other events can also influence workplace morale, such as sick building
syndrome, low wages, and employees being mistreated.
• Job security.
• Management style.
• Staff feeling that their contribution is valued by their employer.
• Realistic opportunities for merit-based promotion.
• The perceived social or economic value of the work being done by the
organization as a whole.
• The perceived status of the work being done by the organization as a whole.
• Team composition.
• The work culture.
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How Down-Sizing Affects Employees’ Morale
Every year companies spend millions in recruitment due to employee turnover. Turnover
and its associated costs are a burden that used to be just the cost of doing business. But
more and more companies are investing time and effort in making better hiring decisions
and doing more to keep the employees they do hire. Employee retention is now a buzz
word in today’s business world.
How much? When you add the costs of finding an employee, training the new employee,
lost productivity and filling in for the employee who leaves, the cost can easily equal
150% of the base salary of the person who left. So, if you are paying someone $50,000,
the cost to replace that person will be approximately $75,000. This money comes out of
your hard-earned profits.
This is one of the key reasons that companies are focusing so much effort on keeping
their current employees. Some of the steps taken by companies to retain their work force
are:
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• Find out what employees want from their career and do what you can to provide
for their needs.
• Be as flexible as possible about how the work gets done.
• Be as flexible as possible as to when and where the work gets done. Can it be OK
for an employee to take a few hours off to attend to a family or personal matter if
they can accomplish the job at their home in the evening?
• Take a real and genuine interest in people’s career aspirations and personal lives.
• Recognize positive contributions to the company. Communicate company
progress, financial news, major customer or sales activities on a regular basis. Follow
up on your commitments to provide information or answers.
• Have regular (bi-weekly or monthly) meetings with all employees where they can
ask you questions about your plans, company progress, new developments to look
for, etc. Be accessible to them so you can learn their needs. If you can respond to
their needs before they become real issues, they won’t begin looking for greener
grass.
• Ask former employees why they resigned. Even if they left six months ago, they
still have a valid perspective.
• Routinely ask employees what you can do to make the company a better place to
work. Set boundaries if necessary as to what items are not negotiable; such as
ownership in the company or 50% per year salary increases.
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LITERATURE REVIEW
“Reflective Restructuring”
According to Theo Blackwell of The Work Foundation, in 1980s and 1990s many
companies resorted to downsizing their human resources in order to cope with economic
pressures. But what most of these companies do not realize is that downsizing does not
always lead to savings in reality or increase in the market worth of the company. On the
contrary, the downsizing companies may be branded anti-people. It usually leads to
repetitive downsizing and results in the loss of employee morale and loyalty and thereby
affects overall productivity levels. However, they can adopt alternative approaches to
cope with economic uncertainties. Wayne Cascio had proposed a new strategy termed as
"reflective restructuring", which enables companies to offer a range of smarter options to
employees. The article explains the significance of this new concept and provides
examples of companies in the US and UK which have adopted the strategy. It also
explains that while companies in the US are at a greater liberty to downsize, the UK
business environment is not amenable to such measures.
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article provides a snapshot of the Indian experience of downsizing and also discusses the
social implications of these drastic measures.
Rick Maurer of Maurer & Associates emphasizes the need for organizations to act swiftly
to cope with changing business conditions and on their requirement of human resources.
Business leaders need to continuously assess the mix of skills required as well as the
number of employees required for the present and the future. In addition, they should
engage in a process of benchmarking with companies in the same industry. The article
explains that downsizing may prove to be a risky strategy that may not always bring
about much improvement in terms of the productivity or revenues to the organizations.
Hence, to cope with changing requirements of staff, companies should consider a number
of different alternatives to downsizing. Further, it is of the utmost importance to plan
workforce requirements keeping in view the turbulent business environment.
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involvement of employees in designing the program, formulation of a fair and equitable
policy, Equal Employment Opportunity (EEO) guidelines, legal counsel, etc. The article
also suggests the use of objective data to formulate the downsizing plan. In conclusion, it
points to a few indicators to assess the effectiveness of a downsizing program.
Carlton Becker of ORC enumerates a number of lessons from the collective experience
of layoffs by companies across the globe. These lessons largely pertain to the need to
remain lean and mean in a fast-changing global business environment, rightsizing the
right way, considering scientific alternatives to downsizing, paying attention to the after-
effects of downsizing, and being aware of the legal implications of downsizing. The
author points out those mass layoffs should be viewed as a change process to be
implemented by adopting a systems approach. It explains the strategic role of HR
executives during the whole process, especially during the initial stages of rightsizing. It
further explains the step-by-step guidelines that HR executives can adopt in the
downsizing process. The article shares the experiences of a few companies such as
MacMillan Bloedel, Canada, DaimlerChrysler AG's US unit Motorola, Hallmark Cards,
and Lucent Technologies.
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learnt from those organizations that have been able to maintain, and sometimes even
enhance, employee morale. Such organizations give due attention to each of the three
phases of downsizing, i.e., planning, its implementation, and managing the results. The
author adds a few essential aspects to be considered while downsizing. These suggestions
pertain to the importance of adopting participative downsizing, managing the rumor mill,
providing continual and frequent communication, and paying special attention to the
results. The article concludes by saying that those organizations, which have been active
in managing the human side of downsizing would find that they have laid the
groundwork for new and stronger relationships with their employees.
Seymour Siegel focuses on the need for organizations to take care of two things in order
to gain competitive advantage in the 21st century. The first pertains to the management
of knowledge workers and the second to the appropriate management of knowledge
itself. In an era of downsizing, organizations need to pay special attention to the fact that
with downsizing, organizations also stand to lose on the vital and tacit knowledge
inherent in the outgoing employees. Managers are always confronted with the challenge
of capturing and codifying explicit and tacit knowledge and then converting it into
innovative products and services. The article describes a number of organizational
practices, which, if managed on an ongoing basis, can offset the loss that can occur as a
result of downsizing. It also discusses a number of steps to manage knowledge assets.
