TABLE OF CONTENTS

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

What Is Employee Down Sizing

Employee downsizing is a nightmare feared by most of the employees working in the

corporate world. A downsizing strategy reduces the scale (size) and scope of a business
to improve its financial performance

In management parlance, the term downsizing refers to pruning (including layoffs and
retrenchments) of the size of workforce for a variety of reasons:

⇒ Obsolescence of skills consequent upon up gradation of technology,

⇒ Shift in the organizational requirements;
⇒ Outsourcing;
⇒ Modernizing,
⇒ Restructuring or even reducing the activities of industrial units; and
⇒ Redesigning the job in an organization.
Employees, nowadays, will have to reconcile with the ugly realities of the corporate
world and they may have to be prepared for alternative employment as the axe may fall
on anyone at any time.

Due to the globalization of business, organizations are able to develop a number of

approaches by which to employ human resources, technology, and capital to implement
innovative projects in different parts of the world. They are able to derive maximum
advantage due to these possibilities. While the larger goals appear justifiable and in the
interest of most stakeholders, they lead to frequent changes at the organizational,
functional, and individual levels.

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.

The fundamental reason to resize the organization is to improve organizational

performance and to reduce costs of operation. While these changes are expected to fetch
significant gains for the companies in the long run, an analysis of corporate experiences
of downsizing shows that such measures are not always implemented with careful
consideration of all the implications. Downsizing also brings, in its wake, a number of
associated hidden costs, which companies tend to overlook in pursuit of short-term gains.
The flip side of downsizing is that the organizations lose expertise, skills, knowledge,
experience and valuable relationships, which walk out of the door every time somebody
leaves. A number of alternative approaches can be implemented to achieve the over-
riding goal of enhancing business performance. At the same time, it is true that
downsizing in many cases is an inevitable option. However, downsizing should be
considered not as the first but the last option. If the axe has to fall, it should be preceded
by a careful consideration of the consequences of such a drastic action.

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 Need to reduce
Costs

Alternatives Voluntary Involuntary

To Layoffs Quits Separations

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.

According to Alexander H. Leighton, "morale is the capacity of a group of people to pull

together persistently and consistently in pursuit of a common purpose".

Morale in the workplace

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.

Factors influencing morale within the workplace include:

• 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.

Over two-thirds (70%) of HR managers state that employee retention is a primary

business concern. HR managers currently find employee retention a business challenge,
long-term demographic changes, such as the retiring Baby Boomer population have the
potential to aggravate this issue. All companies, regardless of size, are struggling with
how to keep employees from leaving for more money or better opportunities. Studies
consistently show that even though employees may say they are leaving for more money,
when those same employees are asked several months later why they really left, the
money factor is about 5th or 6th on the list. The first few reasons include lack of
recognition, disagreement with the culture or direction of the company, poor treatment by
their boss, lack of excitement about their growth prospects, and poor relationships with
co-workers. ?

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:

• Ensure you offer competitive compensation.

• Ensure you offer basic health care benefits at reasonable rates. Consider adding
lifestyle benefits that are cost effective (read easy on the cash flow).

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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

Conceptual Approach To Employee Downsizing

“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.

Kalyan Chakravarti in the article, "Downsizing and Outsourcing: An Indian

Perspective", explains the economic situation of India since Independence (post-1947)
and in the aftermath of the economic liberalization (post-1991). Against this backdrop,
the author analyses the performance of the Indian Public Sector Undertakings (PSUs). He
outlines the causes that resulted in surplus manpower among PSUs. However, after India
opened up its economy, most PSUs were compelled to streamline their operations to
increase their efficiency. One of the major steps taken to achieve this goal was to shed
the excess staff on their payrolls through the "golden handshake," by floating Voluntary
Retirement Schemes (VRS) and Compulsory Retirement Scheme (CRS). The other major
step was to outsource non-core activities and focus on their core competencies. The

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article provides a snapshot of the Indian experience of downsizing and also discusses the
social implications of these drastic measures.

