redundancy and organizations image:a vicious cycle ...

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making a case for how employee redundancies will create negative image there by causing low demand for organizations goods and services. This touches ... employees. Issues on job security date back to the Great Depression years of the .... powerful to negotiate effectively for them during recession (Hartley et al, 1991).
REDUNDANCY AND ORGANIZATIONS IMAGE:A VICIOUS CYCLE IN NIGERA DR. AUSTIN O.OPARANMA, LECTURER RIVERS STATE UNIVERSITY OF SCIENCE AND TECHNOLOGY DEPARTMENT OF MANAGEMENT RIVERS STATE, NIGERIA E-MAIL: [email protected] Abstract This article posits that there are strong image problems in Nigerian organizations as a result of redundancies. It believes that if the Nigerian organizations aim at surviving current stiff competitions, then redundancy control is needed to actualize the organizations visions. The article ends up making a case for how employee redundancies will create negative image there by causing low demand for organizations goods and services. This touches off a chain reaction that will continue to lower the demands of the organizations products and services which further lead to more redundancies. Introduction In times of economic difficulty particularly with the frequent and often unpredictable swings in national and international economies, budget cuts, aggressive competition and deregulation as well as technological innovation, firms may have to cut back on employee numbers leading to early retirements. The decade of the seventies will always be remembered in the history of Nigeria as a decade of booming prosperity and surplus. Since 1980, the country has been experiencing harsh economic conditions characterized by run-away inflations, shortages of essential raw materials, unemployment of graduates and other skill workers and cash flow problems leading to the purge and retrenchment of workers in both the public and private sectors of the economy. In spite of successive

government’s determination to arrest the situation, the trend continued into millennium. Employment Stability So vital is employment stability to the image of an organization and job security to the self esteem of its members that an organization realizes a substantial return on investment by its equilibrium through business fluctuations (Myers, 1976). Media through which non-employees in a community form opinion about an organization may include its employees, the grapevine, public speeches, periodicals, trade journal, and the public print and electronic media. Public opinions are however, reflections of many aspects of the organization, its impact on its employees, employment stability, the quality of products (or services), its technological status, utility of its products, its ecological impact, physical layout, fiscal responsibility, financial performance, comparative size, tax burden, cash donations, talent donations, political alignment and its philosophy and style of leadership, among others (Osoka, 1997; Myers 1976). Viewing the aforementioned aspects in positive light, members of the public see the organization as socially responsible,” a good place to work” and people who work there have corresponding high status. It should be noted that the most potent factors influencing the organization image in the eyes of its public are the negative impact it has on its employees (Myers, 1976). Although it is a praise-

worthy to manage employees well, a negative management of other physical assets also has direct consequences on employees and sooner or later impact on its immediate community. For instance, as organization that has mismanaged its research , engineering, manufacturing, marketing, financial or other pivot strategies, may find itself at a comparative disadvantages and its usual near survival strategy will be a “head count” (Copeland, 2001). This touches off a chain reaction as families without income affect the families of dependants on these incomes. The general disposable income of community members is then low, giving the organization a negative image. The demands of the organizations products or services are further reduced leading to more redundancies. Job Security Inherent in any survivor’s reaction to a redundancy exercise, is his or her feeling of the degree of his or her job security. One of the greatest desires of an employee is not just to be employed but to be able to keep his job for a considerable period of time, making job security one of the foremost desires of employees. Issues on job security date back to the Great Depression years of the 1930s and many authors considered it vital to employee motivation. For example, Chant (1932) reports that employees indicated steady work as one of the most important factors in the evaluation of any job. Job insecurity is a mixture of fears and hopes about the future of one’s job (Hartley, 1991). Greenhalgh, L. and