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Mika Kivimäki, Jussi Vahtera, Jaana Pentti, and Jane E Ferrie reports the results of a
study conducted to investigate the effect of the psychosocial work environment on
employee health. This study was conducted among 1,110 municipal staff in Raisio,
Finland, between 1990 and 1995. It encompasses the period prior to downsizing, during
downsizing, and when downsizing had slowed down. The downsizing exercise was a
reactive one, conducted through retirement and hiring freezes, and letting go the
temporary employees. Some of the significant findings of the study are: downsizing
results in changes in work, social relationships, and health-related behaviours that lead to
increase in certificated sickness due to increases in physical demands, job insecurity, and
reduction in job control; sickness absence increases twofold in a major downsizing as
compared with sickness absence during a minor downsizing; downsizing was associated
with negative changes in work, impaired support from spouse, increased prevalence of
smoking, and sickness absence. It has been found that this study was unique in the area
of employee downsizing and employee health as it studied a natural experiment, which is
rarely feasible.
Jonathan Kelley explains that the significance of downsizing depends on its long-term
impact on workers. It presents a model to study the probability of re-employment among
workers shed by downsizing firms as compared with those departing from stable or
growing firms. This model can also be used to examine the impact of downsizing on the
duration of jobless spells, continuity or change in occupation, on earnings, and on job
satisfaction among workers who obtain employment. The model combines three factors:
re-employment by age, gender, and education. Some of the significant findings of the
study are: downsizing is not a disaster for most of the workers; 75% of the downsized
employees find jobs, and most of them do so quickly; workless spells between jobs are
short or non-existent; and the most serious grounds for concern relate to groups of
vulnerable workers, such as older workers and women.
Carl Van Horn, William M Rodgers III, Neil Ridley, and Laurie M Harrington of
Rutgers, offers glimpses of the consequences of involuntary job loss for workers and
their employers. It describes the evident patterns of worker dislocation: it affects both
blue-collar and white-collar employees, workers of all races, ages, education levels,
occupations and industries; and it happens at very short notice (usually one week or less,
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and many do not receive any advance warning). The report describes the impact of job
loss on individuals and their families, the most significant being emotional distress and
financial hardship. It delineates the differences in approaches by small and large firms.
Large firms offer more assistance and better severance pay as compared with smaller
firms. It also provides guidelines for employers, employees and policymakers to deal
with the consequences of job dislocation. The experience of downsizing employees
during the last few years points to the need for employees to be prepared for a job loss at
any point of time in their career. This report also includes examples of effective practices
of a few companies to bring succour to the displaced workers.
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Downsizing And Employee Attitude
In today's competitive market, many companies have found that staying in business
means downsizing. However, this everyday event in the business world is a unique
(hopefully) event for you and your employees. It is important to remember that this event
affects not only the "downsized," but also those who remain.
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While this result is interesting, of more interest was the finding that variables moderated
this observed relationship. Specifically, Brockner found that the remaining employees'
perception of the fairness of the lay-off process and their attachment to the lay-off
victims colored their views. This issue of fairness has been found to be related to a
number of other work-related variables and has its roots in theories of organizational
justice.
"When survivors perceived that those laid off had been dismissed with little or no
compensation, they reacted more negatively (from an organizational perspective) to the
extent that they felt some prior sense of psychological kinship with the laid-off parties."
(Brockner et al., 1987).
What Brockner's study would indicate is that employees are affected by more than just
the fact of layoffs. They are affected by how the layoffs are managed and by what is done
for the individuals in those positions. Brockner found that negative attitudinal changes
were reflected in survivors' reduced work performance and lowered commitment to the
organization. Conversely, the study showed that employee commitment can actually
increase during a layoff process when the company shows some commitment to
displaced workers.
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them by laying them off--the more committed to the organization are survivors apt to be"
(Brockner et al., 1987).
Downsizing is a stressful time for employees, and is a time in which they will question
each of the eight factors mentioned in the above quote by McKenna. By communicating
with employees, making them feel part of the organization, and working to restore
loyalty, it is possible to avoid some of the most dangerous pitfalls of downsizing.
Communicate
During downsizing, the losses due to decreased employee loyalty, morale and lost
productivity are compounded by the complexity of the layoff process. For example, the
rumor mill that develops, or intensifies, during the preliminary planning stages results in
employees spending significant amounts of time gossiping and worrying about what may
happen. Unfortunately, many managers in the position of being "in the know" are guided
by a policy in which they are to avoid talking about rumors with employees. While this
policy may seem appropriate, the associated costs, in terms of lost productivity and
employee loyalty, may be significant. Communication will help to curb the worry and re-
direct employee energies to the job at hand (Fisher, 1988).
"If you don't know something, or you do know but SEC rules or other legal constraints
have momentarily sealed your lips, come out and say that. Silence is the worst policy"
(Fisher, 1988).
The most preferred method of communication is personal appearances from upper
management; however, any communication at all will be helpful.
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Ensure that communications cover the following topics:
Talk about the fact that changes are coming; employees already know, but it will increase
their trust level if they hear it from you;
• explain the purpose of the downsizing;
• explain the need for growth and profitability (which can be perceived as legitimate
reasons when presented in an appropriate manner);
• if possible, explain future plans including detailed plans for restructuring, upgraded
technology, or some processes to increase efficiency;
• communicate, whenever possible, that though employee downsizing is necessary,
each employee who is let go will receive appropriate severance pay and (if you intend
to offer it) job placement assistance;
• emphasize that laid-off employees will be treated with respect and dignity; this is
important for managing and maintaining remaining employees' moral and company
commitment.