Barbara L Davison explains, in "The Difference Between Rightsizing and

Wrongsizing", the differences among the terms used in conjunction with downsizing,
i.e., rightsizing, resizing, upsizing, sidesizing, and wrongsizing. The author clarifies that
rightsizing need not imply reduction of personnel. In certain cases, it can also mean
increase in the numbers. The article explains the need for tying rightsizing efforts with
the overall strategy, identifying critical growth areas as well as those needing
consolidation, analyzing the effects of rightsizing on all functional areas, evaluating the
financial implications, and ensuring that each department and employee adds measurable
value. The author illustrates how to carry out a rightsizing exercise with the help of a
process example, which describes the most important steps. In this connection, it cites the
examples of a few companies, such as Ernst & Young, Cisco, Agilent Technologies, and
Schwab, which have implemented rightsizing. The article also illustrates a few
alternatives to downsizing and highlights new workforce concepts, i.e., "Just-in-time"
workforce and the "Portfolio" workforce, to cope with fluctuations in business cycles.

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.

Implementation Of Employee Down Sizing

Sumati Reddy of the ICFAI University, Hyderabad, India outlines ways in which
employers can implement a well-considered downsizing program. If downsizing is
inevitable, organizations must pay due attention to the rationale for downsizing,

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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.

Ann E Feyerherm of Graziado School of Business and Management, Pepperdine

University, CA, USA, also provides guidelines based on the first-hand experience of a
manager involved in a downsizing effort in a company in South California. Although, her
team of management consultants explored several alternatives to avoid downsizing, they
had to face the inevitable reality of the downsizing spectre. Since the axe had to fall, the
best approach adopted was to downsize with dignity and to ensure that those who were
let to go were equipped with new skills to enhance their career prospects. Also, the
author describes specific measures undertaken to achieve these twin goals and
enumerates the lessons learnt through these difficult times. She concludes that during
these difficult times, she had no other principle to live by other than the one she had
within.

Robert M Tomasko, provides guidelines to be adopted while implementing a downsizing

strategy. Many organizations are beginning to realize the adverse effects of employee
downsizing and are looking for ways to do so in a more humane manner. Lessons can be

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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.

Coping With Downsizing

Neela Radhika of the ICFAI University, Hyderabad, India, describes a new phenomenon
observed in the aftermath of downsizing - Pink Slip Parties. It describes how Pink Slip
Parties came into practice and the reason for using the term `Pink Slip'. The article
elucidates the special features of these parties with respect to attendees, the kind of music
played during these parties, the colour of wristbands or badges, message boards, and
activities. Pink Slip Parties offer a number of benefits to both job seekers, who had lost
jobs on account of downsizing, as well as the recruiters. The effectiveness of these
parties are analysed vis-à-vis the nature of support gained by laid-off workers in
restarting their careers. The article also points to new developments in this area, such as
Layoff Lounges.

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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.

Why Is this Important?

Downsizing has become a common occurrence in today's business world. Because of
this, and many other factors, many employers and employees no longer believe in the
concept of lifetime employment. As a result, employers often underestimate the need to
provide support to employees, both those who are being released and the 'survivors.'
Many employers feel that the only support they can provide is expensive outplacement
services.
The decision to downsize is made for strategic and financial reasons. The expectation is
that the expense reduction will lead to a positive impact on the bottom line and will
ultimately be reflected in improved profitability and productivity. However, many
organizations neglect to factor in the psychological impact of downsizing on those who
remain. In fact, if downsizing is handled improperly, the problems it was designed to
correct may be intensified due to the impact on the loyalty and attitudes of the survivors.

Effects on Work Effort

In an attempt to determine the impact of downsizing, the effects of job insecurity and
economic need to work on employee attitudes was examined by Brockner and his
colleagues in 1992. In this study, Brockner decided to use work effort as a measure of job
attitudes. The study found that high job insecurity coupled with high need to work,
resulted in increased work effort following a layoff. High job insecurity, coupled with
low need to work resulted in no change in the level of work effort. This seems to indicate
that when there are high levels of job insecurity, as would be expected during
downsizing, employees with a high need to work will increase their work effort, while
those with a low need to work will have no change in work effort.

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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.

