RESEARCH AND PRACTICE
IN HUMAN RESOURCE MANAGEMENT

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Wagar, T. H., (1997). Organizational Outcomes and Permanent Workforce Reduction: An Exploratory Analysis, Research and Practice in Human Resource Management, 5(1), 1-15.

Organizational Outcomes and Permanent Workforce Reduction: An Exploratory Analysis

Terry H. Wagar

Abstract

While organizations around the globe continue to engage in workforce reduction strategies, relatively little is known about the impacts of employee cutbacks. This paper examines some of the potential costs and benefits of workforce reduction based on survey results from almost 1,300 major Canadian organizations. Overall, 54% of the employers permanently reduced their workforce over the two year period beginning in January 1990. There was no difkrence between organizations that had and had not reduced the workforce when considering managerial perceptions of productivity, product or service quality, and innovative activity. However, organizations engaging in permanent workforce reduction were significantly more likely to report a negative impact on employee relations (including greater resistance to change, lower morale, increased conflict, and growing levels of stress among managers).

Introduction

Although workforce reduction strategies are very popular in today’s eco nomic climate, both practitioners and academics are acknowledging that a number of reduction efforts have fallen far short of meeting organizational goals (Tomasko, 1991; Cascio, 1993; Cameron, 1994a). There is growing evidence that several programs aimed at cutting human resources within an an organization are not properly planned or integrated with the overall strategic direction of the organization (American Management Association, 1994). Rather, cuts frequently represent a short-term response to more complex problems.

It is only recently that scholars have begun to investigate, in a significant way, the determinants and consequences of permanent workforce reduction (Cameron, Sutton and Whetten, 1988; Cameron, Freeman and Mishra, 1993). Most of the writings to date are practitioner-oriented and largely unsupported by empirical study. Byway of example, Cascio (1993) found more that 500 articles dealing with downsizing but few of the papers addressed (even indirectly) the impacts of permanent workforce reduction. Additionally, large-scale studies with the organization as the unit of analysis are very rare (Littler, Bramble and McDonald, 1994).

Although executives tend to focus on financial issues during a reorganization, the limited research available indicates that the benefits of restructuring fail to transpire if human resource issues are not carefully thought out and resolved appropriately. As Ford and Perrewe (1993, p. 34) note, “there is not much help available in the literature for managers seeking to address the non-financial issues effectively.”

The current study is based on survey responses from almost 1,300 large Canadian organizations. The purpose of the research is to investigate the relationship between permanent workforce reduction and a number of organizational outcomes, grouped under the three categories of decision making and policy issues, performance and efficiency issues, and employee relations issues. While researchers studying the “survivors” of workforce reduction have examined some of these issues at the individual level of analysis (Brockner, Grover, Reed and DeWitt, 1992; Brockner, Grover, O’Malley, Reed and Glynn, 1993; Armstrong-Stassen, 1993), little empirical work at the organizational level exists.

Previous Research

Organizations embark on workforce reduction programs because managers believe that cutting people will result in reduced costs and improved financial performance. While several executives perceive that reducing the number of people in the organization will lead to lower overhead costs, reduced bureaucracy, better communications and improved decision making, increased innovative activity, and higher productivity (Heenan, 1989), there is mounting evidence that workforce reduction programs often fail to meet their objectives - as observed by Cascio (1993, p. 100), “study after study shows that following a downsizing, surviving employees become narrow-minded, self-absorbed, and risk averse. Morale sinks, productivity drops, and survivors distrust management.”

Similarly, the organizational decline literature provides some information on the presence of dysfunctional attributes associated with decline. In two related papers based on a study of universities in the United States, Cameron, Whetten and Kim (1987) and Cameron, Kim and Whetten (1987) found that declining organizations were significantly more likely to experience increased conflict and negative reactions by organization members. In addition, Cameron (1994b) found that a number of factors addressing the management of human resources (such as increased communication and participation, systematic analysis of tasks and personnel in advance, and increased employee effort regarding downsizing) tended to mitigate against the appearance of negative attributes associated with organizational decline. (what Cameron calls the “dirty dozen”).