• Most importantly, listen carefully to employee concerns and adequately address each
concern to whatever degree possible. This must be done with sincerity and no sense
of condescension, such as "calming the mob."
In addition, justification for the layoffs is extremely important, especially if times are
good and the downsizing is a part of strategic growth and profitability. Employees need
to understand that you sincerely need to make these cuts and it is not a whim or a
mistake.
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A former West Coast bank manager who left when he saw his manager leave made this
comment for an article in Fortune: "If you let people get the idea that the company is not
just cutting back but is sinking into mediocrity, morale really goes to hell" (Fisher, 1988).
This quotation highlights the importance of managing perceptions with "positive press"
and communication from upper management. Discuss the downsizing as a step towards a
more efficient and profitable business with an attractive future.
Rebuild Loyalty
Long after downsizing is completed, continue communicating with employees to re-build
security and trust. Do not allow management to assume remaining employees are merely
grateful to still have jobs. Employees need to feel they are valued, that they have a place
in the company, and that management believes that they are an important part of the
success of the organization. To emphasize this point, talk about where the company is
headed, and describe any plans for growth and prosperity.
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Employee Morale During Downsizing
Downsizing can threaten employees’ sense of well being in several ways. They may see
the company as having behaved unjustly or unfairly. They obviously feel less secure.
They may also lose the belief that their contribution to the business will be rewarded in
future. These responses may easily threaten business performance. Survivors of
downsizing can become unduly risk averse and narrowly focused, and therefore less
creative and open to change.
But ‘morale’ is not a simple concept. It consists of many facets and may be manifest in
many outcomes. These outcomes include:
• whether employees stay with the organization
• whether they achieve organizational or personal goals
• whether they are able to adopt new working practices and learn new skills
• how they respond to customers
It is a useful start to identify specific outcomes of morale which the organization wishes
to address.
The organizations involved in the study suggested three common strands to a strategy for
influencing morale. They were the ability to:
• anticipate likely employee response
• identify interventions to impact morale
• Monitor and evaluate morale and the impact of actions taken.
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Anticipating Employee Response
A number of ‘risk factors’ were identified as indicating circumstances in which
downsizing was most likely to hit morale. They included:
• failure to convince the workforce that job reductions were necessary
• apparent lack of clarity or unfairness in deciding on individual redundancies
• lack of care over redundant staff
• lack of alternative career development options if promotion becomes unlikely
• changes which leave survivors unclear of what is expected of them, or how they will
acquire the new skills they may need
• Managers who are unwilling or unable to provide adequate time and support to
individuals.
Anticipating impact also means understanding that individuals in different job groups or
career stages may respond differently to downsizing. Although it is often difficult to
address interventions to particular workforce groups, they can sometimes be tailored with
varying needs in mind.
Interventions To Build Morale
It is difficult to target interventions with any precision to influence morale. However, the
participating organizations identified several broad kinds of action which they saw as
particularly relevant.
Communicating with employees during downsizing is vital. Conveying the reasons for
such a painful change is central. Employees need to understand the business reason for
reducing headcount, and how the change will be managed. Breaks in communication are
seen as sinister, and lead to rumors. Attempts to deny the reality of the painful aspects of
the change are seen as insensitive. So communication has to be honest in dealing with the
negative feelings of employees. It is important to communicate throughout the period of
change, not just at the beginning.
Giving direct support to the ‘survivors’ as well as the ‘victims’ of downsizing leads to
other types of intervention. They may address such areas as Stress Management and
Careers Counselling.
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Organization Development initiatives may be used to try and improve the effectiveness
of the emergent organization. They may include work to rebuild relationships between
and within groups and departments, often through team building activities. Enhanced
access to training and work experience may be needed to help staff adjust to new job
demands.
Performance Management often needs attention to ensure that staff feels that the new
demands are realistic in terms of the reduced staff resource. They also need to be clear
what is expected of them in the new organization. Reward strategies may also need
realigning, but there is a lack of clarity at present about the link between alternative
reward strategies and morale.
The employee’s relationship with their line manager may have a significant effect on
how well they cope with downsizing. For line managers to support staff effectively at a
time of difficult change, they in turn have to feel as though they know how to handle
queries and problems. It can help for managers to share their concerns with their peers
and discuss how to deal with staff issues. Some companies use regular forums for
managers to do this throughout the change period, and avoid them feeling isolated.
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‘Softer’ measures of attitudes and perceptions of employees are obtained through the
increasing use of employee attitude surveys. These can be used both to identify variations
in response within the workforce, and track changing perceptions over time. Managers
need to understand how employees are feeling in their part of the organization as well as
in aggregate. Upward feedback is another way of collecting information on employee
morale and response to initiatives. It can also be used as a starting point for improving
relationships within teams in the wake of downsizing.
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ORGANIZATIONAL CLIMATE ALSO AFFECTS EMPLOYEE
RETENTION RATE AND POSITIVELY AFFECTS EMPLOYEE
DOWNSIZING RATE
Organizational Climate
Litwin and Stringer define organizational climate as 'a set of measurable properties of
the work environment, perceived directly or indirectly by people who live and work in
this environment and assumed to influence their motivation and behaviour'.