The Justice Theory

Theories of organizational justice propose that people attend to the processes used to
determine outcomes as well as to the end result in determining "fairness." For example,
as Brockner's study reported, the remaining employees considered the way in which their
co-workers were treated during the downsizing process as well as the outcome (i.e.,
losing their jobs). From this perspective, layoff survivors can be expected to exhibit the
most negative reactions when they identify with the layoff victims, and feel the victims
have not been well compensated.

"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.

The post-layoff setting provides organizations with a rather unique...situation in which to

express their commitment to employees; that is, if organizations show commitment to
their dismissed workers (through caretaking activities of providing severance pay and
outplacement counseling,)—even as they are in the process of becoming uncommitted to

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them by laying them off--the more committed to the organization are survivors apt to be"
(Brockner et al., 1987).

Brockner's study indicates organizations can proactively affect surviving employees'

attitudes during periods of downsizing. The next section describes some steps that can be
taken to minimize the negative effects of downsizing.

Strategies for Maintaining Positive Employee Attitudes

According to survey results from a study on employee loyalty conducted by Industry
Week, there are eight factors affecting employee loyalty. They are, in descending order:
equity, security, good management, integrity, empowerment, good communications,
benefits and personal support (McKenna, 1991).

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.

Make Valuable Employees Part of a Progressive Organization

To stay or not to stay? That is the question some remaining employees ask in the
aftermath of their company's downsizing process—particularly those who have other
employment opportunities outside the company. When these employees see some top
managers leave voluntarily, they may question the long-term prospects for the company
and consider an immediate job change. This is something to watch out for, as the people
who leave under these circumstances are generally those with valuable skills and
training.

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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

Why Morale Matters

Of course employees will feel unsettled during downsizing. However, just accepting loss
of morale as an inevitable consequence may undermine the very productivity gains
intended by the change. So employers should seek to minimize the unwanted impact of
downsizing. They also need to recognize the extent to which the manner of managing
such change affects how employees feel about the change and their future relationship
with the company.

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.

Monitoring And Evaluation

Evaluating the success of attempts to influence morale during downsizing is not easy.
There is a natural tendency not to want to ask people how they are feeling when you
expect negative responses. Also we know relatively little about cause and effect in the
area of morale. Ownership of the issue may be difficult to establish — senior
management itself often being in a state of flux during periods of downsizing.
Many managers believe — or like to believe — that the general level of staff morale is
outside their control. There are indeed many limitations to controlling morale including
the variation in individual response, the impact on individuals of what they see
happening to other employees, and the variation in response over time. Separating the
impact of different interventions can be difficult, and downsizing is seldom the only
organizational change going on. In spite of the difficulties of evaluating the impact of
specific responses on morale, organizations are using a range of measures to monitor
some of the outcomes of morale. For example, staff turnover, absence from work and
performance indicators (egg customer service) is often monitored numerically.

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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.

Measuring Organizational Climate

At its most basic level, organizational climate refers to employee perceptions of their
work environment. Generally, these perceptions are descriptively based rather than value
based. For example, the phrase, "I have more work to do than I can possibly finish" is a
description of a person’s workload, while the phrase "I like my job" is a positive
evaluation of one’s job. Thus, organizational climate is more than simply a summary of
employee likes and dislikes.

The assessment of organizational climate typically occurs via an off-the-shelf or

customized survey containing questions about he work environment. Although
administration procedures used when conducting a survey can vary, ideally employees
are asked to report to a designated work site at a scheduled time to complete the survey,
and employee participation is voluntary.

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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,

26
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:

• Employee involvement- By administering an organizational survey, employees are

given an opportunity to be involved in the company at a different level than is
typically defined in their job descriptions. Research has shown that employees who
are more involved in the company also may be more satisfied with their job, miss
fewer days of work, stay with a company longer, and perform better on the job.

• 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.

• Communication forum- In many companies it can be very difficult to communicate

with the majority of employees. Recent trends such as organizational restructuring
and/or merging of companies has resulted in "flat" organizational responsibility
charts, which increases the number of employees for which each manager is
accountable. As a result, some managers only have limited amounts of time to talk to
employees about day-to-day activities. Conversations regarding an employee’s work
environment can fall to the wayside, and in some instances, never take place.

