HUMA 1745 Lecture Notes - Lecture 28: Human Capital
1 May 2018
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HUMA 1745 Lecture 28 Notes – Assistance
Introduction
• Companies downsizing to improve strategic focus often see positive effects on stock
prices after the announcement.
• O the other had, aog opaies that oly ut eployees ut do’t restruture,
profits and stock prices usually decline.
• Part of the problem is the effect of downsizing on employee attitudes.
• Those who remain often feel worried about future layoffs and may be less committed to
the organization.
• Stress reactions can lead to increased sickness absences, lower concentration on the
job, and lower creativity.
• In companies that do’t iest uh i their eployees, dosizig a also lead to
more voluntary turnover, so vital human capital is lost.
• The result is a company that is more anemic than lean.
• Companies can reduce negative impacts by preparing in advance, thus alleviating some
employee stress and strengthening support for the new strategic direction.
• The following are some effective strategies for downsizing.
• Most are closely linked to the principles for organizational justice we discussed
• Investment.
• Companies that downsize to focus on core competencies are more effective when they
invest in high-involvement work practices afterward.
• Communication.
• When employers make efforts to discuss downsizing with employees early, employees
are less worried about the outcomes and feel the company is taking their perspective
into account.
• Participation.
• Employees worry less if they can participate in the process in some way.
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