Traditionally, organizational climate alms to capture a snapshot of an organization at
one point in time. Organizational climate research has had a long and active history,
with much of its foundation drawn from psychology. Because of space constraints and
the availability of excellent articles which review the extensive history of the
organizational climate literature, we will only briefly review the organizational climate
literature here. Organizational climate is largely based on Lewinian field theory, which
is a result of Lewin's work on experimentally-created social climates This work was
advanced by several early key studies including Litwin and Stringer and Tagiuri and
Litwin. Litwi n and Stringer investigated how organizational climate affects individual
motivation. They also suggested that organizational climate was comprised of nine
dimensions: structure, responsibility, reward, risk, warmth, support, standards, conflict,
and identity. Taguiri and Litwin's book was comprised of a series of essays that treated
climate in ways ranging from a subjective interpretation of organizational
characteristics to an objective set of organizational characteristics. Other early studies
were aimed at identifying the dimensions comprising organizational climate
After the 1960s and early 1970s, the focus of the organizational climate field became
more clearly defined. More recently, organizational climate researchers have begun to
consider how organizational climates develop. Three schools of thought have
developed: the subjectivist, objectivist, and interactionalist perspectives. Probably the
most troubling issue that the organizational climate literature continues to face is
defining the appropriate dimensions that comprise organizational climate.
Organizational climate is a fairly general term which refers to a class of dimensions
which can be critiqued for being too diverse . In addition, the multidimensional nature
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of organizational climate makes it more difficult to define sharp borders. Organizational
climate scholars have responded by making empirical and theoretical arguments to
distinguish organizational climate from various other const ructs, such as structure and
individual satisfaction. While these and other efforts have been helpful, some fuzziness
around the borders and differentiation of the organizational climate construct still
remains.
Research on organizational climate has continued more recently, including Joyce and
Slocum's study of person and organizational fit, Joyce and Slocum's investigation of the
extent to which organization members agree about their organizational climate, Glick's
discussion of the difficulties of measuring organizational climate, Denison's
investigation of the relationship between organizational climate and performance, and
Koyes and DeCotis's work on measuring organizational climate. Even more recently,
Denison has investigated the difference between organizational culture and
organizational climate, and Griffin and Mathieu have looked at how perceptions of
organizational climate vary with the hierarchical level in an organization. Anderson and
West contributed to the literature by exploring the link between organizational climate
and innovation.
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Selecting a Survey
Once a decision is made to conduct an organizational survey, it can be difficult to
identify the "right" survey to use. Although not a comprehensive list, the following
factors may be helpful in reducing the number of survey choices:
Determine the scope of information included in the survey. As might be imagined, there
are a large number of organizational climate areas that exist. Recent research has
identified more than 460 different types of work environment characteristics that have
been measured. Many of these characteristics can be classified into the following major
areas: job, role, leader, organization and work group. In many companies there are
particular areas where employee feedback would be useful. For example, a company
concerned about the impact of recent managerial downsizing may want to ensure that
leadership/supervisory components are included in the survey.
Make sure the number of climate areas included is kept to a manageable level. Not only
will including too many areas on the survey increase the time and effort needed to
administer the survey, but it also can make the interpretation process more difficult. On a
related issue, many users of organizational surveys find it useful to add a few customized
items to the survey. Although adding items does not always add to the scientific value of
a survey, it can go a long way in generating support from the company’s management
team.
It can be extremely helpful to choose a survey that offers some flexibility in its
administration capabilities.
For example, some companies may require the ability to administer the assessment using
a paper-and-pencil format, while others may prefer an intranet format. Factors such as
employee demographics can be important, also. Some companies may require both an
English and Spanish version of the survey to accommodate all of their employees.
Finally, identify some general pieces of information you would like to see in a report
once the survey responses have been analyzed. For example, some companies may have
an interest in only reviewing the average levels of item responses within the company,
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while others may want to see how the company scored compared to other companies
throughout the nation.
In addition, some companies may want to have results broken down department-by-
department or item-by-item while others may want one set of analyses based on the
entire set of employee responses. In any event, the publisher/director of an organizational
survey should assist a company in selecting an instrument that will meet their specific
reporting needs.
Benefits
Companies that conduct organizational climate surveys may experience one or more of
the following benefits:
• Positive work outcomes- In the last 30 years, a significant amount of evidence has
been accumulated documenting the importance of the work environment in relation to
organizational performance. In general, research has shown that factors in the work
environment are related to outcomes such as employee motivation, job satisfaction,
intentions to quit, job performance and even organizational productivity. In addition,
an emerging area of research has indicated that organizational climate can influence
customer perceptions of the quality of goods or services delivered by a company.
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Organizational surveys that occur on a scheduled basis (e.g., annually, biannually,
etc.) can be a more efficient way for managers to gather important information.
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TIPS FOR CREATING AN EFFECTIVE ORGANIZATIONAL
CLIMATE FOR MINIMUM EMPLOYEE DOWN SIZING
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ORGANIZATIONAL VITAL SIGNS-A LEADING
INDICATOR OF SATISFACTION MEASURING OF
EMPLOYEES
• identifies the readiness for, commitment for, and skills for change;
• identifies the values, emotional competencies, and behaviors needed for success;
• alerts managers to needs and opportunities for training, communication, and
development;
• helps build strategies for sustainable growth;
• is scalable, measurable, and practical.
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ORGANIZATIONAL CLIMATE-EMPLOYEE SATISFACTION
SURVEY
The objective of performing an employee climate assessment is to identify the key areas
which are hindering production, reducing effectiveness and which might generate
unexpected costs in the near future. The idea and approach is for the organization not to
simply perform an academic exercise, simply because they ‘do it at this time every year’,
but to critically examine themselves to see where the company and it’s employees might
be finely tuned to generate higher levels of performance. Once identified, opportunities
to strengthen existing approaches, which are working well, as well as select appropriate
interventions for addressing the weakest areas, should be aggressively pursued for the
maximum benefit of everyone.
Organizations are successful because of the quality of work employees perform. When
employees are cared for, and the right environment is created where there are no barriers
to performance, their true value to the organization can be fully realized.
