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R’ships after Downsizing

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ORGANIZATIONAL VIRTUES AND ORGANIZATIONAL PERFORMANCE:RELATIONSHIPS AFTER DOWNSIZINGKim CameronUniversity of MichiganA Presentation for the Conference on Positive Organizational Scholarship 5-7 December 2001 Ann Arbor, MichiganTHE PREVALENCE OF DOWNSIZINGBEFORE 911Almost all medium and large firms downsized in the last five years.

More than 90 percent of firms downsized in the last five years. A large majority downsized more than once in the last ten years.

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Downsizing is not a one-time action.

Approximately 62 percent of firms that downsized two years ago downsized again last year.

Downsizing is not motivated solely by bad economic news.

Only 37 percent of firms downsized last year because of economic difficulties compared to 71 percent at the beginning of the 1990s. Only five percent downsized because of decreased market demand.

In one third of all U.S. households, a family member lost a job.

Nearly three quarters of all U.S. households had a close encounter with layoffs in the last decade.

AFTER 911The number of layoffs has equaled the total of all previously announced layoffs for the year.

416,000 lost jobs in September alone.

RESULTS OF DOWNSIZING IN AMERICAFewer than half the companies that downsized between 1990 and 2000 had short or long-term profit increases.

Fewer than a quarter reported increases in employee productivity, product and service quality, and shareholder value.

Three years after downsizing, the market share prices of downsized companies were an average of 26 percent below the share prices of their competitors.

Among companies that downsized, those that laid off the fewest workers exhibited the largest return on assets.

Almost all organizations that downsizedin the public sector and the private sectorexperienced an emergence of the dirty dozen as a result of downsizing.

THE DIRTY DOZENUniversal Consequences of Downsizing, Trauma, CrisisCentralizationThe Threat-Rigidity ResponseLoss of InnovativenessDecreasing MoralePoliticized EnvironmentLoss of TrustIncreased ConflictRestricted CommunicationLack of TeamworkLoss of LoyaltyScapegoating Leaders Leadership AnemiaShort-term Perspective Resistance to Change THE ABUNDANCE HYPOTHESIS A decade of downsizing research led to the supposition that organizations characterized by virtuous behavior would predict superior performance after downsizing. Impressionistic data led to the presumption that indicators of performance such as employee satisfaction, productivity, quality, organizational innovation, and shareholder value would increase over timeand the dirty dozen would decreasein organizations that fostered and facilitated the demonstration of organizational virtues.

In fact, a few firms were observed that displayed positive deviance, that is, an affirmative exception to usual organizational behavior. They possessed characteristics that seemed to foster extraordinary value, remarkable performance, and high levels of excellence. Especially on the human dimension, they engendered virtuousness in relationships and in treatment of people. When they downsized they did so with caring and compassion. When they recovered from crises they did so with maturity and wisdom. When they set strategy they tended to do good as well as do well. They were unusual in demonstrating a capability that led to long term success, even in the face of difficulty.

THE ROLE OFVIRTUOUS ORGANIZATIONAL BEHAVIORLong-term+EffectivenessOrganizational -Virtuous+Commitment,Trauma (e.g.,OrganizationalLoyalty,downsizing)BehaviorRetention-Short-termEffectivenessWHAT DO WE MEAN BY VIRTUES?The Relationships Between Virtues and Extraordinary PerformancePERSONALPhysical HealthIllness HealthFitnessMental HealthAbnormal NormalThriving| | |ORGANIZATIONAL VIRTUESEffectivenessIneffectiveEffectiveExcellentEfficiencyInefficient/FaultyEfficient/ReliableFlawless/PerfectCrises ChaosCopingFlourishingRelationshipsHarmfulHelpfulLovingCommunicationSecretiveHonest and OpenHonoringEthicsUnethicalEthicalGoodnessRecoveryPunishmentToleranceRenewalInjury and Harm RetributionJusticeForgivenessSOME FUNCTIONS OF ORGANIZATIONAL VIRTUESOrganizational virtues create meaning, vision, and human connection (e.g., they create clarity amidst uncertainty).

