ABSTRACT
This project in on the effect of downsizing on organizational performance. The Statement of Problem identified was that downsized organisations have not improved significantly in their performances and have failed to produce the desired results which thereby undermine the effectiveness of performance in the organisation. To meet the general objective, the study is focused on the following specific objectives, to determine the effect of downsizing on the quality of output, to determine the effect of downsizing on the volume of sales and to determine the effect of downsizing on the span of control. The descriptive survey method was used and the research tool was questionnaire. In the analyses, the simple percentage technique was applied to analyse the questionnaires and presentation was done by the use of tables. The data analysis used was Chi-square formula .The findings from the study shows that Downsizing results in decline in quality of output, volume of sales volume and increases span of control consequently, affecting the effectiveness and efficiency of the organisation. The study concluded that reduction in size of workforce has not improved corporate organisational performance. Finally, the solutions and recommendation for this study emphasized that downsizing exercise needs to be carefully planned and executed in order to produce its expected result of expense reduction, increased effectiveness and efficiencies restructuring.
TABLE OF CONTENTS
Tite Page………………………………………………………………………………….i
Certificat ion Page …………………………………………………………………….ii
Approval page ……………………………………………………………………………iii
Dedication…………………………………………………………………………………iv
Acknowledgements ……………………………………………………………………..v
Abstract…………………………………………………………………………………….vi
Table of contents………………………………………………………………………….vii
List of Tables………………………………………………………………………………x
CHAPTER ONE: INTRODUCTION
1.1: Background of the Study…………………………………………………………….1
1.2: Statement of the Problem ……………………………………………………………5
1.3: Objectives of the Study ………………………. 6
- Research Questions …………………………………………………………… 6
1.5: Research Hypotheses ……………………………………………………………. 6
1.6: Significance of Study………………………..………………..7
1.7: Scope of the Study…………………………………………………………………. .8
1.8: Limitations of the Study ………………………………..8
1.9: Definition of Term…………………………………………………………………….9
Reference …………………………………………………………………………….10
CHAPTER TWO: LITERATURE REVIEW
2.1 Meaning of Organisation …………………………………………………………….12
2.2 Organisational Performance and Measurement of Organizational Performance….16
2.3 Concept of Downsizing………………………………………………………………….17
2.4 Types of Organisational Downsizing Operations in Organisation……………………21
2.5 Factors Influencing Downsizing ……………………………… 22
2.6 Reasons for Organisational Downsizing……………………………24
2.7 Stages of Downsizing Process………………………………………27
2.8 Downsizing Implementation Strategy…………………………………34
2.9 Downsizing Best Practices ……………………………………………..38
2.10 Effect of Downsizing on Individuals in the Organisation ……….40
2.11 Problems of Downsizing on the Organisation …….40
References………………………………………………………………………………………42
CHAPTER THREE: RESEARCH METHOD
3.1 Research Design ……………………………………………………………….44
3.2 Area of the Study ……………………………………….44
3.3 Sources of Data ……………………………………………………………………….45
3.4 Population of the Study ……………………………………………………………….45
3.5 Sample and Sampling Technique ………………………………………………46
3.6 Data Collection Instrument ………………………………………………………47
3.7 Validation of Instrument………………………………………………………………..48
3.7: Method of Data Analysis……………………………………………………………..48
CHAPTER FOUR: PRESENTATION AND ANALYSES OF DATA
4.1 Analyses of Data ………………………………………49
4.2: Hypothesis Testing……………………………………………………………………63
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1: Summary of Findings ………………………………………………………………..70
5.2: Conclusion……………………………………………………………………………….72
5.3 Recommandations ……………………………………………………………….73
5.4 Suggestions for Further Studies………………………………………………………75
REFERENCE S ……………………………………………………………………….76
APPENDIX 1 ……………………………………………………………………………….79
QUESTIONNAIRES ………………………………………………………………80
LIST OF TABLES
Table 4.1.1; Questionnaire Response Rate ………………………….…………….49
Table 4.1.1 Sex Distribution of Respondents…………………………………………50
Table 4.1.2: Age Distribution of the Respondents……………………………………51
Table 4.1.3: Marital statues Distribution of Respondents………………51
Table 4.1.4: Educational Qualification of Respondents……………..52
Table 4.1.5: Employee’s Years of Experience………………………………………..52
Table 4.1.6: Designation/ Position Occupied………………………………………….53
Table 4.1.7: Organisational Departmental Distribution of Respondents……………53
Section B: Table 4.1.8: How often does your organisation downsize………………….54
Table 4.1.9 Who initiates downsize in your organisation…………………………….54
Table 4.1.10 Which categories of workers are most affected during downsizing….55
Table 4.1.11: Would you say that downsizing policy has affected performance
in your organisation…………………………………………………………………….56
Table 4.1.12 If yes, how has downsizing affected the organisation………………..56
Table 4.1.13: Do you think that downsizing has affected output in
your organisation………………………………………………………………….……57
Table 4.1.14: How has the policy affected output in the organisation………………57
Section C: Table 4.1.15: Do you have staff under your direct control………………58
Table 4.1.16: Has the number of staff under your supervision increase
since the last downsizing…………………………………………………………………..58
Table4.1.17:What was the number of staff you supervised or that reports to you ….59
Table4.1.18: How has the number of staff supervised by you or that reports
to you affected your performance………………………………………………………..59
Table 4.1.19: How has the number of staff under your control due to
downsizing affected your effectiveness…………………………………………………..60
Table 4.1.20: What would you say is the result of wider span of control
in your firm due to downsizing……………………………………………………………60
Table 4.1.21: Would you say that downsizing has resulted in decline in the
volume of sales……………………………………………………………………………61
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
In the recent times, globalisation has made organisations to become more competitive and complex in the employment and application of resources of production. Many organisations adjust to practices that will give them an edge over their competitors. To compete effectively, they need to reduce cost, improve efficiency, and as well increase productivity and quality of output. To cope with this tough competition, many organizations have applied the management tool of downsizing.
