Term Paper

TERM PAPER Of Management Practice & Organization Behavior On

Relationship of Downsizing Career perception & Psychological Contact

Submitted to; Ms Manbir Kaur Gill Lect. Of MPOB

(LIM)

Submitted by; Md Reyaz Aqubal R.No.RT1901A01 Section.T1901 Reg.no.10900173

CONTENT

1. Acknowledgment 2. Introduction

3. Downsizing & its effect. Relationship between Downsizing & voluntary Important. • Downsizing & voluntary turnover be related. • HR practices affect relationship between downsizing voluntary turnover. •

4. Final Thoughts

• Personal survival strategy • Out of the Crisis. 5. Perception & its type.

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Spoiled/Entitled Lazy Poor work Ethic Little Respect for authority Overinflated/Unrealistic expectation

• Not Committed to work • No Loyalty to employers • Lack of social skill • Needy

6. Psychological Contact, Social & Ideology employment contact Its type. •

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Transactional Relational Transitional Balanced Content Disruption Reneging

7. Bibliography

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ACKNOWLEDGMENT I am thankful to Miss Manbir Kaur Gill for providing me the chance to work on the topic of “Relationship of Downsizing Career Perception & Psychological Contact”. The term paper tested my patience at every step of the preparation but the courage provided me by the teachers helped me to swim against the tide First of all I thank to ALMIGHTY GOD for giving me power to pen down the term paper in its present shape. I thank the entire teaching staff especially Miss Manbir Kaur Gill for sharing his valuable knowledge with us & for providing his able guidance and support. I also thank to my classmate or senior/roommate who every time helped me out and encouraged me for carrying out the task. I am also thankful to all my friends and well-wishers who help me in completing my project timely by providing their suggestions.

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INTRODUCTION Downsizing means, superficially, to be a simple idea but is actually very complex, Downsizing may contribute to other organizational change strategies Successful downsizing requires the use of other HR strategies in order to prevent negative effects. In order for downsizing to succeed, it is necessary to understand the human aspects of change. Managing the people side of downsizing Overall guidelines Overall strategies Change management principles Distributive justice Procedural justice Interactional justice Improved communication Job redesign (protean psychological contracts) Provide organizational support. We are all familiar with the term “downsizing” when it applies to companies or organizations that dramatically reduce the number of their employees. Downsizing one’s career is similar in the sense that an individual decides to reduce dramatically the level of responsibility in their job or seeks a new job at a lower level. Although the idea of downsizing one’s career is something that appeals to both men and women of all ages, it seems to be more prevalent with women in their mid-20s to early 40s and with people in their mid-50s to early 60s—baby boomers. How long it took them to consider making a shift of this kind in their career may be different, but the primary factors involved are similar. I know more than a few people who have decided to opt out of a fast track career for a job that's less stressful or for a job that's more fun. In other cases, especially in a down job market or an industry that's not doing well, it can make sense to look at alternative job options and downsize your career. On the other hand, you may also have more flexibility, less stress, and more employment options. Then, you need to consider what alternatives are available and how to find and apply for them.

03 Effects of Downsizing

In tough economic times, many companies are forced to downsize as a means of staying competitive. While research has determined that company downsizing is related to decrease organizational commitment, an antecedent of voluntary turnover, it has failed to examine the effects of downsizing on voluntary turnover itself. Relationship between downsizing and importance Companies often downsize in an effort to cut costs, and with the cost of replacing an employee at as much as two times the salary of the employee, understanding the link between downsizing and turnover is crucial. Additionally, if downsizing does in fact lead to increased voluntary turnover, the company will likely find itself understaffed after downsizing and subsequent turnover. Finally, given that a company has chosen to retain the highest performing employees after downsizing, it is safe to assume that the company does not want to lose any of its top performers to voluntary turnover.

Downsizing and voluntary turnover be related The announcement of downsizing is a jarring event for employees. The psychological contract (the belief that the company will help the

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employee succeed if the employee does the same for the company) is being violated, even for survivors of downsizing. The shock from the announcement of downsizing can cause an individual to reevaluate his or her job situation. The employee will consider if staying with the company is a desirable situation, or if they can move on to greener pastures. Oftentimes, an employee’s level of organizational commitment (the extent to which an employee is dedicated to the company) is impacted the most by downsizing. It has recently been found that the decrease in organizational commitment resulting from downsizing is the main cause of voluntary turnover, not the actual downsizing event.