Research on the “survivors” of workforce reduction also points to potential problems encountered by organizations who have cut back employees. Recent studies indicate that “survivor reactions” to workforce reduction may be affected by several factors including how the downsizing was communicated (Smeltzer and Ziner, 1992; Cameron, Freeman and Mishra, 1993), the job insecurity of survivors (Brockner, Grover, Reed and DeWitt, 1992), the self-esteem of the remaining employees (Brockner, Grover, O’Malley, Reed and Glynn, 1993), and occupational level of those who remain (Armstrong-Stassen, 1993).

Despite the guilt associated with permanently reducing the workforce, Tomasko (1990, p. 42) observes that a growing number of executives are exhibiting a willingness to downsize their companies and notes that “in spite of practices that alleviate guilt and soften the blow of job loss, companies are finding out that demassing can lead to many unwanted consequences.” He identifies a number of undesirable outcomes that firms engaging in downsizing have experienced including the high human costs, psychological trauma experienced both by those let go and the survivors, reduced employee commitment, lower performance among employees due to job insecurity, greater attention by management to the downsizing process while ignoring customer and client needs, loss of valuable employees, a shift from innovation to protecting one’s turf, lower morale, and potential litigation by employees who believe that they are victims of discrimination.

Carroll (1994) also addresses some of the changes associated with the downsized firm. Contracting organizations may become more top heavy and where seniority plays a major role in who remains with the organization, the average age of the firm increases (for instance, he cites an example from the automobile industry - in the United States, the average age of employees is 46 while in Japan it is 34).

Some studies have examined the relationship between workforce reduction and the performance of the organization. In a study of the effect of layoff announcements on stock prices, Worrell, Davidson and Sharma (1991) concluded that investors generally responded negatively to the announcement of a layoff, particularly if the reduction was due to financial factors or involved a large scale permanent cutback of employees. Similarly, Gombola and Tsetsekos (1992), in an analysis of almost 1,000 announcements of plant closings, concluded that such announcements were typically associated with negative stock price reactions, cutbacks in asset acquisition and dividend growth, and decline in productivity.

Allan and Loseby (1993) compared the financial performance of twenty-three Fortune 500 companies with an expressed policy of commitment to job security with forty-one Fortune 500 companies that had a policy of not providing job security. Over a ten year period beginning in 1978, they found that the financial performance of firms in either group did not differ significantly. DeMeuse, Vanderheiden and Bergmann (1994) tracked the financial performance of Fortune 100 firms that did and did not make public layoff announcements in 1989. They did not find support for the proposition that layoffs improve financial performance; rather, their results indicated that firms engaging in layoffs continued to perform much more poorly than organizations not laying off employees.

The current literature provides some insight into why so many workforce reduction programs fail to meet expectations. More than half of the organizations engaging in downsizing had no policies or programs to address problems associated with cutting human resources and several organizations failed to anticipate the dramatic impacts workforce reduction has on the work environment, employees and customers or clients (American Management Association, 1994). Furthermore, many retrenchment efforts were not carefully thought out or integrated as part of the organization’s overall planning process (Hardy, 1987).

Ford and Perrewe (1993) assert that an effective downsizing is dependent on comprehensive planning for change, proper communication of the plan, credibility of the organization with employees, customers, suppliers and other stakeholders, and consideration and compassion for both employees who are terminated and those remaining with the organization. While downsizing strategies undertaken by organizations can involve workforce reduction, redesign of the organization, and a systemic strategy predicated on massive cultural change within the firm, most organizations use only the workforce reduction approach (Cameron, Freeman and Mishra, 1993).

Method

Data

The data for this study were obtained from responses to a survey sent to major organizations across Canada. To be included in the sample, organizations had to have a minimum of 100 employees (as identified in the mailing list provided by Dun and Bradstreet) and not be a government body or agency. Note that a small percentage of respondents had actually slipped below the 100 employee threshold as a result of workforce reduction; such organizations are also included in the analysis.

Surveys were mailed to the chief executive officer or the senior human resource management executive (with directions asking that persorio complete the survey or pass it on to the person in the best position to do so). After one follow- up iiailout, responses were received from 1,282 organizations (for a response rate just above 35%).

Because of limited information on non-respondents, it was not possible to test directly for non-response bias. However, as one check on whether respondents and non-respondents differed, a logit model was estimated comparing respondents to the first and second mailout (1=responded to the first mailing and 0=responded to the second mailing) based on the assumption that respondents to the second mailout may be more similar to non-respondents (Covin, Slevin and Schultz, 1994). The results of the logit estimation revealed that there were no significant differences among respondents to the two mailouts when considering such characteristics as number of employees, union status or industry sector.

