Organizational redesign and downsizing: A case of appropriated interpretation.

Abstract

This dissertation describes a longitudinal study of organizational downsizing and redesign. Three goals drove the research. First, the research investigated the link between managerial interpretation and organizational action. Second, a framework describing patterns of downsizing at the organizational level was explicated. Third, relationships among managerial interpretation, downsizing strategies and organizational outcomes were explored. I conducted a study of 30 organizations in the U.S. automotive industry over a three-year period. All these organizations were under a mandate from their corporate parents to reduce their salaried work forces. Interviews were conducted with the top manager of each organization every six to nine months. Interview questions addressed downsizing and redesign approaches, changes made and implementation processes used in downsizing, and the manager's assessments of results. Additional data were collected via a questionnaire distributed to salaried work forces at 29 of the 30 organizations. Sections of the questionnaire concerned downsizing, its implementation and effects; organizational characteristics; organizational changes; and organizational effectiveness. Interviews were content analyzed by multiple raters. Questionnaire data were aggregated at the site level and used, along with interview data, to investigate the research questions in both qualitative and quantitative analyses. A link was found between managerial interpretation of the downsizing mandate and organizational action. In general, managers who labelled downsizing as a threat did not incorporate it into other programs for organizational improvement. Downsizing was approached in an incremental, piecemeal fashion involving low-level change. Managers who labelled downsizing as an opportunity, however, were likely to attach it to other items on the organizational agenda. In this case, downsizing involved more radical change and restructuring. Two general strategies for downsizing were identified--downsizing driving redesign and redesign driving downsizing. Each of these strategies was associated with different patterns of downsizing activities. In particular, organizations pursuing these strategies differed on the implementation processes used, the extent to which they made low- or high-level changes to make the organization smaller and reduce the white collar workload, and the magnitude of other changes accompanying downsizing. Finally, relationships were found among downsizing activities and organizational outcomes including organizational climate, evaluations of downsizing's success, and organizational performance. Best practices for organizational downsizing include broad participation, use of high volume and varied media for communication, and gradual as opposed to sudden downsizing. In general, organizations pursuing a strategy where redesign drove downsizing experienced fewer dysfunctional climate outcomes and received higher ratings of downsizing success and organizational performance.