Downsizing Effects on Survivors: Layoffs,Offshoring, and Outsourcing

In a representative sample of 13,683 U.S. employees, we compared survivors of layoffs, offshoring, outsourcing, and their combinations to a group who experienced no downsizing. Survivors of layoffs perceived lower organizational performance, job security, affective attachment, calculative attachment, and had higher turnover intentions. Offshoring survivors perceived lower performance, fairness, and affective attachment, but outsourcing survivors generally did not have more negative outcomes than the no‐downsizing group. Layoffs generally had more negative outcomes than other downsizing forms.     

Effects of downsizing practices on the performance of hospitals

Research has found that downsizing is not generally followed by improved organizational performance. Using a sample of hospitals that recently downsized, we evaluate the effects on performance of the human resource management (HRM) practices used in layoffs. Strategic HRM theory suggests that practices can have an impact on performance outcomes. We find that showing consideration for employees' morale and welfare during downsizing is positively related both to perceived success of downsizing and to financial performance following layoffs. Advance notice of layoffs is positively related to subsequent financial performance, but the provision of extended insurance to laid‐off employees is negatively related to financial performance. Planned redesign of work structures is positively related to perceived success, but has neutral to negative effects on financial performance. Copyright © 2004 John Wiley & Sons, Ltd.     

Market reactions to announcements of corporate downsizing actions and implementation strategies

This study examines the effects of downsizing actions and implementation strategies on market performance. While downsizing actions reduce costs, they also produce a loss of valuable human capital that can exceed the benefits resulting from the lay‐offs. In support of this argument, the results showed that downsizing had a negative effect on market returns and the effects grow increasingly negative with larger downsizing actions. However, the market reacts more positively to downsizing actions when reallocation strategies are used and to large downsizing actions when disengagement incentives are applied. The results of this research suggest the importance of carefully managing valuable resources to create positive returns. Copyright © 2004 John Wiley & Sons, Ltd.     

Reducing slack: the performance consequences of downsizing by large industrial firms, 1977–93

We conceptualize downsizing as an attempt to reduce organizational slack. We suggest that the degree to which downsizing will improve firm performance will be contingent on conditions under which the downsizing occurs. We emphasize the level of organizational slack as an important contingency, and also examine two other contingencies: (1) whether the scope of the downsizing is narrow (restricted to personnel reductions) or broad (involves organizational redesign); and (2) if the downsizing is conducted proactively (when performance is stable or improving) or reactively (when performance is declining). By analyzing a panel dataset of downsizings conducted by the 100 largest American industrial firms from 1977 to 1993, we find broad support for our hypotheses that downsizings are more likely to lead to improved performance when firms have high slack, when their scope of the downsizing is broad, and when the downsizing is done proactively. We also explore and find evidence for interactions among these contingencies. We discuss the implications of our findings for the literatures on downsizing and organizational slack. In doing so, we bring together two literatures that have an obvious affinity but have been only loosely coupled in the past. Copyright © 2005 John Wiley & Sons, Ltd.     

The Gender Pay Gap for Private‐Sector Employees in Canada and Britain

The gender earnings differentials for private‐sector employees in Britain and Canada are similar, substantial and significant. Using linked employer–employee data, we show that women are more likely to be employed in low‐wage workplaces than men in both counties. After accounting for the workplace, women continue to earn less than comparable men. Although men and women face a more equal pay structure within their workplace than they do across workplaces, a substantial portion of the gender pay gap in both countries remains unexplained by the individual characteristics or workplace effects considered in this study.     

Knowledge Sharing through Face‐to‐Face Communication and Labour Productivity: Evidence from British Workplaces

We investigate whether the adoption by workplaces of human resources management (HRM) practices that enhance face‐to‐face communication (FTFC) among employees is associated with productivity gains. The analysis is based on a nationally representative sample of over 500 British trading establishments drawn from the linked 2004 Workplace Employment Relations Survey and Annual Business Inquiry, for which objective measures of labour productivity (value added per employee) are available. We find a positive association between productivity and FTFC in problem‐solving groups, teams and meetings of senior or line managers and employees, provided that FTFC is adopted on a continuous basis. Our finding suggests that British workplaces in the trading sector could increase their productivity by implementing HRM practices in such a way as to enhance knowledge sharing through employees' personal interactions.     

