Managerial Value, Financial Condition, and Downsizing Reform: A Study of U.S. City Governments

• Published date: 01 December 2019
• Author: XiaoHu Wang,Kuotsai Tom Liou
• Date: 01 December 2019
• DOI: 10.1177/0091026019826144
• Subject Matter: Articles

https://doi.org/10.1177/0091026019826144

Public Personnel Management

2019, Vol. 48(4) 471 –492

© The Author(s) 2019

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DOI: 10.1177/0091026019826144

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Article

Managerial Value, Financial

Condition, and Downsizing

Reform: A Study of

U.S. City Governments

Kuotsai Tom Liou1 and XiaoHu Wang2

Abstract

This study examines downsizing reforms in U.S. city governments to understand

the influence of managerial values and financial conditions on the implementation of

downsizing strategies. Based on the analyses of national survey data, we found that

downsizing tends to be implemented with a package of downsizing factor including

structural and procedure changes. We further confirmed that managerial values,

measured as their innovative attitudes and ethical concerns, affect downsizing factors

of structural changes. Financial conditions, including budget surplus and fund deficits,

are not related to downsizing strategies. Implications of the research findings are

presented for future studies of public downsizing reforms.

Keywords

local government, public sector downsizing, public management reform, managerial

value

Introduction

Since the late 1970s, public administration researchers and practitioners have promoted

several reforms to improve the performance and accountability of public organiza-

tions. These reforms include, for example, cutback management, total quality manage-

ment, reinventing government, national performance review (NPR), and new public

management (NPM; Rainey, 2003). Based on different philosophies and theories,

1University of Central Florida, Orlando, FL, USA

2City University of Hong Kong, Hong Kong

Corresponding Author:

Kuotsai Tom Liou, University of Central Florida, Health and Public Affairs Building II, Room 240,

Orlando, FL 32816, USA.

Email: kliou@ucf.edu

826144PPMXXX10.1177/0091026019826144Public Personnel ManagementLiou and Wang

research-article2019

472 Public Personnel Management 48(4)

these reforms were developed to change the behavior of public employees, simplify

the structure of government agencies, decentralize the decision-making processes,

improve the measurement of public service outcome, and promote a new culture of

public management (e.g., Rosenbloom, 1998).

Among these reforms, organizational downsizing has been consistently empha-

sized by policy makers and public managers. For example, downsizing, as a strategic

fiscal option, was discussed in cutback management in the 1980s to address budgetary

challenges (Levine, 1980). It was further highlighted in the reinventing government

and the NPR movement in the United States during the 1990s (Gore, 1993; Osborne &

Gaebler, 1992). Downsizing, as a strategy used by many countries to reduce the size

of government and simplify the decision-making structure, has also been promoted in

the movement of NPM at the international level (e.g., Peters & Pierre, 1998).

Despite its importance, the implementation of public sector downsizing has not

been fully examined and understood. Early studies of cutback management tended to

offer theoretical and conceptual explanations without empirical analyses and evidence

(e.g., Jones, 1998). Some limited research that provided insight into downsizing expe-

riences tend to focus on case studies of selected federal agencies and local govern-

ments (e.g., Levine, Rubin, & Wolohojian, 1981a, 1981b; Rubin, 1985).

Studies that focus on downsizing activities in public organizations have examined

downsizing experiences among federal agencies (e.g., Halley, 2005), state govern-

ments (Liou & Korosec, 2009), and public safety agencies of local governments (e.g.,

Guajardo, 2014a), as well as ethical implications of downsizing (Feldheim, 2007),

effective downsizing guidelines (Nutt & Hogan, 2008), and employee feelings of cut-

back and related organizational changes (Kiefer, Hartley, Conway, & Briner, 2015;

Stein, 1997) and their experiences about downsizing decisions (Ashman, 2015).

Despite different concerns and findings, these studies have recognized the need for

more empirical studies to understand the overall downsizing experiences and their

related factors to deepen our knowledge about public sector downsizing.

This study examines the implementation of downsizing reforms in city govern-

ments to enhance our understanding of public sector downsizing. Based on theoretical

arguments from the corporate downsizing strategy, the study investigates the imple-

mentation of downsizing strategies in three areas: work redesign, system change, and

work force reduction. Regarding influence of factors of downsizing, the study tests the

influence of managerial values, financial conditions, and organizational factors on the

downsizing strategies. The study first presents a critical review of theoretical issues to

develop research questions followed by detailed explanations about research data,

variables, measurements, and statistical techniques used. The findings of empirical

analyses and their implications to public management reforms are discussed in the

conclusion.

Research Background and Issues

Downsizing has become an important managerial strategy for both business and pub-

lic organizations since the late 1970s. For business organizations, downsizing has