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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.

• Industry comparisons- Organizations often look to other companies when

determining organizational policies and procedures. It is quite common for
companies to "explore the market" or conduct benchmark studies when considering
issues such as new product development, salary or employee benefit policies,
marketing strategies, etc. A common question is "How do we compare to others?"
One advantage of conducting an organizational survey is that it can provide an
opportunity to compare the company’s work environment to that of other companies.
Many surveys offer a national normative database that can be used to facilitate
comparisons across a variety of conditions and industries.

• Proactive management- Administering organizational climate surveys allows

managers to be much more proactive in managing their employees and work
environments. When used on a scheduled basis, organizational surveys can help
pinpoint problem areas within the work environment before they grow into a crisis
needing immediate attention. Problems that require a reactive posture interrupt the
normal workflow, and typically cause delays in providing products or services to
customers.

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 TIPS FOR CREATING AN EFFECTIVE ORGANIZATIONAL
CLIMATE FOR MINIMUM EMPLOYEE DOWN SIZING

• Listen to the entire organization with ease.

• Collect perceptions in real-time.
• Reduce organizational bias.
• Validate the questions and thus improve the results.
• Facilitate candid and open feedback from employees who respond anonymously.
• Identifying areas of inefficiency or performance gaps.
• Identify root causes for poor productivity (such as poor communication or poor
process efficiency).
• Reduce transition time during changes in the organization (such as reorganization,
relocation, a change in ownership, new products/services, or rapid growth).
• Inform leaders with the information needed to make the best decisions.
• Give employees an organized voice to assist leaders in taking actions.
• Gain a fresh perspective of the organization.
• Facilitate, track and execute informed action steps in one system.
• Increase productivity.

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 ORGANIZATIONAL VITAL SIGNS-A LEADING
INDICATOR OF SATISFACTION MEASURING OF
EMPLOYEES

Organizational Vital Signs:

• 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 Organizational Climate Assessment is a powerful instrument, especially when

provided organization-wide with specific departmental demographic separation and
analysis. Each category has been designed to assess one of the key categories, which
affect employee performance. This assessment should be administered anonymously
company wide, broken out by departments of 6 or more people to protect the identities of
respondents. Every precaution should be taken to insure confidentiality in order that
respondents will feel comfortable sharing their true opinions and perspectives

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.

This assessment is designed with the following assumptions in mind:

Fundamental care of the employee as an asset

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.

Respect For The Dignity Of The Employee And The Sensitivities Of

Human Beings

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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.

Full Understanding Of The Realities Of Business

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.

Embracing Optimization And Improvement

An irrefutable trend in business today, continuous improvement and increasing levels of

efficiency are a way of life, and these factors are given appropriate emphasis in this
assessment because they represent an ever present dynamic with which every employee
must deal.

Keys To Motivation And Commitment

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.

Motivation – Hygine Theory

The motivation – TWO FACTOR THEORY – proposed by Herzberg postulates that:
The factors causing job satisfaction (and presumably motivation) were different from that
causing job dissatisfaction. He developed the motivation-Hygiene theory to explain

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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.

Motivators Hygiene Factors

• Achievement Company Policy & Administration.
• Recognition, Leadership.
• International relation, welfare & salary.
• Challenge, growth, Working condition status & security.
• Responsibility and accomplishment.
• Motivation through job rotation and security.
• Satisfaction by communication.
• Appraisal & feedback.

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.

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 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.

What Do Workers Want?

"Supervisors generally ranked good wages, job security, promotion and good, working
conditions as the things workers want from their jobs. While workers felt they want most
is full appreciation for work done, felling "in" on things, and sympathetic understandings
of personal problems -all incentives that seem to be related to affiliation and recognition
motives. It’s not only good money but there is lot of other needs, which an employee
wants to fulfill for being satisfied and committed towards the job. These needs vary from
one employee to another, workers needs are totally different from the managers and are
rated as least important by Mana

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.

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The evidence of a significant relationship between employee engagement and financial
performance is undeniable.

