Impact of Downsizing on Organizational Commitment, Motivation and Psychological Well-being among Workers of Secondary and Tertiary Organizations of Pakistan

Abstract

Organizational downsizing becomes inevitable sometimes, for competence improvement, output augmentation or cost cutback but the results may be in the form of negative impacts on survivors’ thoughts, moral, and insights, if the technicalities of survivors’ psychological attitudes are not considered by the corporations. Its ultimate impact appears in the form of worsening organizational phenomena instead of improvement. Extent of downsizing is the main factor on which survivors’ potential psychosomatic thoughts and organizational behaviors are based. The present research uses experimental type-retrospective study design to explore the impact of downsizing and extent of downsizing, on survivors’ affective organizational commitment, work motivation and psychological well-being. Sixteen main and nine secondary hypotheses were formulated. A pre-formulated and pre- tested research questionnaire measuring affective organizational commitment, work motivation, psychological well-being, and downsizing was circulated. Disproportionate stratified random sampling technique was adopted to collect the data from 299 respondents before downsizing (72.93% response rate) and 520 respondents after downsizing (control group: 272 respondents with 71.58% response rate; and experimental group: 248 respondents with 62% response rate) from the four organizations throughout Pakistan; two from secondary and tertiary sectors of economy each. Data collected was examined employing explanatory statistics and ANOVA at 0.05 alpha levels. The results were further verified using Structural Equation Modeling (SEM) and Path Analysis techniques. As per results, a negative shift in survivors’ psychological attitudinal levels has been observed before and after downsizing. The downsizing itself, has negative effects on survivors’ organizational commitment, work motivation and psychological well- being and that psychological attitudes and behaviors are the limiting factors of extent of downsizing. As per results the extent of downsizing must be limited to a predetermined level (20% suggested by the study) to avoid the deteriorating effect on these psychological states. A positive correlation is found among the three attitudinal variables. Affective organizational commitment and psychological well- being have been found to be mediating the relationship between work motivation and some tangible demographics. The difference of experiences regarding xxv survivors’ attitudes is also assessed sector-wise as well as among organizations separately. This study provides a mean to academicians, researchers, and policy makers to understand the influence of downsizing and its extent on survivors’ selected attitudes in secondary and tertiary economy sectors of developing countries. Keywords: Downsizing, organizational commitment, work motivation, psychological well-being, secondary sector, tertiary sector, layoff survivors.