Rosenblatt, Z. (1984) defines job insecurity as perceived powerlessness to maintain desired continuity in a threatened job. They described the forms powerlessness could take as (a) lack of protection (b) the culture of the organization and (c) the types of standard procedures for dismissing employees. Lack of protection refers to the procedures for dismissing employees. Lack of protection refers to the absence or weakness of such elements as unions, seniority systems and employment contracts that can serve to protect individual employees. Also, the culture of the organization may increase an employee’s sense of powerlessness when there are no direct norms regulating employment relations, when employees have little influence or decision making or when the evaluation decisions of superiors are seen as arbitrary. Effects of Redundancy on survivors Generally, especially at the intellectual level, employees understand that anyone could be fired (Stybel and Peabody, 2001). But whenever there is a redundancy exercise or it is the offing, employees instinctively begin to react and exhibit certain behaviors. Two general categories of factors influence survivors’ reactions. Firstly, survivors are affected by the perceived fairness of the exercise and secondly, survivors' reactions depend upon their perception of how the work place has changed relative to before the exercise (Brockner, et al, 1993). Having

said this, it is equally important to discuss some of the possible survivors’ reactions to redundancy exercises. (A) Increased Labour Turnover. After a redundancy exercise and when people perceive that their jobs are becoming insecure, they begin to think about leaving the organization. The more valuable the worker is, the greater is the chance that he or she will leave, thus leading to the loss of the people who are supposed to revitalized the organization. Studies show a positive relationship between job insecurity and propensity to leave (Chinoy, 1995; Gow et al, 1974, Hartley et at, 1991). Additional research reveals that the more valuable workers especially those who have better labour market alternatives, are likely to be the first to leave (Evans et al, 1996). (B) Low Productivity. Job effort is the most basic contribution in an exchange relationship. Survivor’s propensity to leave will only lead to turnover when there are alternatives. But an employee, who no longer wishes to be an employee but is constrained from leaving by either poor alternative opportunities of any reason for that matter, will substantially redefine the psychological contract (Hartley, 1991). The individual’s degree of intended contribution would be adjusted to balance his or her perception of the exchange relationship subject to a lower limit representing the minimum contribution necessary to avoid being sacked. Studies show that employee productivity and efficiency are usually lower

after a redundancy exercise due to decreased motivation and job security (Sadri, 1996). Also, survivors may view their work load as too much, thus resulting in people who are too referred to as ‘down shifter’. That is, people who deliberately want to show down their working lives so that they could enjoy other aspects of life. (Laabs, 1996). Research also shows that these workers could limit production and induce work place sabotage (Downs, 1995). (C). Worry. After a redundancy exercise and survivors believe that future exercises are likely, they tend to feel depressed, anxious and worry about their job security. One prevalent reaction of potential job loss, particularly when the employees first hear the rumors or news is anxiety (Hartley, 1991). Several results from studies show a general impairment of productivity associated with high levels of anxiety (Sutton, 1987). Some other studies show a positive relationship between organizational environmental changes and redundancy with younger employees at the managerial level having greater expectations of all kinds of change and older employees with children likely to be dismissed or made redundant; that results of the studies reveal that older people with children tend to worry more. From other studies, foreign workers, immigrants, and ethnic minorities are usually very anxious about redundancy exercises (Hartley et al, 1991). Brockner et al believe that a person’s self-esteem, which is the sum of self confidence and self respect has a lot to play here as persons with low self-esteem who generally lack confidence in

their ability to meet the challenges posed by the demanding and stressful circumstance will feel more worried than persons with high self-esteem who feels competent and worthy (Brockner et al 1993). (D) Lack of Organizational Commitment. The concept of organizational commitment has long been recognizes as important in the study of organizations. Chester Barnard (1938), viewed “loyalty” as an essential condition in organizations. In a similar vein, Porter

et al (1974), pointed out that the

development of organizational commitment appears to require an individual to think in fairly global terms about his or her relationship to the organization. Thus, loyal workers who have decided to contribute would be expected to be willing to participate in the give and take of an organization’s contingent reaction to its environment. In other words, they would tolerate some degree of organizational change since they would be identified with its general goals. There is evidence of deceased organizational commitment associated with the perceived injustice to co-workers job loss (Hurley et al, 1988). As Brockner et al (1993) notes, when redundancy exercises are judged to be relatively unfair and changes in working conditions are experienced more as threats rather than opportunities, organizational commitment suffers. They also observed that in periods of high unemployment, workers are reluctant to quit their jobs and managers may observe increased level of