-Towers Perris

Talking about the engagement and commitment of an employee to an organization, most

companies are of the opinion that they do have a few, but they still want more. Why? It is
merely because these companies have come to the realization that their organization’s
long-term success relies on employee performance, which is directly impacted by the
level of employee engagement and commitment to an organization. Well, some
organizations think that simply making people happy and paying them handsome pay
packets is the solution. But it is not so. These are things which an organization need to
consider to attract and retain the most qualified individuals, however, when it comes to
engaging employees in their work, there are definitely some more issues that need to be
worked out. Engagement requires engaging not only the employees’ minds but their
hearts as well and this is something that the organizations can neither force not buy in
order to succeed in the marketplace.

What is employee engagement?

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.

How to measure employee engagement?

To determine the level of employee engagement, the organizations should make use of a
comprehensive employee feedback and to improve levels of productivity and
commitment by identifying the root causes of workplace attitudes. They also help in
developing an understanding of the extent to which employees are passionate about their
work and emotionally committed to their company and to their co-workers.
There are several standardized tests, toolkits and instruments available which can help
determine the level of employee engagement in an organization. survey of the Gallup
Organization Identifies strong feelings of employee engagement in four key areas –
customer satisfaction / loyalty, profitability, productivity and employee turnover. The
questionnaire has been administered to a multitude of companies across the world.
Results from the survey show a strong correlation between high scores and superior job

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.

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 DIAGNOSTIC TOOL

The diagnostic tool

Current studies suggest that employee engagement will be influenced by:

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.”

5. Quality of working relationships with peers, superiors, and subordinates. “…if

employee’s relationship with their managers is fractured, then no amount of perks
will persuade the employees to perform at top levels. Employee engagement is a
direct reflection of how employees feel about their relationship with the boss.”

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.”

Approaches suggested for creating an engaged workforce

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:

• Communication: A proper communication system helps employees in finding out

what is going on within the company outside their immediate team. They also help to
create an environment of trust and openness within the organizations where they are
able to talk openly. Employees who feel they are listened to are able to express
dissatisfaction and work together to resolve their causes, without it affecting their
performance.

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.

The organizations must work towards implementing the communication forums to

provide regular feedback to all people, including team meetings and conferences. 3M
for example encourages employees to bring forward their questions or concerns
through such programs as let’s talk It Over, Between Us and various internal and
external help lines.

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.

• Reward Schemes: These form an important part of a company’s overall employee

engagement program. Studies have long shown that while money in itself is not a
motivating factor the absence of financial reward can be a significant demotivator.
Thus the role of reward schemes in boosting. Thus the roles of reward schemes in
boosting employee engagement are? To remove barriers to satisfaction in the
organization and provide a framework for rewarding everyone in the organization for
their performance. This may be achieved through right compensation and benefit

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.

The organizations must demonstrate a commitment to employees’ well –being by

providing opportunities for career advancement and be developing a safe, clean and
inspiring work environment for their all-round growth. The employees must be
provided with enough resources to solve their day-to-day problems or to do a job
well. Culture – building activities are great for generating a feeling of belongings.
Giving employees a feeling of belongingness is crucial in creating a thriving
organization that people feel committed to and others want to join.

• 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.

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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.

An organization can always gain a competitive advantage by creating an engaged

workforce. It therefore, becomes, imperative for the organizations to identify the
level of engagement in their organization, strive to eliminate the reasons behind the
disengaged workforce and implement strategies to make them fully engaged.
Employee engagement is something that is very difficult to accomplish but if efforts
are made on an ongoing basis, it can shrivel with relative ease.

44
 RESEARCH OBJECTIVES

The objective of the study is:-

1. To make a conceptual study of Employee Down-Sizing

2. To study as to what cause this Employee Down-Sizing
3. To study the impact of Employee Down-Sizing on the employee’s morale
4. To study as to how Employee Down-Sizing, Employee Retention and employee
commitment are inter related

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.

46
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

Sampling Procedure Actually Employed:

The process employed to select the sample was simple random sampling. Simple random
sampling refers to that sampling technique in which each and every unit of the population
has an equal and same opportunity of being on the sample. In simple random sampling,
which item gets selected is just a matter of chance.

