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Article Excerpt
The current downsizing literature has neglected the cognitions and behaviors of layoff agents. In this article, layoff agents are defined as employees who assist in the implementation of layoffs in their employing organizations. The article develops a theoretical framework that focuses on the cognitions and perceptions of those individuals. This framework suggests that layoff agents have the potential to experience cognitive dissonance as a result of their layoff agency activities, and under some conditions they will seek to reduce that dissonance by altering their perceptions of organizational downsizing. The framework specifies variables that moderate the relationship between layoff agency and cognitive dissonance and also variables that moderate the relationship between layoff agency--induced cognitive dissonance and agent perceptions of organizational downsizing. The moderating effects of these variables are captured in a set of propositions suitable for testing in future empirical research on the psychology of layoff agents.
Keywords: cognitions; institutionalization; layoff agents; perceptions of downsizing
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The increasing use of organizational downsizing is interesting given the evidence that suggests the practice generally fails to achieve its intended financial outcomes and often generates negative consequences in terms of victim and survivor psychological and physiological stress (Cascio, 2005; Grunberg, Moore, & Greenberg, 2006; McKinley, Sanchez, & Schick, 1995). This raises the issue of why managers engage in organizational downsizing. A potential explanation for this phenomenon is that managers often hold favorable perceptions of downsizing. How such perceptions form in the face of equivocal evidence with respect to the effectiveness of downsizing is a significant research question that has been largely ignored in the past.
This article strives to address this issue by examining the cognitions of layoff agents, whom we define as any employee who "has ever assisted in the implementation of a layoff or downsizing initiative in an organization for which (s)he has worked" (Sronce & McKinley, 2006, p. 90). We focus on the factors that contribute to changes in these individuals' perceptions of organizational downsizing. Layoff agents' perceptions of downsizing are important because those perceptions can influence the way other employees view downsizing and indeed the overall institutionalization of the phenomenon (McKinley et al., 1995; Sronce & McKinley, 2006). Given that layoff agents are generally individuals of some authority in their organizations, working at middle management or higher ranks, their perceptions of downsizing will likely have an effect on other employees (Grunberg et al., 2006). Those employees may change their own views of downsizing to conform more closely to the perceptions held by the layoff agents. As downsizing diffuses in the corporate world, more and more employees are likely to be thrust into the role of layoff agent, and the perceptions of downsizing that these individuals develop will feed into the ongoing sociocognitive process that results in the institutionalization and objectification of downsizing (McKinley, Zhao, & Rust, 2000). Thus, by studying layoff agents' perceptions of downsizing and the factors that influence those perceptions we can begin to trace one of the cognitive foundations that contribute to the institutionalization of organizational downsizing (McKinley et al., 1995, 2000).
The body of this article is structured as follows. In the second section, we provide a brief review of the literature on organizational downsizing. The third section then develops our theoretical framework. In that framework we argue that layoff agency has the potential to bring about cognitive dissonance (Cooper, 2007; Festinger, 1957) in the layoff agent and that such dissonance has the potential to induce changes in the agent's perceptions of organizational downsizing as a general phenomenon. As we examine each linkage in this causal chain (layoff agency-cognitive dissonance and cognitive dissonance-change in perceptions of downsizing), we present arguments about variables that moderate the linkage. We therefore consider two sets of moderating variables, one that describes the contexts in which layoff agency will produce cognitive dissonance in the agent and a second that describes the contexts in which layoff agency--induced cognitive dissonance will generate changed agent perceptions of downsizing. As we present the arguments about the moderating variables, we specify propositions intended for testing in future empirical research. The fourth section of the article then discusses the general implications of our theoretical framework for future research on downsizing and for future management practice. One of the key themes in this discussion is the role of layoff agent perceptions as one pillar for the institutionalization of downsizing. The final section concludes with a brief summary of the article and how it could be extended in future work on layoff agents.