Collective Bargaining and High‐Involvement Management in Comparative Perspective: Evidence from U.S. and German Call Centers

This article assesses the relationship between national and collective bargaining institutions, management practices, and employee turnover, based on case study and survey evidence from U.S. and German call center workplaces. German call centers were more likely to adopt high‐involvement management practices than those in the United States, even across workplaces with no collective bargaining institutions. Within Germany, union and works council presence was positively associated with high‐involvement practices, while works council presence alone had no effect. In contrast, union presence in U.S. call centers showed either a negative association or no association with these practices. National and collective bargaining institutions and high‐involvement management practices were associated with lower quit rates in both countries, with only partial mediation.     

Trade Unions,Union Learning Representatives and Employer‐Provided Training in Britain

This article provides an empirical assessment of the relationship between trade union recognition, union density, union learning representatives (ULRs) and employer‐provided training in British workplaces using linked employer–employee data from the 2004 Workplace Employment Relations Survey. The results suggest that the relationship between union recognition and training is, at best, weak. We find no consistent relationship between union density and training or between the presence of ULRs and training. We do, however, find some evidence of greater equality in the distribution of training in ULR workplaces than in other workplaces.     

‘Shopping for Voice’: Do Pre‐Existing Non‐Union Representation Plans Matter When Employees Unionize?

The transition to unionization in three workplaces with pre‐existing non‐union employee representation plans (NERPs) is contrasted to three matched sites, which had only individual representation. Pre‐existing collective voice arrangements had substantial effects on the process and outcomes of unionization. While the individual representation sites presented a conventional process of mobilization and attachment to the union, the NERP sites revealed a more equivocal outcome. The union was used in an instrumental manner to increase NERP power and to achieve worker demands already articulated by the NERP. NERP leaders became union leaders. There remained significant attachment to the NERP and a reluctance to fully embrace unionization.     

Product–service innovation and performance: the role of collaborative partnerships and R&D intensity

Treating the intersection of the strategic partnerships, R&D intensity and servitisation literatures, this study explores empirically whether external collaborative service development and provision and industrial R&D intensity help to unpack the complex relation between product–service innovation (servitisation) and performance. We argue that manufacturing firms implementing services benefit from strategic partnerships with Knowledge‐Intensive Business Service (KIBS) firms. KIBS partnering provides opportunities for downsizing, externalising risks and sharing knowledge. Additionally, manufacturers in R&D‐intensive industries are more likely to benefit from implementing service provision than firms in other sectors because of industry dynamics and reduced customer uncertainty. The study surveys executives in 370 large manufacturers worldwide. Results reinforce the importance of concentric strategic partnerships to successful product–service innovation in high R&D industries.     

Temporary Layoffs and Unemployment in Canada

The importance of temporary layoffs in measured unemployment has not been solidly established empirically. Clark and Summers (1 979) maintain that these separations account for only a small fraction of U.S. unemployment. Administrative data analyzed in this paper show that temporay layoffs are an important feature of the Canadian labor market. Approximately 35 per cent of the variation in the Canadian unemployment rate over time can be accounted for by changes in temporary layoffs and about 45 per cent by variations in all temporary employment separations.     

Firm,industry, and strategy influences on choice of downsizing approach

This study represents a step toward a more sophisticated and grounded understanding of downsizing. The author sharpens the concept of downsizing by identifying and distinguishing among different resource-reduction approaches. Then, drawing upon exit and mobility barrier theory, firm, industry, and strategy influences on choice of downsizing approach are examined. Findings suggest that characteristics of a firm's resources and the resale market for those resources differentially influence broad and focus firms' choice of downsizing approach. © 1998 John Wiley & Sons, Ltd.     

When Might a Distressed Firm Share Work? Evidence from the Short-Time Compensation Programme in France

This paper analyses the participation patterns of publicly funded short-time compensation benefits (STC) in France. The regression equation directly models the choice of work units facing slack demand to adjust their labour force by declaring redundancies or by implementing an STC agreement. The likelihood of adopting the work-sharing mode is related to certain firm and labour force attributes, labour market institutions and policy parameters. The results suggest that employment protection laws increase the incidence of STC usage and hence decrease employers' recourse to layoffs. Work-forces receiving relatively high levels of pay and exhibiting relatively low levels of labour force attachment are less likely to participate in the STC programme, ceteris paribus . Although the programme is designed to prevent cyclical layoffs, there is preliminary evidence that chronic usage in instances of permanent layoffs is fairly widespread.     