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

1. What Is Your Primary Reason For Leaving The Company?

1. Benefits 7. Better Job Opportunity

2. Commute
3. Conflict with Manager
4. Job Expectation
5. Pay
6. Reallocation/Move
8. Conflict with Other Employees
9. Family Reasons
10 Not Challenging
11 Personal Reasons
12. Working Conditions

49
 25%

20%

benefits
15%
commute

conflict with manager

10% job expectation

pay

reallocation/move
5%
better job opportunity

conflict with other employees

0%
family reasons
benefits 5%
not challenging
commute 5%
conflict with 5% personal reasons
manager 50
job expectation 10% working conditions
pay 15%
reallocation/move 3%
 25%

20%

benefits
15%
commute

conflict with manager

10% job expectation

pay

reallocation/move
5%
better job opportunity

conflict with other employees

0%
family reasons

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?

1. One Month or Less 2. One To 5 Months

3. More Than 5 Months

50%

45%

40%

35%

30%

25% one month or less

20% one month to 5 month

15%
more than 5 months

10%

5%

0%

one month or 10%

less
one month to 5 40%
month
more than 5 50%
months

52
3. How Satisfied Are You With The Company You Work For?

1. Extremely Dissatisfied 2. Very Dissatisfied

3. Neither Satisfied nor Dissatisfied 4. Very Satisfied
5. Extremely Satisfied

25%

20%

extremely dissatisfied
15%

very dis satisfied

neither satisfied nor

10%
dissatisfied

very satisfied

5% extremely satisfied

0%

extremely dissatisfied 20%

very dis satisfied 25%
neither satisfied nor 25%
dissatisfied
very satisfied 15%
extremely satisfied 15%

53
4. How Was Your Working Experience?

1. Much More Positive than Negative

2. More Positive than Negative
3. More Negative than Positive
4. Much More Negative than Positive

30%

25%

20%

much more positive than

15% negative

more positive than negative

10%
more negative than positive

5%
much more negative than
positive
0%

much more positive 20%

than negative
more positive than 30%
negative
more negative than 30%
positive
much more negative 20%
than positive

54
5. If Your Experiences Are More Negative Than Positive, What Factors Are
Responsible? Select All That Apply.

1. My Performance Evaluation and the Outcome

2. My Role, Responsibility and/ or Title
3. Job Training
4. My Boss
5. My Co-Workers
6. My Compensation
7. Change in Compensation Package
8. Company Savings Plan
9. Medical Benefits and Insurance
10. Relocation
11. Vacation Time
12. Other

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?

1. Very Inflexible 2. Somewhat Inflexible

3. Neither 4. Somewhat Flexible
5. Very Flexible

25%

20%

15%
very inflexible

somewhat inflexible

10% neither

somewhat flexible

very flexible
5%

0%

very inflexible 25%

somewhat inflexible 25%
neither 10%
somewhat flexible 25%
very flexible 15%

57
7. Do You Have A Clear Path For Career Advancement?

1. Strongly Disagree 2. Somewhat Disagree

3. Neither Agree or Disagree 4. Somewhat Agree
5. Strongly Agree

30%

25%

20%

strongly disagree

15% somewhat disagree

neither agree or disagree

10% somewhat agree

strongly agree
5%

0%

strongly disagree 25%

somewhat disagree 10%
neither agree or 10%
disagree
somewhat agree 25%
strongly agree 30%

58
 8. How Satisfied Are You With Your Position At This Company?

1. Very Satisfied 2. Somewhat Dissatisfied

3. Not Satisfied nor Dissatisfied 4. Somewhat Satisfied
5. Very Satisfied

35%

30%

25%

20%

very satisfied

15%
somewhat dissatisfied

not satisfied nor dissatisfied

10%

somewhat satisfied

5%
very dissatisfied

0%

very satisfied 20%

somewhat 30%
dissatisfied
not satisfied nor 10%
dissatisfied
somewhat satisfied 5%
very dissatisfied 35%

59
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%

60
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%

61
11. How Would You Rate The Morale In Your Company?

