Abstract

While the dominant literature on downsizing suggests that workforce
reductions have a negative impact on employee commitment, knowledge of
downsizing is limited by the undifferentiated ways in which downsizing activities
are usually approached. This study analyses differences in employee commitment
depending on a) the downsizing method used (voluntary redundancies, divestment,
layoffs and closure of units) and b) the degree of exposure of employees to the
downsizing event. Using downsizing announcements and questionnaires, two
distinct families of downsizing methods were identified. Layoffs and closure of
units have a negative effect on commitment while voluntary redundancies and
divestment have a positive effect. Employee exposure (direct, indirect or not
exposed) to the downsizing event accounts for significant differences on
commitment. Studying downsizing in a differentiated way shows that assuming
that all downsizing is detrimental to commitment is inadequate. We outline the
theoretical and practical implications of a more nuanced approach to downsizing.