Dependent Variables

Due to the exploratory nature of this study and the somewhat limited empirical evidence relating to the impact of permanent workforce reduction, each of the statements addressing organizational outcomes anticipated to be associated with workforce reduction is presented in the paper. Survey participants were asked to consider the present state of their organization and provide responses to the twenty statements using a six point scale (where 0 equals “strongly disagree” and 5 equals “strongly agree” with the particular statement).

For the purposes of presentation, the twenty statements are grouped under the three categories of decision making and policy issues, performance and efficiency issues, and employee relations issues. However, it should be underscored that these three categories do not represent specific constructs.

The twenty statements used in the study were drawn from a variety of sources including literature on organizational decline (Cameron, Whetten and Kim, 1987) and industrial relations (Voos, 1989; Cooke, 1990). As well, some of the items were included because they were frequently mentioned in interviews conducted with senior executives (in both Canada and the United. States) prior to designing the questionnaire.

Similar to the approach used by other researchers (Cameron, Whetten and Kim, 1987; Voos, 1989; Cooke, 1992; Juravich, Harris and Brooks, 1993; Naman and Slevin, 1993), the variables were based on perceptual measures and there was no attempt to have respondents attribute the degree to which the variables were affected by specific independent variables (such as workforce reduction behaviour).

The twenty variables addressing organizational outcomes potentially related to permanent workforce reduction are presented in Table 1. Also included in Table 1 are the variable definitions and means. Initially, a number of the measures (PLANNING, ORGNREPN, INNOVN, PRODUCT, FINPERF, CONTEXP, TOPMGT, MGTCRED) were reverse coded. However, these variables have been recoded so that for all twenty statements, a higher score represents a i favourable outcome and any change in wording as a result of the recoding has been placed in parentheses. By way of example, the original statement for PLANNING, “there is more focus on long-term planning”, was altered in Table 1 to read “(less) focus on long-term planning”.

Table 1
Summary Information on Dependent Variables
Variable Definition Mean
Decision Making and Policy Issues:
CENTDECN Decision making is more centralised. 2.50
PLANNING (Less) focus on long-term planning. 1.80
SPECINT Special interest groups are becoming more vocal. 2.33
ORGNREPN Our reputation is (unfavourable). 1.26
Performance and Efficiency Issues:
INNOVN Innovative activity is (decreasing). 1.82
EXPENCUT Expenditures cut as low as possible. 2.75
PRODUCT Productivity is (decreasing). 2.03
QUALITY Product/service quality is declining. 1.16
WORKDONE It is becoming harder to get the work done. 2.25
FINPERF Our financial performance is (decreasing). 2.46
CONTEXP (Not) better able to control operating expenses. 1.87
Employee Relations Issues:
RESISTCH Employee resistance to change is increasing. 1.87
MORALE Morale is decreasing. 2.15
TOPMGT Employees perceive top management (less) favourably. 2.38
CONFLICT Conflict within the firm is increasing. 1.85
TURNOVER Turnover is increasing. 1.25
JOBINSEC Employees are more concerned about their jobs. 3.63
ABSENT Absenteeism is increasing. 1.67
STRESS Stress among managers is increasing. 3.40
MGTCRED Credibility among top managers is (decreasing). 2.19

Primary Independent Variable

The major purpose of this paper was to examine the relationship between permanent workforce reduction and a number of organizational outcomes. Consequently, the primary independent variable is whether the organization permanently reduced its workforce over the two year period beginning in January 1990 (pernianent workforce reduction was coded 1; no permanent workforce reduction was coded 0). The focus on permanent workforce reduction was motivated by a desire to investigate the impact of an organizational decision to reduce the number of employees over the longer term (as opposed to seasonal or short-term employment adjustments). Note that respondents completing the survey were asked to indicate whether their organization had permanently reduced its workforce over the relevant time period and to provide the percentage of the workforce reduced (for organizations that had reduced the workforce).

Control Variables

A number of other variables were entered into the estimations as control variables. Demand for the organization’s primary product or service, which was measured using a six point scale (1=substantial increase and 6=substantial decline in demand), was controlled for because as indicated in the decline literature, an organization undergoing decline in demand may encounter several negative consequences (Cameron, Sutton and Whetten, 1988).

