A Study Of Organizational Rightsizing : Actors, Processes And Outcome
Nirmala, Maria Christine
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The pressure for economic integration has been reinforced by developments in technology, changes in market structures and the emergence of transnational corporations. Rightsizing has emerged as a critical process in this present era of shrinking space, shrinking time and disappearing borders in the context of employee engagement and human capital. It is often adopted by most organizations to help them become more agile and flexible and thereby cater to the competitive demands. The diverse impacts of rightsizing on various actors however question the justice aspect of the entire process. This study addresses rightsizing from the perspective of social justice by taking into consideration the assessments of the processes by the affected actors namely, the implementers who drive the rightsizing processes; the separated who leave the organization as a result of rightsizing; and the stayers who remain in the organization and have observed the process. It also aims at understanding the various rightsizing processes from an empirical perspective and examines the causal relatedness of the rightsizing processes and outcome across some of the Indian organizations and the actors. Review of literature: The gamut of literature in rightsizing has provided a strong foundation for the researcher to gain a critical understanding of the various processes underlying rightsizing. The key challenge in rightsizing concerns the fairness aspect of the entire process considering the fact that in most cases rightsizing results in gains for some people and loss for others. Given that judgments of fairness are highly subjective, the lack of an absolute standard for determining fairness in this situation has been identified as a gap. As many studies highlight the ambivalence in results with regard to the outcome of rightsizing and attribute them to the rightsizing processes, the relationship of the rightsizing processes and the outcome has emerged as an area of interest. Though there have been correlation based analysis between various rightsizing variables, causal models that link the rightsizing processes to the outcome have been found missing. The dearth of studies from the Indian set up have also prompted the need to build segregate and aggregate causal models of rightsizing processes and outcome at the organization and actor levels. Aim, objectives and methodology: The aim of this study has been to identify the rightsizing processes that contribute towards positive outcome for both the organization and the individuals concerned from the social justice perspective. The objectives were: 1. To compare and contrast the implementation of rightsizing processes in some of the Indian organizations. 2. To develop a framework for understanding and classifying rightsizing processes in relation to the social justice perspective. 3. To identify the effective rightsizing processes that contribute significantly towards minimizing individual stress and maximizing commitment towards the organization. 4. To outline appropriate guidelines based on the justice perspectives of the actors for better implementation of rightsizing in organizations. The conceptual model links the actors, their assessments of the rightsizing processes and the outcome of the entire process as affecting their individual stress and commitment towards the organization. The just processes of rightsizing have been decided based on the assessment of actors and on the extent of their agreement with one another on implementation of the discrete rightsizing practices. Accordingly those practices that all the three groups of actors, namely the implementers, stayers and separated perceive to have been implemented will be classified as the "best practices" or system 4 practices; the practices that have been perceived to have been implemented by the implementers and stayers but not the separated will be classified as the "better practices" or system 3 practices; those practices that the implementers and separated perceive as implemented will be the "ineffective practices" or system 2 practices; and the practices where all the three groups differ with one another with regard to the extent of implementation will be termed the "poor practices" or system 1 practices. The questionnaire was finalized after a preliminary and pilot study. Data was collected from 727 respondents across four organizations, one private manufacturing unit referred to as Org-1, one state public sector unit referred to as Org-2, two central public sector units referred to as Org-3 and Org-4. The total sample consisted of 137 implementers, 320 stayers and 270 separated. Results and discussion: The first part of the analysis focused on validating the rightsizing processes through factor analysis and also testing the reliability using Chronbach alpha. The implementation of the rightsizing processes across the four organizations was compared using Bonferroni post hoc comparisons. Org-1 and Org-4 had implemented most of the rightsizing practices adequately. The perceptions of the employees of Org-2 and Org-3 were found to be significantly inadequate when compared to Org-1 and Org-4 with respect to many of the practices. The second set of analysis compares the assessments of the actors with regard to the implementation of the various rightsizing practices, and classifies them into one of the four systems based on the framework developed. The system 4 practices consist of, the notification period; the severance package; the amount of money that the organizations wished to save after rightsizing and avoidance of ineffective cost reduction strategies. The outcome of rightsizing with respect to role clarity and role sufficiency also falls into system 4. The system 3 practices consist of understanding the need for rightsizing; the need for manpower reduction, proactive cost reduction strategies, separation of the sick and criteria for separation of the redundant. System 1 practices comprise of internal stakeholders, alternate strategies adopted by the organization before resorting to separation of the employees, preparation and communication, leadership, review and control and assistance provided to the separated. The outcome with regard to job security and commitment also falls in this category. The final set of analysis aims at identifying those processes that contribute significantly towards the outcome at both the organizational level and from the perceptions of the actors through path analysis. The path analysis was conducted at the segregate and aggregate levels for the organizations and the actors. Initially a full segregate model where all the independent variables are linked to the dependent variables was fit for the 4 organizations and for the 3 categories of actors. Those processes that contributed significantly towards the outcome with respect to the actors and the organizations were structured onto two final aggregate models. The validity of these aggregate models was examined for the organizations and actors respectively. Conclusion: This study provides a deeper understanding of the various processes underlying rightsizing in the three different stages of implementation. These validated measures can be used as a template by the organizations to study and guide further rightsizing initiatives. Through this research three groups of individuals diversely affected by rightsizing have been brought together under one common framework which is a methodological innovation. Inspite of having different interests, it is possible to obtain a consensus in their assessments of some of the rightsizing practices. This is an important conclusion that can be drawn in support of the social justice perspective with regard to rightsizing. The relationship between the rightsizing processes as affecting the outcome of stress and commitment can also be understood from a causal perspective across organizations and actors through segregate and aggregate models. The best practices with knowledge capital and social capital can also be included in understanding the perspectives of the actors and classification of rightsizing best practices in future work.