productivity by survivors, especially those with low self-esteem. But these survivors become extremely focused only on those activities that will enable them keep their jobs and less committed to the organization. (E) Increased Labour – Management Conflict. Workplace environment as shaped by experience usually influence employee attitudes and subsequently behavior. Security of employment is a key aspect of workplace environment (Lumley, 1980). Labour unions often promise job security and workers join the unions as an insurance against job loss or feel that the union is sufficiently powerful to negotiate effectively for them during recession (Hartley et al, 1991). However, non-unionized workers argue that job security does not result from union pressure but rather depend on the making of products to meet customers’ demands and selling theses products at a profit in a very competitive market (Myers, 1976). Management try to weaken the unions and try to “deal with the trouble makers” while the workers fight back by pushing for wage increment and other conditions of service. Studies show that many firms experience a higher number of short strikes and other forms of industrial actions as survivors post redundancy exercise reactions (Lumley, 1980). (E) Aggression. When an organization faced with impending adversity and workers recognize that the organization is becoming maladapted, they surmise that workforce shrinkage is in the offing (Hartley et al 1991). In a case of eventual redundancy, survivors become very desperate and are

almost obsessively preoccupied with their own continuity of employment and economic well being inter-personal bonds weaken, as workers become acutely aware of their zero-sum interdependence. That is, when positions are scarce, a coworker survival in the organization might mean one’s own demise. Trust diminishes, and people become more guarded in what they share and disclose and although some survivors may become aggressive. Studies reveal that people with low self-esteem viewing everything around them as threats, are more violent and aggressive (Laabs, 1996). (F) Increased Accident Rate. An accident may be seen as an unplanned event which occurs in a chain event each of which is planned or controlled as a result of some non-adjustment act on that part of an individual (Flippo, 1984). The cause of accidents are countless many but to Flippo, human causes is connected with deficiencies in the individuals involved in the accident. The deficiencies include improper attitudes, carelessness, recklessness, and inability to perform the job, daydreaming, alcoholism, and the use of the drug on the job (Flippo, 1984). After a redundancy exercise, attitude clusters comprising, suspicion, anger, self blame, demoralization, helplessness, and stress reactions usually distract survivors and interfere with their ability to concentrate on the tasks at hand, thus leading to avoidable accidents (Hartley et al, 1991, Brockner et al, 1993) The aforementioned effects of redundancy exercise on surviving employees are neither exhaustive nor

conclusive as survivors may still react to the exercises in other forms not mentioned here. The essence of this section is to bring these reactions to the limelight for managers to understand the reactions and adopt coping strategies with a view to enhancing the organizations’ post exercise performance. Conclusion In Nigeria, section 20(1)

( C) of the Labour Act, 1990 states on

compensation that, in the event of redundancy the employer shall use his best endeavors to negotiate redundancy payments to any discharged workers who are not protected by regulations made under subsection (2) below, while section 20 (2) states that the Commissioner may make regulations providing generally or in particular cases, for the compulsory payments of redundancy allowances on the termination of a worker’s employment because of his redundancy. In this section redundancy means an involuntary and permanent loss of employment caused by an excess of manpower (Labour Act, 1990, (20) (3). Thus the employer is under a duty to negotiate redundancy payments to any discharged worker who is not protected by any of the regulations made by the Minister of Labour and Productivity, as the Minister may make regulations providing for compulsory payments of redundancy allowances in particular cases. It has been observed however, that many manufacturing firms in Nigeria do not have a yardstick for calculating redundancy payments and even though employees

expect to be compensated, majority do not know the legal provisions on redundancy payment or an idea of how much would be paid to them as compensation as a result the organizations are perceived negatively.

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