HR practices affect the relationship downsizing and voluntary turnover

between

Ultimately, an employee’s decision to stay following the shock of company downsizing will primarily be based on the expected utility of her options. Contrary to popular belief, utility is not just about dollars and cents, and many activities that increase perceptions of utility also increase organizational commitment. One HR practice that can improve an employee’s perceptions of the utility of staying is focusing on procedural justice. The most salient of these processes is determining employee pay. Job embeddedness is also related to an employee staying after downsizing. Increasing the utility of remaining with the company after downsizing. Employee career development practices also affect the relationship between downsizing and subsequent turnover. Companies that engage in more employee career development practices experience about four times more turnover following downsizing than companies that engage in fewer of these practices.

Final Thoughts Companies looking to improve profitability by reducing their headcount should strongly consider the long term consequences before acting and account for subsequent turnover to ensure the company is not left

05 Shorthanded. Ultimately, downsizing may be a necessary decision, but remember, the practices in place before downsizing, influence voluntary turnover afterwards.

Layoff and downsizing often causes more stress than most people in your life realize .In America, downsizing is expected to continue past the turn of the century, and the downsizing "cure" has begun to hit Europe, Japan, and even Russia. Sometimes, downsizing occurs because it is a proper treatment, a response to the natural ebb and flow of the economy & pressure to downsize. Downsizing devastates social networks. When a person is laid off, an entire personal network of internal and external relationships is lost as well. It destroys informal bridges between departments, disrupts the information grapevine, and severs ties with customers. When General Motors reorganized a few years ago, it so ruined the informal network that the company never recovered fully. Additional reductions nip these relationships in the bud. Eventually, the organization devolves into a sullen, resigned, demoralized crowd. PERSONAL SURVIVAL STRATEGIES Those who survive in the new business culture must learn how to work in downsized organizations, how to tell when jobs are in jeopardy, and how to secure new jobs. Organized groups such as forty plus are excellent ways to get information, find jobs, swap leads, practice interview skills, and get moral support. Join one now even if your position is not in jeopardy and volunteer your services. You will make important contributions to others and be able to build your own network in the process. Big companies often have openings in vital areas even when others are cut. IBM is downsizing frantically, for example, but it is hiring in its RISC (reduced instruction set computing) chips area. Build internal networks to find out about such opportunities. Volunteer for committees, task forces, and temporary assignments that put you in contact with other groups, departments, or divisions.

06 The information highway offers exciting new opportunities to make contacts, locate positions, and find good people for jobs. The Career Center in America Online offers resume templates, a cover letter library, Federal employment services, employer contacts, company profiles, job listings, and more.

Often, the route to the ideal position is found through intermediate positions that move you in the right direction. Establish a trajectory and use such "halfway" houses. Consider internships or part-time work.

OUT OF THE CRISIS Downsizing attacks the wrong problem. The real issue isn't number of people. IBM cut 40,000jobs in 1993 and 35,000 in 1994, with the goal of becoming half its peak size. Big Blue's real problem isn't bloat, however. Rather, it's how traditional IBMs interact, work, think, and relate. The corporation suffers from lack of imagination and innovation, caused by a stiff bureaucracy and hidebound culture. That is why IBM formed a strategic alliance with archrival Apple Computer — to get access to the creativity it lacked. Even drastic cuts will not help if the company's culture stays the same. The way out of the crisis is to focus on creating new forms of organization — the reformation of social networks, not their destruction. When downsizing works, enlightened leaders devote great attention to human resources and network rebuilding. They raise the organization out of the ashes of downsizing, creating new social networks that empower and boost performance. Establish a clear strategic vision. Successful leaders create a clear vision of the company of tomorrow and manage into that vision. With the right vision, redeployment of resources, not downsizing, is the proper treatment to achieve corporate success. Establish network-building mechanisms, such as General Electric's WorkOut, established by CEO Jack Welch. Modeled after the New England town meeting, Work-Outs empower, eliminate unnecessary effort, and rebuild relationships across levels and functions.