Mass Layoffs and CEO Turnover

We investigate the relationship between layoff announcements and CEO turnover over a 31-year period. We find that layoffs significantly increase CEO turnover in the following year, and, in some time periods, CEO changes are strongly positively associated with layoff announcements two years earlier. We proceed to show how this relationship has changed over time, and offer several possible explanations. Finally, we find strong evidence that layoffs that are associated with negative stock price reactions are much more likely to lead to CEO turnover than those associated with positive stock price reactions, especially in the earlier years in our sample.     

Disability and Perceptions of Work and Management

Matched employee–employer data from the 2004 Workplace Employment Relations Survey are used to examine differences in work‐related perceptions between disabled and non‐disabled employees. Even after accounting for differences in personal, job and workplace characteristics, disabled employees are found to hold more negative views on the treatment of workers by managers and, consistent with this, they express less job satisfaction and commitment towards their organization. The influence of disability is also examined across workplaces defined by sector, the presence of disability‐related policies and practices, and employee views of management to explore the role of corporate culture.     

The Ethnographic Contribution to Understanding Co‐worker Relations

Relations among co‐workers are becoming both more important and more complex in modern workplaces as authority over job decisions is shifted from supervisors to quasi‐independent teams. The author develops a model of co‐worker relations that recognizes these changes and evaluates this model using data content coded from the full population of published book‐length workplace ethnographies (N = 204). Confirmatory factor analysis techniques support the existence of three distinct aspects of co‐worker relations: cohesiveness, conflict and peer supervision. The most important determinants of co‐worker relations are employee involvement programmes and management behaviour. Returning to specific case studies allows a theoretical elaboration of how employee involvement and management behaviour condition co‐worker relations. The author concludes by noting the importance of intellectual exchanges between qualitative and quantitative methods for generating new advances in the study of work and employment relations.     

Disorganized, Unilateral, and Participative Organizations: New Insights from the Ethnographic Literature

Disorganized workplaces are often overlooked in contemporary models of the workplace. Contemporary accounts more typically analyze organizations in terms of tight management control or in terms of participative workplace models. This article examines 109 organizational ethnographies describing a wide range of workplaces, including many poorly run and disorganized ("anomic") workplaces. Such workplaces evidence high levels of worker resistance. In contrast, participative workplaces evidence high levels of citizenship behaviors. Unilateral or "top-down" organizations are expected to encourage accommodation behaviors, but this hypothesis is not supported. Instead, both accommodation and resistance are highest in disorganized workplaces. The continuing importance of disorganized workplaces—workplaces that provoke strong worker resistance—represents an unmet challenge to organizational theory and practice.     

High-Involvement Management and Pay in Britain

High‐involvement management practices have well‐established benefits for employers, but what do they do for employees? Using a nationally‐representative survey of British private‐sector workplaces, high‐involvement management is shown to be associated with higher pay. The wage premium is little affected by the choice of employee involvement practices (e.g., teams versus quality circles), but it appears only where employee involvement practices are supported by job security guarantees. Powerful trade unions increase the premium.     

Employment Change after Takeovers: The Role of Executive Ownership

The article examines the impact of executive ownership and other ownership and governance factors on employment change after takeovers. Drawing on a dataset of 235 takeovers, the results show that there is a reduction in employment in just over 50 per cent of the sample. Higher levels of executive share ownership are associated with lower probabilities of employee layoffs post‐takeover, and there is a positive relationship between executive ownership and employment growth. The effect of executive options on employment change is generally insignificant, as are the effects of other features of ownership and governance. The evidence suggests that executives with higher levels of ownership tend to mount takeovers of better‐performing firms and to implement takeovers aimed at growth.     

A comparative analysis of layoff announcements and stock price reactions in the United States and Japan

Downsizing and layoffs are an important mechanism for U.S. firms to cope with their strategic and economic environment. In contrast, the Japanese tradition of lifetime employment limits the ability of firms to employ layoffs as a strategic measure, relegating its use to conditions of financial distress. This paper provides the first comparison of layoffs in Japan and the United States and examines stock price reactions to layoff announcements in each country from 1990 to 1994. Agency theory and Aoki's cooperative game theory are employed to discuss differences in the governance structures of U.S. and Japanese firms and their implication for stock price reactions. Results show that layoff announcements trigger negative returns for both U.S. and Japanese firms. Specifically, layoff announcements of U.S. firms are associated with a negative 1.78 percent abnormal return, while layoff announcements for Japanese firms are associated with a negative 0.56 percent abnormal return. To better understand the impact of layoffs, this study examines the relationships between stock price reactions and various layoff characteristics (such as whether the layoff is proactive or reactive or whether the layoff is the first in the industry). Implications of the findings are discussed. © 1997 John Wiley & Sons, Ltd.