Downsizing is a universal phenomenon the business world is experiencing. The major impact is on people, corporate organisations and the economy. An organisation, being a structured entity which is established to achieve specific goals by blending resources, is very sensitive regarding costs and benefits to get optimal returns.
The main motive for most downsizing activities is the objective of reduction of cost (Casio,1993), an increase of organisation’s level of efficiency, effectiveness, productivity (Gandolfi 2002), and competitiveness (Cameron 1994), and so an overall organisational performance. (Thornhill & Saunders 1998).
Every organisation attempts to expand or reduce its man power according to specific requirements and prevailing business conditions. The right size of human resources is indispensable for the successful survival of every organization. Many organisations are more concerned about how to become “lean and mean” and therefore face the task of reducing the size and improving the efficiency of an over-staff as a general endeavour to increase economic growth and cut deficit.
This has spread across American economy where the largest organisation has implemented a work force reduction unprecedented in its size and scope (Morris, Cascio
and Young 1999) and more recently, the phenomenon has also been documented in European (Dahl & Nashum, 1998) and Asian Firms (Ahmadjian & Robbinson,2001).
In the USA, there have been more than 4.6 million job cuts announced since 1990 with 1998 topping the decade’s biggest downsizing year (Laabs 1999).
An economist at the Federal Reserve Bank of Chicago estimated that in 1995, workers faced a 3.4 percent chance of being laid-off. A recent survey by the American Management Association (AMA) found that between one third and one half of medium and large sized organisations in the US have downsized every year since 1998 (Cole 1995).
In Nigeria since May 29, 1999, about 4.8 million Nigerians have been retrenched in the civil service of the federal statutory corporations, state owned companies, banks and insurance companies, through the policy of downsizing ( Aluko 2007). The downsizing of the public sector has consequently led to the downsizing of private sector and vice versa.
John Holt Plc is a multinational company, whose businesses spans through every sector of the economy such as manufacturing, industrial, commercial and other related businesses. In the organisation, retrenchment and retirement has become order of the day since 2005. Over the years, the organisation has been downsizing and over five hundred workers have lost their jobs. Some divisions were completely closed down while some branch network were reduced to operate only from the company’s corporate headquarter In Lagos.
The last downsizing was in August, 2011 where one Hundred and fifty workers were laid-off and this year, more names are being complied on the list of redundancy which will be released as soon as management settles the benefits of the last downsized staff. The organisation attributed their efforts, to improving global effectiveness through cutting down costs and improving organisational efficiencies.
Downsizing could be a painful process because it involves people and emotions. In organisations, the freedom for taking actions is much more and the damage such decision can make on employees and organisations can be too hard.
In private organisations, any decision about downsizing can drop like a bomb shell without any prior warnings and without giving time for employees to be prepared and management at all levels is expected to achieve results with fewer employees at less cost. Unfortunately, many employers generally lack a decent level of diplomacy in effecting retrenchment and they hide behind the legal terms and conditions under which an employee originally signed, which would normally include a virtual freedom to terminate the employee.
Therefore, downsizing as an effective management tool for reorganisation and re-engineering, needs to be carefully planned and executed in order to produce its expected result of expense reduction, increased effectiveness and efficiencies restructuring.
It is on this background that this study is set to examine the effect of downsizing on organisational performance in the organisation where the concept of downsizing and organisational performance are defined, the downsizing implementation strategies used by organisations, the rationale behind organisational downsizing, the various factors affecting organisational downsizing, its effects on individuals and the various downsizing problems in the organisation.