07 This world would be the logical culmination of the downsizing movement, but also would be a bleak and harsh reality. It can be avoided only if courageous business leaders recognize the negative, dysfunctional consequences of downsizing, and then face and remedy the corporation's real problems. The business heroes of the past decade came from finance. The heroes needed today are those who champion human resources, creating the conditions that stimulate and tap human potential, rather than destroy

In Conclude Given the mixed evidence regarding the long-term benefits of downsizing, further empirical studies are needed to assess if and when downsizing is beneficial. The current quantitative and qualitative studies seem to indicate this overarching conclusion: for staff reductions to be effective, long-term and structured planning must be in place. Because good staff morale is critical, an effective downsizing plan will provide resources for dismissed staff and remaining staff. By helping staff to adjust to the changes, HSOs may realize some of the expected benefits of this process. Future studies should investigate the types of downsizing practices that improve organizational survival and prosperity. Furthermore, given HSOs' use of downsizing to respond to the Balanced Budget Act of 1997, further empirical studies are needed to determine how HSO managers currently use downsizing. It is important to determine the differential effect of using downsizing as a quick fix versus using it as part of the strategic process to control and redirect.

PERCEPTION When you say Perception, like the first impression to the person it's a bad or it's a good, always looked the outside personality of the person, But always remember look also the inside attitude of these person. Spoiled/Entitled

08 Reality: To an extent, the folks in this generation do have a sense of entitlement & these parents stunted their children's growth by proactively removing all obstacles and potentially negative experience. Generation Y workers must realize that their bosses are not going to be like their parents, and that part of growing as an employee is learning from past mistakes and accepting constructive criticism. Perception: Lazy Reality: Technology has allowed this generation to multitask and find shortcuts in achieving tasks. Texting, instant messaging, social networking, and Web surfing have all made Generation Y workers more competent, efficient, and productive (if not sometimes overwhelmed). The

key for employers is to accept that there may be multiple ways for workers to accomplish their tasks. Perception: Poor Work Ethic Reality: Generation Y is the first generation to expect -- from day one -employers to realize there is more to life than work. They have a strong work ethic -- just not in a 9-5 sort of way. Generation Y wants work to be fun and flexible because the line between work and life is seamless. The key for employers is offering flexible work schedules, adjusting the belief that workers need to "put in the hours at the desk" to be effective, and developing a work culture that is pleasant and positive. Perception: Little Respect for Authority Reality: While some people refer to this cohort of people as Generation Why for a reason, it is not so much an issue of a lack of respect for authority as much as it is that this group has been raised by their parents to question everything and raise questions when they don't understand something. The key for employers is realizing that asking questions can often lead to answers and solutions that are actually more efficient and effective . Perception: Too Self-Centered and Individualistic Reality: This iPod Generation (named such because iPod commercials focus on individuality while selling the product to every Gen Y) works well

09 in groups and teams -- especially with people their own age -- but they also have been taught the value of individuality and independent thinking. They see themselves as unique individuals -- not tied to any specific labels. And unlike any previous generation, these workers do not plan to let their jobs define who they are. The key for employers is finding the right mix of individual and team projects that allow these workers to grow professionally. Perception: Overinflated/Unrealistic Expectations Reality: While this generation may be more anxious than others to rise quickly to the top, it's less about unrealistic expectations than it is about being better prepared for work than previous generations -- with perhaps a touch of the need for instant gratification thrown in. This generation also has no interest whatsoever in working in a cubicle -- not because it is beneath them, but because they feel advances in technology should let them be able to choose to work from home, Starbucks, or anywhere there is a Wi-Fi connection.

The key for employers is to redesign and rebuild some of the old career ladders that were destroyed with the flattening of organizations and greatly expand telecommuting and remote working arrangements. Gen Y workers need to see a progressive promotion path or they will move on to the next employer. Perception: Not Committed to Work Reality: This generation is the most educated workforce ever, and partly because of this level of education, Generation Y workers believe their work should have meaning. These folks quote from Office Space and have a mistrust of management. More than ever, these workers are seeking greater fulfillment and are only willing to work hard at jobs that provide it. Perception: No Loyalty to Employers Reality: Because of more work experiences and greater education, Gen Y workers are simply more mobile, making it easier to move from one