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Humans have fundamental needs for safety and security, affiliation and acceptance,
involvement as well as self-actualization. The extent to which these and other human
needs are fulfilled lead to higher levels of commitment, initiative and performance.
Organizations, who include an emphasis on fulfilling the needs of their employees to
some extent, will enjoy a more productive and stable workforce.
This assessment is written with full realization of the realities of business, and not an
unrealistic utopian view of an idealized work environment. The factors emphasized and
measured in this assessment are the important levers to optimizing employee workplace
performance, not just creating an environment where everyone feels better.
Rather than only identifying potential problem areas to be avoided, this assessment
focuses on areas where human behavior can be leveraged more positively to create
employees with higher levels of motivation and commitment.
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EMPLOYEE DOWN SIZING & EMPLOYEE
MOTIVATION ARE CLOSELY KNITTED
A manager’s job is to influence the people in the organization to accomplish the goals
and objectives with optimal efficiency and effectiveness. One of the most critical and
vexing concerns of management and supervisory personnel in any organization
understands of motivation and its role in performance. Motivation is the desire within an
individual that stimulates him or her to action. Higher the motivation, higher the moral
of productive work force.
For motivation, we have to attempt to identify the factors that influence behavior,
particularly the ways in which people respond to the action of those around them and to
other stimuli in their environment. Today, we no longer have a socially simple world.
The powerful forces are making it more complex all the times. People are products of
experiences they have never relinquished. Personal history will always make its claim
even though it operates silently and usually beyond the individual’s awareness.
One of the earliest approaches to motivation was Frederick Taylor Theory that the
employer essentially bought or exchanged the purchasing power of his wage dollars for
the worker’s time, interest, effort and contribution. This was the first widely accepted
motivation theory. At that time, it seemed to accurately describe workers responses to
existing environments. As time passes, it become clear that monitory rewards, including
the plethora of incentive wage and bonus plans, did not by themselves buy interest,
commitment and motivation. In post World War II ear, new motivation theories evolved
by behavioral sciences in response to the changing environment of time. Especially
noteworthy were the conceptual contributions of Douglas Mc Gregor, Abraham Maslow,
Herzbeg, David Mc clelland, Johan Morse and Jay Lorsch.
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these results. He called the satisfiers motivators and the dissatisfied hygiene factors,
using the term “hygiene” in the sense that they are considered maintenance factors that
are necessary to avoid dissatisfaction but that by themselves do not provide satisfaction.
Herzberg reasoned that because the factors causing satisfaction are different from those
causing dissatisfaction, the two feelings cannot simply be treated as opposites of one
another.
Therefore, managers who seek to eliminate factors that create job dissatisfaction can
bring about peace but not necessary motivation.
When hygiene factors are adequate, people will not be dissatisfied, but neither will they
be satisfied.
To the question “HOW do you motivate employees? “ Hertzberg has but one answer “the
only way to motive the capable employees is to give him challenging work for which he
can assume responsibility” (and thus drive at least partial satisfaction of his higher need).
Hertzberg’s concept can be viewed as special application of Maslow in a highly complex
industrialized society, in organization having tasks and people more appropriate to Mc
Gregor’s Theory ‘Y’. In spite of limitations, Hertzberg’s contribution to study of
motivation cannot be ignored. Hertzberg’s theory is widely real and his recommendations
followed by many managers.
34
EMPLOYEE DOWN-SIZING & EMPLOYEE
ENGAGEMENT
Employees Engagement
In today’s technologically advanced World, employees are aware of what services should
they deliver for a particular return from their employer. On the other side employer has
no choice but to satisfy his employees by identifying and fulfilling his wants, the
employer has to use the motivation theories as these provide a good idea of how and in
what way they will get motivated and satisfied. The above logic applies to every industry
whether it is politics, economics, technology or society. For instance, in a society the
same person who is an employee plays a role of a member of the family. His duties are to
control his children so that they do not get into a bad company and they should
concentrate on their studies. Now the same question comes How to motivate them to
study? Here the employee acts as an employer and the children act as his employees.
Employee engagement goes beyond the employees’ intent to leave. It includes the
employees’ commitment to the organization and motivation to contribute to the
organization’s success. By creating a workforce that is passionately involved with the
company, the organization can create a sustainable competitive advantage for itself. This
article throws light on the issues to be addressed by the organizations for creating an
engaged workforce.
35
The evidence of a significant relationship between employee engagement and financial
performance is undeniable.
-Towers Perris
An engaged employee is a person who is fully involved in and is enthusiastic about, his
or her work. Such employees are attracted to, and inspired, committed and fascinated by
their work. In a recent research by Hewitt Associates, it was found that engaged
employees are not only intellectually committed to the organization but are also
emotionally attached to it, as is measured by three primary behaviors: Say, stay and
strive.
The age old business dictum goes that “satisfied employees create satisfied customers”
by constantly striving for the best, contributing to the bottom line of the company success
by their motivation and enhanced performance. It is believed that an engaged employee
always acts positively in the interest of the company and takes unconcealed pride in the
success and prosperity of his employer. The engaged employees and the organizations go
that extra mile for each other, thereby realizing the benefits that flow through an
investment in such a relationship.
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Does Engagement Really Make a Difference?
According to the former GE Chairman and CEO, Jack Welch, a company’s health is
determined through it’s energized workforce who not only realize the mission of the
organization and have an understanding of how to achieve it, help the organization win in
the long run. Engaged employees care about the future of the company and are willing to
study entitled, The War for talent, reported that a shortage of skilled employees was an
emerging trend and it was more so due to the fact that the organizations fail in their
attempts to create a workforce that is not only cognitively vigilant but also emotionally
connected to the organization.
