May 15th, 2009
April 14th, 2009
Research on Downsizing’s Effects Named Best HR Article
Charlie O. Trevor
Anthony J. Nyberg
An article by Charlie Trevor and Anthony Nyberg of the Wisconsin School of Business has received the 2009 Scholarly Achievement Award (best article of the year) from the Human Resources Division of the Academy of Management for: “Keeping Your Headcount When All About You Are Losing Theirs: Downsizing, Voluntary Turnover Rates, and the Moderating Role of HR Practices.”
Trevor is an associate professor in Management and Human Resources at the Wisconsin School of Business. Nyberg worked on the study while earning his Ph.D. from the school; he graduated in 2008 and is now an assistant professor at the Moore School of Business at the University of South Carolina.
Their article was printed in the April/May 2008 issue of the Academy of Management Journal. In it, they describe their findings about downsizing and turnover rates at 200 companies. The research has been highlighted by U.S. News & World Report, TIME magazine, BusinessWeek and Harvard Business Review.
According to their study, downsizing can set off an exodus among retained employees that in some cases is much greater than the reduction achieved through the layoffs.
“The downsizing-turnover relationship suggests a sad irony in that employees are laid off by companies that may subsequently find themselves understaffed,” write Trevor and Nyberg in the article. “To the extent that turnover rates hinder organizational performance, the performance of downsizing companies may well suffer further through the leaving behavior that the layoffs generate.”
Perhaps the most striking finding in their study of quitting rates in some 200 companies was the considerable exodus that even a small downsizing could set off. For example, companies that laid off a mere 0.5% of their workforce sustained, on average, a turnover rate of 13%, a rate that was 2.6 percentage points higher than the average turnover rate of non-downsizing firms. In other words, an extra 2.6% of the workforce left of its own accord, more than five times more workers than were laid off.
“Employers sometimes use downsizing as a way of getting rid of undesired workers. Our findings ought to persuade them that this could very well result in the loss of even more employees whom they want to keep,” added Trevor.