Investment in new technology (measured as a dummy variable with 1 indicating the organization had introduced new labour-saving technology; 0 otherwise) and involvement in a merger (dummy coded where 1 represents participation in a merger; 0 otherwise) were also controlled for. While new technology may lead to improved performance over the long term, it may also be associated with negative people consequences (Osterman, 1989). Similarly, the merging of organizations and major change in management often result in high levels of employee uncertainty, particularly if the change process is not properly managed (Gutknecht and Keys, 1993).

Union status of the organization was also dummy coded (1=union and 0=non- union). Union status was controlled for because evidence from the economics and industrial relations literature indicates that union status may influence organizational behaviour and employee satisfaction (see, for instance, Freeman and Medoff, 1984; Kochan, Katz and McKersie, 1986; Blinder, 1990; Ng and Maki, 1994).

Finally, there was also a need to control for organizational characteristics such as size and industry sector since such characteristics may be associated with measures of organizational effectiveness (Jackson, Schuler and Rivero, 1989). Organization size was measured as the natural logarithm of the number of employees while industry sector of the organization included manufacturing, communication and transportation, wholesale and retail trade, finance and insurance, health, education, and other business services (the omitted category).

Results

Characteristics of the Respondents

A total of 1,282 organizations in Canada participated in the study. Respondents, on average, had 1,279 employees and 58% of the organizations were unionized; this rate of unionization, which is higher than the Canadian average of about 38%, is due because of the focus in this study on larger organizations (which are more likely to be unionized). Participants represented several industry groups including manufacturing (33%), communication and transportation (7%), wholesale and retail trade (11%), finance and insurance (8%), health services (14%), education (11%), and other business services (17%).

With reference to the demand for the organization’s major product or service, the mean score was 3.4;, the number of organizations reporting an increase or decrease in product or service demand was about equal. Just over one-quarter of the respondents indicated that their organization had introduced new job-saving technology over the past five years and 28% of organizations had participated in a merger or acquisition. Concerning the incidence of permanent workforce reduction (the primary independent variable in the study), 54% of respondents reported permanently reducing the workforce over the relevant two year period. Among organizations reducing the workforce, the average reduction was 14.9%; further breakdown of the results indicated that 57% of the organizations had reduced the workforce by 10% or less, 23% had reduced the workforce by 11% to 20%; and 20% had reduced the workforce by more than 20% (with only a few organizations engaging in reductions in excess of 50% of the workforce).

Organizational Outcomes

As noted previously, the means for the dependent variables are presented in Table 1. With reference to the decision-making and policy variables, respondents generally did not support the position that there is less focus on long-term planning or that the organization’s reputation was unfavourable. Still, about half of the respondents agreed that decision making is becoming more centralized and special interest groups are becoming more vocal.

Table 2
Ordered Probit Results
Dependent Variable Coefficient for
Workforce Reduction
Asymptotic
T-Ratio
Number of
Observations
Decision Making and Policy Issues:
CENTDECN .063 0.923 1183
PLANNING .037 0.547 1195
SPECINT .097 1.419 1182
ORGNREPN .168 ** 2.416 1190
Performance and Efficiency Issues:
INNOVN -.017 -0.252 1194
EXPENCUT .326 *** 4.807 1186
PRODUCT -.022 -0.326 1189
QUALITY -.031 -0.424 1133
WORKDONE .109 1.591 1191
FINPERF .170 ** 2.156 890
CONTEXP -.198 *** -2.923 1188
Employee Relations Issues:
RESISTCH .251 *** 3.699 1194
MORALE .340 *** 5.912 1193
TOPMGT .278 *** 3.892 1184
CONFLICT .262 *** 3.824 1190
TURNOVER .225 *** 3.252 1195
JOBINSEC .345 *** 4.950 1194
ABSENT -.070 -1.040 1190
STRESS .211 *** 3.059 1193
MGTCRED .269 *** 3.889 1192

***p<.01; **p<.05; *p<.10

When examining the various performance and efficiency issues, respondents tended to perceive their organization’s performance in a fairly positive light. However, the majority of respondents did not agree that expenditures had been cut as low as possible and almost half reported that their employer’s financial performance was decreasing.

Although most respondents disagreed that absenteeism and turnover are increasing, less favourable responses were associated with some of the employee relations variables. There was some evidence that in a number of firms morale is declining, employees perceive top management less favourably, and credibility among top managers is decreasing. In addition, there was strong agreement that employees are more concerned about their jobs and stress among managers is increasing.