10 employer to another if they are unhappy with the work. They were also raised during a period of great downsizing and rightsizing, and many witnessed the grief and frustration their parents felt when being laid off -and they do not want to experience that emotion. These are also some of the reasons why many Gen Y workers are diligently planning to start their own businesses. Perception: Lacking in Social Skills Reality: Generation Y are some of the most social of any generational cohort; it's just that they communicate and socialize much differently from the rest of us. The key for employers is to realize and accept that people communicate differently and to embrace the new techniques while also teaching the Gen Y workers that business sometimes still needs to use traditional methods of communication. Perception: Needy Reality: Okay. The reality here is that Millennial are indeed pretty needy. Again, though, it's not really their fault as their parents basically trained them that mom or dad is just a phone call away. In fact, there are stories of Generation Y job-seekers taking a parent along for the job interview or to help negotiate the job offer.

Theoretical Implications Perceptions that downsizing is financially effective, inevitable, liberating for laid-off employees and not a source of implied contract breach may make downsizing seem acceptable, and even natural, to the perceiver & has potential to enhance the acceptability of organizational downsizing.. Who suggested that the ideology of employee self-reliance acts as a catalyst for the spread of organizational downsizing by creating an ideological context in which downsizing decisions are easier to make.

Practical Implications 11 In addition to the theoretical implications summarized above, our results have some implications for practice that are worth noting. However, future research on the relationship between business ideologies and perceptions of downsizing might permit some managers to extend that informal conditioning into formal ideological indoctrination programs. Research on such perceptions must move forward with attention to the robustness of theory and empirical findings, but also without forgetting the possible uses to which research results might eventually be put.

Limitations One limitation of this study is its cross-sectional nature, which renders firm empirical conclusions about causal order among the variables difficult. Clearly researchers should attempt to supplement self-report methods where possible, but it also seems reasonable to argue that constructs such as ideological beliefs about business and perceptions of organizational downsizing can only be measured by self-reports.

In Conclude We began this paper by developing a theory about the effects of layoff agency on perceptions of organizational downsizing. Thus if we wish to understand how administrative practices like downsizing spread and become institutionalized in modern society, we may have to pay more

attention to the past experiences and the cognitions of the managers, employees, and external observers who ultimately grant legitimacy to these practices and become agents of their diffusion.

PSYCHOLOGY Great importance is being attached to the concept of the psychological contract. However, the concept does not sit easily within the `traditional' perspective on employment relations with its primarily institutional-level focus. Nevertheless, the concept, depending on how it is defined, has great

12 potential to fill an emerging gap in employment relations: that of individual-level analysis. This gap becomes apparent when a broader, more `contemporary' perspective on employment relations is considered. This study investigated the main effects and the interaction effects of psychological contract breach and hostile attribution style on employee deviance. Psychological contract breach did not have a stronger effect on organizational deviance than on interpersonal deviance. Hostile attribution style had interactive effects on the relationships between psychological contract breach and the two forms of employee deviance. Specifically, the higher the hostile attribution style, the stronger the positive relationship between psychological contract breach and employee deviance. The present research was designed to shed light on several facets relevant to the definition of employment contracts and the implications of employment contracts for organizational behavior Third, we present the results of several studies that document the factor structure and internal consistency of the scales and that examine convergence and divergence with other measures. Finally, we highlight several implications that the distinction between social and psychological contracts has for future research and practice.

Social Contract We define a social contract as the set of norms, assumptions, and beliefs that society conceives as fair and appropriate for parties involved in employment relationships. Thus, it defines the beliefs and norms pertaining to reciprocity, job security, loyalty, good faith, and fair dealings that should be maintained by employees and organizations in general. Our definition is a narrowed view of the current variety of social

contract definitions. In the current work, we focus on individuals' perceptions of the social contract that they perceive should exist between employers and employees in today's organizations.

Psychological Contract 1 3 We define a psychological contract as the employment relationship between an organization and an individual employee with regard to the obligations that each party has to the other. In the current research, we focus on the employee's perception of the psychological contract. Employee beliefs about the psychological contract develop, in part, from either explicit or implicit promises made by the employer at the time of recruitment, as well as during continuing interactions between employee and employer. The psychological contract differs from the social contract in several other ways. The psychological contract is developed at an individual level and the social contract is developed at a societal level.