Research has proven that wholly engaged employees tend to be more self-motivated,
reliable, and have higher levels of organizational loyalty. They are capable of delivering
sustained affecting the key results areas such as employee turnover, sales, innovation and
customer satisfaction, engaged employees in customer facing roles are more likely to
treat customer is ways that positively influence customer satisfaction and are more than
twice as likely to be company advocates. They share information with colleagues and
pass on ideas that speak up for the organization. Engaged employees are much more
likely to feel secure and stable in their position and are in fact the ambassadors for the
company, singing its praises to everyone, and taking the best foot forward to deliver and
over-deliver for customers and the colleagues alike.
37
performance and many organizations have found it to be a definitive measure of the
engagement level of their employees. Standard Chartered, for example, introduced
annual survey to measure improvement in the engagement of teams. The results are used
to develop action plan and continually monitor the follow-through of the teams. This
focus has seen a continuous rise in both the number of engaged teams and extent to
which the employees are engaged at Standard Chartered.
Many organization use employee satisfaction survey to identify the root causes of job
issues and create solutions for improvements with due consideration given to the
viewpoints of employees. Certain employee opinion surveys are also in practice that
offers accurate identification of employee behaviors, feelings, and thoughts for improved
organizational development. The other ways used to measure the employee engagement
levels is through tracking changes in the attrition rate and growth in productivity and
business. The data collected from these surveys can furnish information that can help the
management in the following ways:
• Identifying cost-saving opportunities
• Improving productivity
• Reducing turnover
• Curbing absenteeism
• Strengthening supervisor
• Evaluating customer – service issues
• Assessing training needs
• Streamlining communication
• Benchmarking the organization’s progress in relation to the industry
• Gauging employees understanding of and agreement with the company mission.
The surveys must also be integrated with the culture survey s and since the culture varies
within the organization, the companies must aim at measuring the engagement at work
group level. The organization also needs to keep in mind that it is not just about the
surveys; whatever follows is of great importance. After evaluating the results from these
surveys it is imperative for the management to work out the problem areas and take an
appropriate action. Many a times it so happens that the good news is communicated
expeditiously to all concerned but the key challenges tend to be avoided. This makes the
38
employees feeling unheard, thus leading to resentment and this poses a significant threat
to engagement levels within the organization.
The survey findings must aim at behavioral changes required to improve desired
outcomes at the organizational, team and individual levels. While HR plays an
instrumental role in the survey process, the extent to which the change program can be
successful is the responsibility of an organization’s leaders.
39
DIAGNOSTIC TOOL
1. Employee perceptions of job importance. This study has found that “…an employees
attitude toward the job [‘s importance] and the company had the greatest impact on
loyalty and customer service then all other employee factors combined.”
2. Employee clarity of job expectations. “If expectations are not clear and basic materials
and equipment not provided, negative emotions such as boredom or resentment may
result, and the employee may then become focused on surviving more than thinking
about how he can help the organization succeed.”
40
3. Career advancement/improvement opportunities. “Plant supervisors and managers
indicated that many plant improvements were being made outside the suggestion
system, where employees initiated changes in order to reap the bonuses generated by
the subsequent cost savings.”
4. Regular feedback and dialogue with superiors. “Feedback is the key to giving
employees a sense of where they’re going, but many organizations are remarkably
bad at giving it.”
6. Perceptions of the ethos and values of the organization. “‘Inspiration and values’ is
the most important of the six drivers in our Engaged Performance model.
Inspirational leadership is the ultimate perk. In its absence, [it] is unlikely to engage
employees.”
Employee engagement can occur when the organizations work on removing the
blockades to work which necessitates having a clear understanding of the levers required
to improve the key employee attitudes of satisfaction and engagement so as to create an
optimally functioning system.
There can be more than one way to improve the level of employee engagement in a
company. In fact, there are many different things that companies not only can do, but
also need to do. Most organization have a range of practices to improve the engagement
level of their employees. Best practice recommends starting right at the selection or
recruitment stage by having the right employees working in the right jobs and having a
strong induction and orientation program in place. Besides giving the employees clarity
on the vision and goals of the organization, it is essential for organizations to put into
place regular technical / soft – skill training and development programs and the
41
certification programs to drive people towards excellent performance as it so happens at
HCL info systems.
Once the employees become a part of the system, efforts have to be put into place to
engage employees to their highest level. This includes giving emphasis on certain areas
which go a long way in affecting the level of engagement of the employees and includes:
The initiative must be taken by the leaders at the top as it happens at the Sum
Microsystems where the CEO interacts with Sun employees through WSUN, a forum
on Sun’s intranet. He uses this to sustain an active, an ongoing dialog on the
corporate goals and direction.
Besides using the regular employee opinion and satisfaction surveys, an update on the
various organizational issues can be tracked by the organizations through the usage of
in-house magazines and online communications, including discussion boards by
company personnel including the senior management.
42
programs, stock ownership and profit sharing plans and recognition programs. People
want to know if their input matters and that they are contributing to the organization’s
success in a meaningful way, for which there must be performance based reward
scheme in place.
In fact, organizations must have flexible benefit schemes, as Hewitt Associates does, to
attract and retain their talent, which provides employees with the freedom to choose how
they receive their benefits tailoring a package to suit their lifestyle.
• Developing the right culture: The organizations must have clear and humane HR
policies and take initiatives to maintain the quality of work life of its employees.
Opportunities must be provided for social interaction such as family gathering
barbeques, and trips to the cinema or picnics. At HCL Info systems, a balance
between personal / professional lives of employees is maintained through recreational
activities like festivities @ HCL, get-togethers @HCL, sport@HCL. The company
also encourages an open and transparent culture to empower its people and develop
entrepreneurs.
