The impact of downsizing on surviving employees’ organizational commitment in a retail organization

Abstract

Organizations are operating within a difficult economic environment and in the face of fierce world competition (George & Jones, 1992 cited in Ndlovu & Brijball Parumasur, 2005). To remain competitive globally and for economic reasons, Theron and Dodd (2011) postulate that organizations sporadically have to retrench workers. In order to reduce expenses as well as costs and losses to the organization, they have to restructure and reduce their headcount and the typical form of engaging in the restructuring is by means of downsizing. Makawatsakul and Kleiner (2003) posit that employee morale and loyalty tend to be the first unintended casualties of a downsizing strategy. The repercussions of downsizing is that it jeopardizes employees’ commitment and morale to a large extent (Muthuvuloo 8Rose, 2005) and survivors thus experience lower job and organizational satisfaction (Baruch & Hind, 2000) as this creates insecurity, anxiety and uncertainty. Survivors are also often forced to make a sideway or downward move in their job, may experience a drop in pay and status, become stressed by the amount of work left by departing colleagues that they would now need to undertake and worry about the security of their new position in the organization (Chipunza & Berry 2010).