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Lay-offs and downsizing

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  1. Introduction - the knowledge economy and culture.
  2. Downsizing vs. layoffs.
  3. Ratuonale.
  4. The problems of downsizing.
  5. Blue-collar study.
  6. Morale (and a white-collar study).
  7. Conclusions.

Sweeping economic, technological, and social changes during the last two decades have begun to transform how work is organized in modern society. The shift from an industrial to a knowledge economy, the globalization of markets, and the rapid proliferation of new technologies have dramatically increased the pace and unpredictability of change. In response, firms dismantled rigid hierarchies to enhance their responsiveness to new environmental demands. Through downsizing and restructuring, organizations eliminated layers of management and expanded the responsibilities of remaining employees. These societal changes had direct consequences for employment structures and practices in organizations. Gone are stability, vertical advancement, and employment security that defined industrial era careers. Greater flexibility, performance demands, and extensive job mobility characterize twenty-first-century employment.

[...] Colquitt, J.A., Conlon, D.E., Wesson, M. J., Porter, C.O. and Ng, K. Y. (2001) "Justice at the millennium: A meta-analytic review of 25 years of organizational justice research." Journal of Applied Psychology. 86: 425- 445. Deavers, K. L., Lyons, M. R., and Hattiangadi, A. U. (1999) The American Workplace 1999: A Century of Progress - a Century of Change. Washington, DC: Employment Policy Foundation. Fisher, S.R. and White, M.A. (2000) "Downsizing in a learning organization: Are there hidden costs?" Academy of Management Review. 25: 244-251. [...]

[...] The key phrase is "other things remaining equal." In practice, however, other things often do not remain equal, and therefore the anticipated benefits of employment downsizing do not always materialize. Cascio and Young (2003) examined financial and employment data from companies in the Standard & Poor's 500. The S&P 500 is one of the most widely used benchmarks of the performance of US equities. It represents leading companies in leading industries, and consists of 500 stocks chosen for their market size, liquidity, and industry-group representation. [...]

[...] In negotiations, Bridgestone/Firestone broke with its industry by moving from an 8-hour to a 12-hour shift that would rotate between days and nights, as well as cutting pay for new hires by 30 percent, cutting wages for most job classifications by $ 5.34 per hour to about $12 per hour, reducing incentive pay for piecework, cutting two weeks of vacations for senior workers, and requiring hourly workers to contribute to their healthcare costs. The United Rubber Workers union that represented the workers proposed that the company follow the master pattern agreement set with Goodyear, which called for no wage increases other than cost-of-living adjustments. [...]

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