1. Low 2. Very Low

3. High 4. Very High

35%

30%

25%

20%
low

very low
15%
high

10% very high

5%

0%

low 35%
very low 20%
high 25%
very high 20%

62
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%

63
 CONCLUSION & IMPLICATIONS

The present report indicates that the following features:-

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

1. Charles R. Greer, Strategic Human Resource Management: A General Managerial

Approach, Second Edition, Person Education, 2004

2. Tyson, S., Lawrence, P., Poirson P, Manzolini, L., and Seferi, S.V., Human
Resource Management – Strategies, Issues and Cases, Kogan Page, London,
1999.

3. Barney Olmstead and Susanne Smith (2001): Creating a Flexible Workplace:

How to Select and Manage Alternative Work Options

4. Khanewal Rohit (February 2002), "Winning the Retention Game", Human

Capital, Pg. 10-12.

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: -

1. What Is Your Primary Reason For Leaving The Company?

1. Benefits 7. Better Job Opportunity

2. Commute 8. Conflict with Other Employees
3. Conflict with Manager 9. Family Reasons
4. Job Expectation 10 Not Challenging
5. Pay 11 Personal Reasons
6. Reallocation/Move 12. Working Condition

2. How Long Have You Been Thinking About Leaving The Company?

1. One Month Or Less 2. One To 5 Months

3. More Than 5 Months

3. How Satisfied Are You With The Company You Work For?

1. Extremely Dissatisfied 2.Very Dissatisfied

3. Neither Satisfied nor Dissatisfied 4. Very Satisfied

67
 5. Extremely Satisfied

4. How Was Your Working Experience?

1. Much More Positive than Negative

2. More Positive than Negative
3. More Negative than Positive
4. Much More Negative than Positive

5. If Your Experiences Are More Negative Than Positive, What Factors Are
Responsible? Select All That Apply.

1. My Performance Evaluation and the Outcome

2. My Role, Responsibility and/ or Title
3. Job Training
4. My Boss
5. My Co-Workers
6. My Compensation
7. Change in Compensation Package
8. Company Savings Plan
9. Medical Benefits and Insurance
10. Relocation
11. Vacation Time
12. Other

6. How Flexible Is The Company With Respect To Your Family Responsibilities?

1. Very Inflexible 2. Somewhat Inflexible

3. Neither 4. Somewhat Flexible
5. Very Flexible

68
7. Do You Have A Clear Path For Career Advancement?

1. Strongly Disagree 2. Somewhat Disagree

3. Neither Agree or Disagree 4. Somewhat Agree
5. Strongly Agree

8. How Satisfied Are You With Your Position At This Company?

1. Very Satisfied 2. Somewhat Dissatisfied

3. Not Satisfied nor Dissatisfied 4. Somewhat Satisfied
5. Very Satisfied

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%

10. Does Working Conditions Affect You To Leave Your Job?

1. Yes 2. No

11. How Would You Rate The Morale In Your Company?

1. Low 2. Very Low

3. High 4. Very High

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.

71
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

2. Is downsizing the only way out for the above problem?

Yes No

3. If No, What are the alternatives to downsizing?

Employment Changes in Pay/Benefits Training

Policies Job Design Policies

4. Which is a better criteria to use as the basis for downsizing employees?

seniority performance

5. Are the reasons for downsizing communicated well to you?

Yes No

6. When should the employers convey about downsizing to their employees?

give future notice

tell them on the day they are expected to leave

7. Does downsizing affect the motivation of the employees?

Yes No

72
8. In what circumstances the employee morale is most hit during downsizing?

• failure to convince that job reductions were necessary

• lack of clarity in deciding on redundancies
• lack of care over redundant staff
• lack of alternative career development options
• 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 to provide adequate time and support to individuals.

9. What helps to build the morale of the employees during downsizing?

Effective communication
Psychological support
Counseling
Alternative career options

10. Does downsizing also have an impact on the survivor employees?

Yes No

11. has this Company Done Anything To Encourage You ?

1. Yes 2. No

12. What are the consequences of employee downsizing?

73
74