Results from Ordered Probit Estimations

Because the underlying measure of the dependent variables is actually a crude ordinal scale,ordered probit estimation was used to investigate the relationship between permanent workforce reduction and the dependent variables. As Greene (1993) observes, ordered probit is preferred to multinomial logit or probit estimation when the dependent variable is ordinal in nature - multinomial logit or probit models fail to take into account the fact that the responses to each statement are ordinal and result in a loss of efficiency (Maddala, 1983; Amemiya, 1985). Furthermore, the use of multiple regression is not appropriate because the responses constitute a ranking (that is, the difference between the six responses on the scale are not the same).

The ordered probit results are presented in Table 2. It should be noted that while only the coefficients that relate to permanent workforce reduction are reported in Table 2, each of the models was estimated with all of the control variables included in the analysis. As well, for each of the estimations, the overall clii- square test was highly significant (p <.001).

When considering decision making and strategy issues, the results indicated that there was no difference between organizations that had and had not permanently reduced the workforce except with respect to ORGNREPN. The coefficient on ORGNREPN was positive and significant at p <.05; organizations that had permanently reduced the workforce were more likely to perceive that the organization’s reputation was unfavourable. Although not included in the paper, the marginal effects (partial derivatives) for the dependent variables that were significantly related with permanent workforce reduction were also calculated.

The ordered probit estimates relating to performance issues revealed that innovative activity, productivity, product or service quality, and the ability to get the work done were not significantly related to permanent workforce reduction behaviour. However, engaging in workforce reduction was associated with EXPENCUT (expenditures cut as low as possible) and FINPERF (financial performance is decreasing); note that the number of observations for FINPERF is 890 (while a small number of private sector respondents failed to respond to this question, the major reason for the lower number of responses was because organizations from the not-for-profit sectors of education and health are omitted from the analysis). In addition, the coefficient on CONTEXP was negative and highly significant (p <.01); organizations engaging in workforce reduction were more likely to agree that they were better able to control operating expenses.

It is with respect to employee relations issues that the strongest relationships with workforce reduction behaviour emerged. For eight of the nine employee relations issues, the coefficient on workforce reduction was both positive and highly significant (p <.0 1). In short, organizations that had permanently reduced the workforce were more likely to report increased resistance to change, declining morale, less favourable perceptions by employees of top management, increased conflict, increased turnover, greater concern by employees about their jobs, higher management stress, and lower credibility among top managers.

Although the goal of this paper was to compare organizations that had and had not permanently reduced the workforce, it can be argued that such a categorization fails to account for the size of the workforce reduction. Consequently, the estimations were rerun with the percentage of the workforce reduced (coded 0=no reduction; otherwise the actual percentage reduction) as the primary independent variable and all of the control variables included in the estimations. The findings generally parallel those reported above with a few exceptions - the coefficient on FINPERF was not significant and the coefficients for CONTEXP, RESISTCH and CONFLICT were only significant at the p <.10 level.

Conclusion

Using data from a large survey of major Canadian organizations, this study examined the relationship between permanent workforce reduction and a number of organizational outcomes. In short, there were relatively few significant differences between organizations that did or did not reduce their workforce when considering not only decision making and policy issues but also performance and efficiency issues. Employers experiencing a reduction of the workforce were more likely to report that expenses had been cut as low as possible and that the organization was better able to control operating expenses. In addition, workforce reduction was associated with more negative outcomes with respect to the organization’s reputation and financial performance. However, for other key variables including focus on long-term planning, innovative activity, productivity, and product or service quality, there were no significant differences based on workforce reduction.

The most dramatic results are found when investigating employee relations issues; for eight of the nine “people” outconies, there was a strong relationship with permanent workforce reduction Organizations engaging in employee cutbacks were more likely to experience negative outcomes when considering employee resistance to change, employee morale, employee perceptions of top management, conflict within the organization, turnover, job insecurity, stress among managers, and credibility among top management.

As noted previously, the bulk of the writings on permanent workforce reduction have been practitioner-oriented and generally unsupported by empirical evidence with few large-scale studies with the organization as the unit of analysis. The findings of this study, which are generally consistent with Cascio’s (1993) observations, support the position that workforce reduction has major negative impacts on the people in the organization. It is not surprising, when considering that many of the workforce reductions undertaken in this study were characterized by declining employee relations, that a number of restructuring efforts fail to meet their intended objectives.

