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.
THE EFFECT OF DOWNSIZING ON ORGANIZATIONAL PERFORMANCE A CASE STUDY OF JOHN HOLT PLC