An Ideology of Employment Contracts We believe that social contracts and psychological contracts are driven by individual ideology that can be characterized as varying on a continuum from self-reliant to employer-reliant. On the opposite end of the continuum is the ideology of employer reliance. Building on the framework introduced by McKinley et al. (1998), we propose that employees who are employer reliant believe that the appropriate conduct in employment relationships is support for and care for the employee in terms of providing long-term job security in exchange for loyalty and dedication (Downs, 1995). Ehrlich (1994) suggested that a belief in employer reliance entails employer responsibility for providing training and enhancing the skill level of employees. Thus, the ideology of employer reliance creates expectations that the employer is mainly responsible for providing retirement income and substantial health benefits to the employee.

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Types of Psychological Contract It would be easy to understand that given the dynamics and varying nature of psychological contract, there could be a number of types of psychological contracts existing in the organizational context. Transactional: The transactional contract is present when the employment arrangement is of a short-term or limited duration, primarily focused exchange of work in lieu of money with a specific and definite description of duties and responsibilities and limited involvement in organization. Relational: The relational contract results from long-term employment arrangements based upon mutual trust and loyalty. Growth in career and remuneration comes mainly from seniority and other benefits and rewards are only loosely related to work performance. Transitional: By definition it is not exactly a psychological contract, but a cognitive state which reflects the changes in organizational context and socio-eco-nomic changes and transitions that are in contradiction with a previously established arrangement or psychological contract. This type of cognitive state is apparent during company mergers and acquisition, downsizing as well as related state of uncertainties in work life. 15 Balanced: Balanced psychological contract refers to a dynamic and open-ended employment engagement pre-conditioned on business success of the employer organization and the employee’s opportunities to develop

skill sets and opportunities for career advancement based on skills and performance. Content of Psychological Contract If one attempts to summaries the various research works , it would be possible to mark out the content of psychological contract. Although, to have a logical conclusion on the content of psychological contract, detailed studies should be undertaken, but still the existing body of knowledge could be used in developing practical implications of psychological contract to business. psychological contract, stability, loyalty, state of well-being, external employability, internal advancements, dynamic performance, external employability, internal employability, trust, equitable pay, fairness, and all other related contents. Disruption: This occurs when either or both the employee and the employer are willing to comply with the contract but are unable to do so. Reneging: This occurs when either or both the employee and the employer are able but unwilling to comply with the contract. Most employees feel that their psychological contracts have been violated in some way by their employer at some time. Violations are most commonly concerned with training and development, pay and benefits, and promotion opportunity. This may lead to a fall in job satisfaction, performance and motivation as the employee can no longer rely on promised inducements. It is also possible that the employee or the employer, instead of voicing the breach may turn silent. Silence is a form of non-response. It reflects a willingness to endure or accept unfavorable circumstances in the hope that they may improve. As a passive, constructive response it serves to perpetuate the existing relationship. Employers can terminate employees whose performance does not meet standards and employees may quit an untrustworthy or unreliable employer.

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The renewed interest in the concept of the psychological contract has come to the fore in attempts to describe, understand and predict the consequences of changes occurring in the employment relationship. Recognizing that the employment relationship includes two parties to the exchange process, we set out to examine the content and state of the psychological contract from both the employee and employer perspective. The two perspectives permit an examination of the mutuality of obligations, which has not received much empirical attention to date. The research methodology consists of two surveys conducted in a large local authority directly responsible and accountable for a range of public services including education, environmental health and social care to the local population. The key findings suggest that the majority of employees have experienced contract breach. This view is also supported by managers, as representatives of the employer, who further indicate that the organization, given its external pressures, is not fulfilling its obligations to employees to the extent that it could. Overall, the results

17 Indicate that employees are redressing the balance in the relationship through reducing their commitment and their willingness to engage in organizational citizenship behavior when they perceive their employer as not having fulfilled its part in the exchange process.

Conclusion Considering the available research studies on employee retention and the content and nature of psychological contract, the author tends to conclude that psychological contract would be one of the major factors influencing employee retention. In light of the above discussion, it would be pertinent to conclude that a conscious development and management of psychological contract in an organization would definitely contribute to employee retention and reducing employee turnover.

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