The mediating role of distributive, procedural, and interactional justice on the relationship between downsizing and organizational citizenship behavior.

Author:Hart, Adrienne L.
Position::Report
 
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INTRODUCTION

Downsizing is a serious issue that is impacting large numbers of workers in the US and Worldwide. In the last six months of 2010, Caterpillar, Verizon, Pfizer, Merck, Wal-Mart Stores, Alcoa, AT&T, Boeing, and Home Depot have each downsized their companies' labor force by at least 8,000 jobs (Kneale & Turchioe, 2010). In 2014, Hewlett-Packard completed its downsizing of 34,000 employees over a 4-year period (Poeter, 2013). The United States Bureau of Labor Statistics reported that 80,703,000 jobs have been lost as of September 2010 due to temporary and permanent downsizing, and those losses continue. In the first quarter of 2013, another 154,374 workers lost their jobs. While this was down from 2012, it reflects a continued pattern of downsizing (BLS, 2013). Datta, Guthrie, Basuil, and Pandey (2010) stated, "Global competitive pressures coupled with ever-changing demand conditions have caused firms to critically examine their cost structures, including those associated with human resources" (p.282). However, there are not solely benefits from downsizing, and the negative impact is often ignored (Leonard, 2009). Chipunza and Berry (2010) stated, "while it has become a common practice for organizations operating in the current global economy characterized by recession and political instability to downsize in order to remain competitive, a grave problem of survivor quality arises" (p.604).

Downsizing is of particular interest vis-a-vis the organizational justice perspective with much evidence pointing toward the impact layoffs have on organizationally relevant outcomes such as commitment, fairness perceptions, and employee turnover (van Dierendonck & Jacobs, 2012). Downsizing creates a work environment defined by high levels of uncertainty and research suggests that those employees who feel treated with respect and fairness are more likely to accept the process and remain committed to the organization (van Dierendonck & Jacobs, 2012). The way in which survivors respond to the downsizing can have far-reaching effects for the organization. An organization's existence rests upon employees who remain after cutbacks are complete. Accordingly, employee behaviors and productivity become ever more important to the future functioning of the organization. Armstrong-Stassen (2000) stated, "Organizational citizenship behavior has been shown to be related to improved organizational effectiveness (Podsakoff & MacKenzie, 1997), workgroup performance (Podsakoff, Ahearne, & MacKenzie, 1997), and individual performance (Van Dyne & LePine, 1998)" (p.159). If downsizing has a lasting effect on morale, it would then be probable that organizational citizenship behavior will also be affected (Armstrong-Stassen 2000).

Organ (1988) found perceived justice to be an essential determinant of organizational citizenship behavior. When an individual feels that he or she has been treated fairly by the organization, they are more likely to exhibit organizational citizenship behaviors. However, those who feel they have been treated unfairly by their organization will withhold exhibiting organizational citizenship behaviors. James & Tang (1996) stated, "The way in which an organization handles labor cuts and downsizing is critical to the efficient functioning of the organization after the downsizing is complete" (p.34). Furthermore, Shin et al. found that the justice climate set by the organizational leadership plays an important role between the conduct of the leadership team and organizational performance (Shin, Sung, Choi, & Kim, 2015).

Little research has been conducted on how significant workplace events can influence justice perceptions on work attitudes (Clay-Warner, Hegtvedt, & Roman, 2005). According to Moorman, Niehoff and Organ (1993), perceptions of justice are important predictors of work attitudes and may also contribute to the effectiveness of an organization by directing an employee's decision to exhibit organizational citizenship behaviors. Therefore, the purpose of this paper is to examine whether perceived justice mediates the effect of downsizing on organizational citizenship behavior among those of organizational downsizing.

DOWNSIZING

Since the recession of the late 1970's and early 1980's, employers have been looking for ways to cut costs (Appelbaum, Simpson, & Shapiro (1987). One of the ways employers cut costs is by reducing the number of employee positions within their companies. Downsizing has become the new way of thinking as employers realize they can get by with less. According to Freeman and Cameron (1993), downsizing has spread widely and has moved from being seen as a last attempt effort to save a failing company, such as Chrysler in 1979, to becoming an accepted way of managing.

Downsizing involves reducing the number of personnel in all or some departments within a company. Freeman and Cameron (1993) stated "A variety of personnel reduction strategies are associated with downsizing, such as transfers, outplacement, retirement incentives, buyout packages, layoffs, attrition, and so on" (p.12). Other strategies may be used to downsize the expenses of the company, although employees are often seen as targets of the largest cutbacks. According to Cameron (1994), downsizing also focuses on the organization's effectiveness. It is used to lower operating costs while maintaining productivity in order to compete with other organizations. Downsizing affects the work processes of an organization. When downsizing is used to reduce a workforce, it leaves the organization with fewer employees to do the same amount of work. Negative as well as positive outcomes can come from these layoffs. Possible consequences are that overworked employees feel burnout and conflict, but changes in work processes may lead to improved productivity and speed.

There are three main types of implementation strategies used for downsizing. Workforce reduction is the most commonly used strategy, and it is implemented in a variety of different ways such as offering early retirements, transfers, attrition, and layoffs. According to Cameron, et al. (1993), the main purpose of this strategy is to make the organization aware of the conditions that exist, to motivate cost savings in daily work, and to unfreeze the organization from changes in the future. The second downsizing strategy is work redesign, which avoids terminating employees and increasing workload. The disadvantage to using this strategy is the time it takes to conduct research, implement and produce results. However, this strategy helps to make sure the changes made are pointed at the work processes. The third strategy is systematic strategy, which focuses on changing the employees as well as the organization (Cameron, 1994). By changing the attitudes and values of employees, the systematic strategy strives to redefine downsizing as a process that is ongoing rather than just a target. Cameron et al. (1993) stated, "examples of downsizing targets include reducing wait time, response time, rework, paper, incompatibilities in data and information systems, number of suppliers, and rules and regulations" (p.34). Rather than employees being seen as targets up for elimination, they are considered as resources to the organization. Organizations that choose to use this strategy will create a sense of employee ownership to reduce costs. Cameron et al. (1993) stated, "Because this strategy takes a long-term perspective, it may not generate the immediate improvement in bottom-line numbers that a workforce reduction strategy will generate" (p.34).

There are both benefits and problems associated with downsizing in organizations. Some of the benefits of downsizing include lower overhead and smoother communication (Appelbaum, Delage, Labib, & Gault, 1997; Cascio 1993). However, according to Appelbaum and colleagues (1987) the widespread use of downsizing has had major negative consequences on both the macro and micro environments. It puts a larger strain on unemployment and welfare programs. Employees who lose their job due to downsizing may lack the confidence they need to get a new job. According to Sahdev (2004), it leaves businesses to pay the high cost...

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