Publication: Human Resource Management (JAN 2011)
Article: The effects of downsizing on labor productivity, the value of showing consideration for employees’ morale and welfare in high-performance work systems
Authors: R.D. Iverson, C.D. Zatzick
Reviewed By: Rebecca Eckart
As economic conditions weaken, downsizing has become an increased reality for many organizations. Typically aimed at decreasing operational costs, often downsizing has the unintended consequence of also lowering employee productivity and morale.
To harness costs and increase efficiency, an increasing number of organizations are adopting High -Performance Work Systems (HPWS).These are typically defined by multiple separate but interconnected human resource practices aimed at increasing employee commitment, skills, and productivity. Examples include such practices as selective hiring, information sharing, job design, employee participation, and HR planning. HPWS center on encouraging and motivating employees to use their enhanced skills and knowledge to increase individual productivity and thus aid in the accomplishment of organizational goals.
HPWS are often a significantly large resource and cost expense for organizations, leading researchers to investigate HPWS in the context of downsizing. Iverson and Zatzick (2011) report that organizations with HPWS have lower levels of productivity following downsizing, but this relationship is more pronounced for those that give little consideration to employees’ morale and well-being during the process.