Organizational virtues build the foundation upon which alliances and productive relationships are formedboth individual and organizational (e.g., they foster well-developed social capital).

Organizational virtues foster attachments to the organization (e.g., they foster loyalty and trust). Organizational virtues promote improved psychological and physical performance (e.g., they foster positive biological and mental responses). Organizational virtues help organizations heal and move past trauma, such as downsizing (e.g., they foster improved organizational effectiveness over time).

SURVEY OF VIRTUES IN ORGANIZATIONSCompanies included in the preliminary analyses:CH2MHillCooper LightingDana CorporationDix and EatonGeneral Electric Power SystemsHeidrick and StrugglesInvacareJo-Ann StoresNational City BankOfficeMaxOglebay NortonThompson HineUniversity of MichiganYMCARoadwayFinistarData being gathered from addition firms:Approximately 50 firms, mainly manufacturing organizations, studied 10 years ago in a study of organizational downsizing.

PRELIMINARY ANALYSES OF SURVEYSDISCRIMINANT ANALYSESAbove Average Performance versus Below Average Performance(Correlations with discriminant function)12345678Compassion and Caring781673668723909671835934Overall Virtuousness6835686205637808107469441 = Overall Performance2 = ProductivityHope and Optimism7085295456037588736669203 = Quality4 = ProfitabilityIntegrity7225164547217325637158315 = Customer Retention6 = InnovationForgiveness5052882745036785798375647 = Employee Turnover8 = Employee ComplaintsHumility436259300363551683771444Centroid Below Average-382-417-421-451-417-217+517+481Centroid Above Average417240308348329201-287-188Classification100%100%100%100%100%100%100%100%CONCLUSION: Organizations performing above the average demonstrate significantly more virtuousness than organizations that perform below the average.

PRELIMINARY ANALYSES OF SURVEYSMULTIPLE REGRESSION ANALYSESMajor Predictors of Organizational Outcomes (Significant regression weights)12345678Compassion and Caring.21*Overall Virtuousness.18*.23*1 = Overall Performance2 = ProductivityHope and Optimism.35***.18*.20*.17*3 = Quality4 = ProfitabilityIntegrity.23**.21**.32***(-.18)(-.18)5 = Customer Retention6 = InnovationForgiveness-.24**-.19*7 = Employee Turnover8 = Employee ComplaintsHumility.25***.27**ANOVA F105.818.930.49.422.725.16.58.9(all significant at .10CONCLUSION: Different virtues tend to predict different outcomes. Hope and optimism predicts 4 outcomes. Integrity predicts 3 outcomes. Forgiveness, humility, and virtuousness predict 2 outcomes. Compassion and caring predicts 1 outcome.

(VERY) PRELIMINARY FINDINGSCertain organizational virtues are predictive of high levels of organizational effectiveness, especially after the organization has encountered a trauma such as downsizing.

Organizational virtuousness and the dirty dozen are significantly and negatively related. No virtues significantly predict employee turnover or employee grievances and complaints (although taken as a set of virtues, virtuousness is predictive of both factors).

Puzzle: General organizational forgiveness tends to be negatively associated with quality and with customer retention. SOME KEY RESEARCH ISSUESVirtues are considered to be intra-psychic and relevant only to individuals, not organizations or collectivities.

It is difficult to recognize virtues when they are demonstrated in organizations, consequently, it is difficult to measure them. Virtues, by definition, represent inherent goodness. Consequently, to assess virtues empirically and endeavor to establish their relevance in organizations by associating them with an instrumental outcome is self-contradictory. That is, if no evidence emerges that instrumental outcomes are enhanced, the desirability of organizational virtues remains. Words/ Pages : 1,047 / 24

Cite this R’ships after Downsizing

R’ships after Downsizing. (2019, Apr 14). Retrieved from https://graduateway.com/rships-after-downsizing/

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