• Leadership: Effective leaders who help in setting the tone for creating an engaged
workforce can really differentiate an organization from its competitors. Everyone in
the organization with leadership responsibility must have the emotional intelligence
and leadership skills needed to switch and employees on they must act as role
models, demonstrate and set high standards to which others can aspire. Good
practices include effective performance management and a fair evaluation of
performance. The leaders must act as coaches and mentors and must give an honest
feedback and guidance to their employees.
43
Ideas should be sought from all employees and the frontline employees should be
allowed to exercise a degree of discretion during service delivery E.g., allowing
employees to spend up to a certain amount to correct a customer’s problem or handle
a complaint. The success of Microsoft, for example, stems in part from Bill gates’
belief that smart people anywhere in the company should have the4 power to drive an
initiative. Initiatives such as Six Sigma are dependent, in part on the active
participation of employees on the shop floor.
For great managements, the path towards engaging employees and keeping them
engaged beings with asking them what they want and what is important in order to be
effective in their roles. Effective leaders don’t wait to get the resignation to know that
an employee is dissatisfied.
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RESEARCH OBJECTIVES
45
RESEARCH METHODOLOGY
A Research Methodology defines the purpose of the research, how it proceeds, how to
measure progress and what constitute success with respect to the objectives determined
for carrying out the research study. The appropriate research design formulated is
detailed below.
Exploratory research: this kind of research has the primary objective of development of
insights into the problem. It studies the main area where the problem lies and also tries to
evaluate some appropriate courses of action.
The research methodology for the present study has been adopted to reflect these realties
and help reach the logical conclusion in an objective and scientific manner. The present
study contemplated an exploratory research
Research Design
The research design is the basic framework, which provides guidelines for the rest of the
research process. The present research can be said to be exploratory. The research design
determines the direction of the study throughout and the procedures to be followed. It
determines the data collection method, sampling method, the fieldwork and so on.
Nature of Data
Primary Data: Primary data is basically fresh data collected directly from the target
respondents; it could be collected through Questionnaire Surveys, Interviews, Focus
Group Discussions Etc.
Secondary Data: Secondary data that is already available and published .it could be
internal and external source of data. Internal source: which originates from the specific
field or area where research is carried out e.g. publish broachers, official reports etc.
External source: This originates outside the field of study like books, periodicals,
journals, newspapers and the Internet.
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Data Collection
Primary data: Primary data was selected from the sample by a self-administrated
questionnaire in presence of the interviewer.
Sample Size:
The survey is conducted among 100 respondents
Sample Area: NCR Delhi
Sample unit: Employees of many BIG companies in Nehru Place (Delhi), these people
were requested to fill in the questionnaires during the lunch intervals at the Nehru Place
premises
SECONDARY DATA: Secondary data has been used which is collected through
⇒ Articles,
⇒ Reports,
⇒ Journals,
⇒ Magazines,
⇒ Newspapers and
⇒ Internet
Sampling Technique
Random sampling technique has been employed to extract the fruitful results. This
includes the overall design, the sampling procedure, the data collection methods, the field
methods and the analysis procedures
47
Analytical Tools:
Simple statistical tools have been used in the present study to analyze and interpret the
data collected from the field. The study has used percentiles method and the data are
presented in the form of tables and diagrams.
48
DATA ANALYSIS
49
25%
20%
benefits
15%
commute
pay
reallocation/move
5%
better job opportunity
20%
benefits
15%
commute
pay
reallocation/move
5%
better job opportunity
benefits 5%
not challenging
commute 5%
conflict with 5% personal reasons
manager
job expectation 10% working conditions
pay 15%
reallocation/move 3%
better job 20%
opportunity
conflict with other 5%
employees
family reasons 5%
not challenging 5%
personal reasons 2%
working conditions 22%
51
2. How Long Have You Been Thinking About Leaving The Company?
50%
45%
40%
35%
30%
15%
more than 5 months
10%
5%
0%
52
3. How Satisfied Are You With The Company You Work For?
25%
20%
extremely dissatisfied
15%
very satisfied
5% extremely satisfied
0%
53
4. How Was Your Working Experience?
30%
25%
20%
5%
much more negative than
positive
0%
54
5. If Your Experiences Are More Negative Than Positive, What Factors Are
Responsible? Select All That Apply.
55
25%
20%
my performance evaluation
15% and the outcome
my role, responsibility and/or
title
job training
10%
my boss
my co-workers
5% my compensation
change in compensation
package
company savings plan
0%
medical benefits and
my performance 25% insurance
evaluation and the
relocation
outcome
my role, 10%
responsibility vacation time
and/or title
job training 5% other
my boss 10%
my co-workers 10%
my compensation 2%
change in 8%
compensation
package
company savings 5%
plan
medical benefits 10%
and insurance
relocation 5%
vacation time 5%
56
6. How Flexible Is The Company With Respect To Your Family Responsibilities?
25%
20%
15%
very inflexible
somewhat inflexible
10% neither
somewhat flexible
very flexible
5%
0%
57
7. Do You Have A Clear Path For Career Advancement?
30%
25%
20%
strongly disagree
strongly agree
5%
0%
58
8. How Satisfied Are You With Your Position At This Company?
35%
30%
25%
20%
very satisfied
15%
somewhat dissatisfied
somewhat satisfied
5%
very dissatisfied
0%
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9. What Part Of Pay Play In Your Decision To Leave The Organization?
1. 20-40% 2. 40-60%
3. 60-80% 4. 80-100%
30%
25%
20%
20-40%
15%
40-60%
60-80%
10%
80-100%
5%
0%
20-40% 20%
40-60% 25%
60-80% 30%
80-100% 25%
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10. Does Working Conditions Affect You To Leave Your Job?
1. Yes 2. No
70%
60%
50%
40%
yes
no
30%
20%
10%
0%
yes 65%
no 35%
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11. How Would You Rate The Morale In Your Company?