Literature Review
As organizational downsizing becomes a common tool of corporate managers and becomes institutionalized as a taken-for-granted practice (McKinley et al., 1995), increasing scholarly attention is being devoted to the phenomenon. One stream of research has attempted to investigate the relationship between organizational downsizing and financial performance to determine whether downsizing is financially beneficial for the organizations implementing it. The outcome of this research shows no reliable positive effects of downsizing on financial performance. Some work (e.g., Love & Nohria, 2005) suggests that downsizing can have a positive influence on firm profitability under some conditions, whereas other research (e.g., De Meuse, Bergmann, & Vanderheiden, 1997; De Meuse, Vanderheiden, & Bergmann, 1994; Mentzer, 1996; Wayan & Wemer, 2000) indicates that the positive effects of workforce reductions on accounting performance measures are either transitory or nonexistent. When financial performance is assessed through stock price reactions, meta-analysis of the many existing studies (Capelle-Blancard & Couderc, 2007) reveals that layoff announcements are, on average, followed by reduced stock prices. Exceptions to this outcome include instances where layoff announcements are positively framed (e.g., Worrell, Davidson, & Sharma, 1991).
A second stream of research (DeWitt, 1993; Littler, Bramble, & MacDonald, 1994; Littler & Innes, 1999; McKinley, 1992; Mentzer & Near, 1992; Sutton & D'Aunno, 1989) has tried to assess the effects of downsizing on organizational structure. This research has concluded that downsizing fails to produce decreases in organizational structure that are the equivalent of the increases in structure that occur during growth. In other words, change in organizational size seems to have an asymmetrical causal influence on organizational structure, throwing doubt on the idea that leaner, less complex structures can be achieved through organizational downsizing alone.
Complementing this stream of work is a third body of research that focuses on the ramifications of institutional norms and ideologies for the proliferation of organizational downsizing (Budros, 1999, 2002; Lamertz & Baum, 1998; McKinley et al., 1995, 2000; McKinley, Mone, & Barker, 1998). This literature suggests that organizational downsizing has become institutionalized, and indeed objectified, as a taken-for-granted practice that is increasingly assuming the appearance of an economic "law." According to this stream and the underlying postulates of neoinstitutional theory (DiMaggio & Powell, 1983; Meyer & Rowan, 1977), managers downsize because doing so reduces their uncertainty or because they simply perceive no other option when financial performance declines.
All this work has been conducted at the macro level, focusing on the downsizing organization and the causes and consequences of downsizing at the organizational level of analysis. However, on a more micro level, a considerable stream of research on the consequences of organizational downsizing for individual employees has also evolved. For example, an important corpus of work (Leana & Feldman, 1992; Leana & Ivancevich, 1987; Pugh, Skarlicki, & Passell, 2003) has sought to understand the influence of downsizing on the "victims," the individuals who lose their jobs. Conclusions from this research emphasize the stressful effects of downsizing on the employees who are terminated. Considerable research attention has also been devoted to the effects of organizational downsizing on the "survivors," the employees who remain in the organization after a downsizing has taken place (see Brockner, 1988; Brockner, Davy, & Carter, 1985; Brockner et al., 2004; Brockner, Grover, O'Malley, Reed, & Glynn, 1993; Brockner, Grover, Reed, Dewitt, & O'Malley, 1987; Grunberg et al., 2006; Moore, Grunberg, & Greenberg, 2004). This literature has drawn attention to the phenomenon of "survivor guilt" and its possible ramifications for survivor job performance as well as the negative outcomes that tend to ensue when survivors are closely affiliated with layoff victims and the latter are not adequately compensated during their termination (Brockner et al., 1987).
What has been missing in all this literature is attention to the layoff agent. The layoff agent's role can include a variety of activities, from planning the sequence of events during a layoff, to deciding which employees are to be laid off, to breaking the news to those individuals. A few studies (Clair & Dufresne, 2004; DeWitt, Trevino, & Mollica, 2003; Folger & Skarlicki, 1998; Kets de Vries & Balazs, 1997; Wright & Barling, 1998) have begun to open the black box of the layoff agent's cognitions and emotions, but layoff agents have received very little attention compared to layoff victims or...
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