While workforce reduction had major impacts on employee relations issues, there was no significant relationship with such variables as innovative activity, productivity or productJservice quality. One explanation may be that workforce reduction has a more immediate impact on people issues and the effect on performance and efficiency outcomes may be more long-term. A second explanation is provided by Cappelli (1995) who argues that if a single organization acting alone decided to engage in workforce cutbacks, the employees could opt to go elsewhere. However, in the present economy where several firms are reducing the workforce, frustrated employees have few alternative employment opportunities and “survivors” may be unwilling to engage in negative behaviour for fear that they would lose the jobs they currently hold.

From a managerial perspective, some organizations are not “lean and mean” and workforce reduction may be an appropriate strategic response. However, cutting the people in an organization is not a “quick fix” remedy; prior to embarking on any workforce reduction effort, firms should carefully consider the consequences of the decision (Cameron, Freeman and Mishra, 1991). Considerable care and planning must go into the decision and the reasons for the reduction must be effectively communicated to employees. As Cameron, Freeman and Mishra (1993) observed, organizations tended to focus on workforce reduction while ignoring the critical aspects of redesigning the organization and the implementation of cultural change. In addition, managers frequently have little experience or training with regard to downsizing and restructuring.

Based on their research, Cameron, Freeman and Mishra (1991) developed a list of six “best practices” in downsizing firms: (1) downsizing should be initiated from the top but requires hands-on involvement from all employees, (2) workforce reduction must be selective in application and long-term in emphasis, (3) there is a need to pay special attention both to those who lose their jobs and to the survivors who remain with the organization, (4) it is critical that decision-makers identify precisely where redundancies, excess costs, and inefficiencies exist and attack those specific areas, (5) downsizing should result in the formation of small semiautonomous organizations within the broader organization, and (6) downsizing must be a proactive strategy focused on increasing performance.

While the current study suggests that negative outcomes may be associated with permanent workforce reduction, it is exploratory in nature. The findings are based on cross-sectional data, the outcome measures are perceptual and only address developments over the short-term, and variables that may distinguish effective and ineffective workforce reduction strategies are not included in the analyses. Moreover, reliance on a single respondent (such as the chief executive officer) is problematic; on the other hand, one would expect that a senior member of the upper management team should be in a good position to assess the organizational issues addressed in this study. Due to the exploratory nature of the research, it was decided to canvass a large number of organizations rather than focusing on a small number of firms; in doing so, some tradeoffs were unavoidable.1

From a global perspective, we are witnessing a massive restructuring of organizations in more traditional economies (such as Canada, the United States, the United Kingdom, Australia and Western European nations) as firms strive to meet the challenge of global competition. At the same time, a number of East Asian Newly Industrialized Countries have experienced rapid economic growth (Wilkinson, 1994). As Frenkel and Harrod (1995) point out, the advanced countries are very concerned with the exporting of semi-skilled jobs to lower-wage nations by multinational employers and the ability to provide high-wage, high-skill jobs for its citizens.

However, some observers are expressing concern that Asian economies may be facing major challenges in the future. These include labour costs rising at rates. much faster than productivity, overcapacity in key industries, and slower export growth (Engardio, Moore and Hill, 1996). Asian businesses confronting these issues may find that the restructuring and workforce management experiences of organizations in more traditional economies are instructive; by way of example, there is strong evidence that workforce reduction severely impairs employer-employee relations. Furthermore; there is a tendency in times of growth to not focus on human resource planning and to let bureaucracy and redundancy creep in. While the present paper has addressed the issue of workforce reduction using Canadian data, considerably more attention should be paid to the policy implications of organizational downsizing and the relationship with global economic developments.

In short, there is a strong need for further research. For example, are the findings of this study generalizable to smaller organizations and firms outside of Canada? ‘What characteristics / approaches distinguish successful from unsuccessful workforce reduction efforts? To what extent do negative people consequences ultimately affect the bottom line? Is there a relationship between workforce reduction behaviour and financial performance over the long term? What is the relationship between workforce reduction and organizational efforts to promote “progressive” human resource management programs? It is important to track organizations over time; while collecting longitudinal data on workforce reduction strategies involves considerable effort, it is essential that researchers examine organizational outcomes over the long term.

1 For a discussion of some of these issues, see Huber and Power (1985) and Cooke (1990).

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