35%
30%
25%
20%
low
very low
15%
high
5%
0%
low 35%
very low 20%
high 25%
very high 20%
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12. Could This Company Have Done Anything To Encourage You To Stay?
1. Yes 2. No
60%
50%
40%
yes
30%
no
20%
10%
0%
yes 40%
no 60%
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CONCLUSION & IMPLICATIONS
1. Better job opportunities in outer market & pay are the main reasons for increasing
attrition rate.
2. The employees do not feel valued by their employer.
3. The working environment in the company also make them to leave their job.
4. Performance Appraisals are not given at regular intervals so that the Employee
feel motivated for its work.
5. The work schedule is very much inflexible & Stressful.
However an effective retention policy could be followed to make the employees stay in
the company starting form recruitment and selection of employees, providing an effective
pay packages and compensation, outlining an efficient career development path for
employees and most importantly catering to their emotional, mental and family needs.
Also practices should be followed to bring the ex-employees back in the company.
64
RECOMMENDATIONS
65
BIBLIOGRAPHY
2. Tyson, S., Lawrence, P., Poirson P, Manzolini, L., and Seferi, S.V., Human
Resource Management – Strategies, Issues and Cases, Kogan Page, London,
1999.
5. Brockner, J., Grover, S., Reed, T., & Dewitt, R.L. (1992). Layoffs, job insecurity,
and survivors' work effort: evidence of an inverted-U relationship. The Academy of
Management Journal, 35, 413-425.
6. Brockner, J., Grover, S., Reed, T., Dewitt, R.L., & O'Malley, M. (1987).
Survivors' reactions to layoffs: We get by with a little help for our friends.
Administrative Science Quarterly, 32, pp. 526-541.
7. Fisher, A.B. (1988, May 23). The downside of downsizing. Industry Week, pp.
42-51.
66
APPENDIX
QUESTIONNAIRE
NAME: -
JOB TITLE: -
ORGANIZATION: -
CELL NO. : -
AGE GROUP: -
2. How Long Have You Been Thinking About Leaving The Company?
3. How Satisfied Are You With The Company You Work For?
67
5. Extremely Satisfied
5. If Your Experiences Are More Negative Than Positive, What Factors Are
Responsible? Select All That Apply.
68
7. Do You Have A Clear Path For Career Advancement?
1. 20-40% 2. 40-60%
3. 60-80% 4. 80-100%
1. Yes 2. No
69
Practices To Reduce Employee Down-Sizing
Many companies face the challenge of employee turnover, and incur heavy losses. The
employers provide several attractive packages in order to retain the employee. Reasons for
employee turnover constitute several controllable and non-controllable factors.
Good economic time’s means lowered unemployment, increased productivity, and better
prospects for growth in all sectors. However, economic prosperity also means increased job-
hopping among the job seekers. Opportunities abound everywhere with increasing
competition for talent among companies. Frequent job changes are no longer a stigma, but
they are becoming norm. The issue of employee turnover is so pronounced in today’s world,
that even in Japan, where life-time employment and high employee loyalty are the norms,
workers are becoming increasingly mobile. Even survival will become questionable, if the
company witnesses higher turnover among the top performer. With the increasing mobility
among the workers, “employee retention” poses a distinct challenge to any company.
Companies that are inflexible, or whose organizational culture is characterized by
domination and autocracy are likely to have dissatisfied employees no matter how good the
incentives to stay may be Or, at the very least, the tenure of their employees is likely to be
highly sensitive to changes in specific (usually monetary) incentives: small changes in
compensation may lead to numerous departures. There are however other aspects of the work
environment or particular jobs that can act as strong ‘de-motivators’ that can cause people to
leave their employment. These include
Lack of control over one’s work
• Feeling bored or unchallenged by repetitive tasks
• Lack of job security
• Lack of learning opportunities
• More generous compensation or benefits package offered elsewhere
• Concerns about the future of the firm
It’s Not Just the Pay …
While remuneration and other types of benefits continue to be an important factor in the
retention equation, it is important to note that the current HR literature treats them as only
one potential area for retention, and not always in and of themselves, sufficient to ensure
strong employee commitment. Over the past 10 or 15 years, the business literature dealing
with employee participation, workplace wellness, work-life balance and other topics has
70
mushroomed, indicating a strong interest in and recognition of how other aspects of working
life influence people’s decisions to stay with or leave a company.
Why do people choose to leave or stay?
Setting aside list of retention policies and programs, it is clear that there is broad agreement
in the HR literature about the general features of any potential HR program that contributes
to good retention. Most of these are directly related to creating a satisfactory work
environment for employees and thus, in turn, to good retention. These features
• A stimulating work environment that makes effective use of people’s skills and
knowledge, allows them a degree of autonomy on the job, provides an avenue for
them to contribute ideas, and allows them to see how their own contribution
influence the company’s well-being.
• Opportunities for learning and skills development and consequent advancements
in job responsibilities.
• Effective communications, including channels for open, two-way
communication, employee participation in decisions that affect them, an
understanding of what is happening in the organization and an understanding of the
employer’s main business concerns.
• Good compensation and adequate, flexible benefit plans.
• Recognition on the part of the employer that employees need to strike a good
balance between their lives at work and outside of work.
Respect and support from peers and supervisors.
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1. What are the reasons for employee downsizing?
Obsolescence of skills
Shift in organizational requirements;
Outsourcing;
Modernizing,
Redesigning the job
Restructuring or reducing the activities of industrial units
Yes No
seniority performance
Yes No
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8. In what circumstances the employee morale is most hit during downsizing?
Effective communication
Psychological support
Counseling
Alternative career options
Yes No
1. Yes 2. No
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