Effects of Downsizing on Employee and Organizational Performance in Ghana

Abstract

Corporate downsizing has become a strategy of choice by a multitude of organizations worldwide. Downsizing is mostly carried out to achieve higher levels of efficiency, effectiveness, profitability, and to gain competitive advantage. The study is focused on the implementation of downsizing and its effects on productivity. Personally, administered questionnaire was used to collect information for the study. The data collected were analyzed descriptively. The study revealed downsizing has a significant negative relationship on employee and organizational performance. Also, early retirement, attrition, voluntary and compulsory termination are some of the downsizing strategies employed and could be attributed to factors such as cost reduction, an increase in the levels of efficiency and organizational competiveness. It was also revealed that employees are normally ignored when taking downsizing decisions causes emotional and behavioural effects on both the downsized workers and the remaining employees. The study therefore recommended that management should have an open and honest communication regarding downsizing and involve employees in the exercise.