TERM PAPER

Of
Management Practice & Organization Behavior
On
Relationship of Downsizing
Career perception &
Psychological Contact

Submitted to; Submitted by;

Ms Manbir Kaur Gill Md Reyaz Aqubal
Lect. Of MPOB R.No.RT1901A01

(LIM) 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.

• 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.
• Transactional
• Relational
• Transitional
• Balanced
• Content
• Disruption
• Reneging
7. Bibliography
 01

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.
 02

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
0
4
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 between
downsizing and voluntary turnover
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 Work-
Out, 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.
 14

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.
 16

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.

Bibliography
• http://www.sciencedirect.com/science?
_ob=ArticleURL&_udi=B6WMN

• http://www.iipm.edu/iipm-old/managing-psychological-
contract.ht

• http://www.entrepreneur.com/tradejournals/article/159696526.ht
ml

• http://www.meetingsfocus.com/Magazines/ArticleDetails/tabid/13
6/Article

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