Matt Moyer COMM 3140 Reading 8 The Communication Consequences of Downsizing Trust, Loyalty, and Commitment 09/23/13 This

article focuses on downsizing and the reasoning behind doing so and the failed attempts to reengineer organizations. A review of 3,628 companies over a fifteen-year period looked at Return on Assets (ROA) a useful measure of profitability. It found that ROA in companies that downsized declined in the downsizing year and the first year subsequent to the downsizing. There was a slight improvement in year two, but it was not sufficient to restore ROA to it pre-downsizing level (Morris et al., 1999: 82). In an attempt to conserve cash through reduction of overall payroll jobs were eliminated which resulted in an overall loss. Downsizing also results in interpersonal conflict, weaker relationships between employees and customers, and decreased employee morale and loyalty. Reduced loyalty is almost an accepted trend in some organizations. Growing along with disloyalty is insecurity and bitterness. These factors contribute to the overall success or failure of a company. They are known as the human equation. As bitterness increases and loyalty decreases employees, including those with the greatest talents, are more likely to abandon their employers in hopes of finding a new place of employment with a higher degree of satisfaction. An unsatisfied workforce can lead to failure because they are concerned with their own insecurities and often leave decision making to others and experience a decrease in creativity. Social capital is people working together for a common goal. Downsizing results in loss of trust with results in loss of social capital. Without trust it is hard for a group of people to work together. Organizations keep falling into this downsizing trap because the managers that support downsizing are seen as innovative, while those that dont support downsizing are seen as not utilizing newer techniques and lose legitimacy in the eyes of the executive officers and stockholders. Opponents of downsizing are likened to the Luddites, who fought against new machinery introduced by the Industrial Revolution in the eighteenth century. Irrelevant historical analogies or misplaced international comparisons displace critical thinking. The company I work for often tries to convince its employees that it is a good problem that we are often out of product to sell. The typical thought process would be that a retail store should always be adequately stocked with product to sell instead of trying to convince employees and customers that it is actually a good thing that we are out of products. Their thought is that if we are out of product then it must mean the product is really good and we just cant keep it in stock. Of course is not what is happening, actually, the needed funds to produce our flagship are being eaten up by product that does not sell as frequently and operate on thinner profit margins.

Lower level managers often feel intimidated by upper level managers; therefore, upper level managers do not get honest and critical feedback. The common situation is for lower level managers to agree with the decisions of upper level management in order to avoid rocking the boat. There is a common trend in the U.S. to view the relationship between employee and employer as short term. Many have gotten away from the idea of being able to maintain an entire lifelong career at one company. This kind of thinking promotes employee uncertainty and weakens the relationship between employee and employer.