Impact of Downsizing on Employee Attitude and Performance: A Case Study of HBL

Abstract

The function of downsizing today has become a byword for layoffs amidst burgeoning company, mergers and acquisitions and more particularly amid business devouring world wide recession. In the modern day world, where efficiency and effectiveness are imperative for survival, it is getting mandatory for the corporations of every kind to reduce their costs and improve their profitability by inducing modern cost cutting techniques-Human Resource traditionally being the first target. The banking industry in Pakistan has undergone similar restructuring, involving large scale layoffs in many local and multinational banks in the last few years. This study has attempted to investigate the factors which made downsizing a relevant strategy for the management in the Habib Bank Ltd, simultaneously identifying its employees' attitude and performance attitude in terms of job security, morale, turn over rate, absenteeism, degree of organizational citizenship, commitment towards long-term goals and projects. The study has been carried out among HBL employees at head office, Karachi through in depth interviews with Human Resource personnel involved in downsizing decisions. In the second stage an analysis of about 100-150 employees from the middle and lower management level belonging to departments which were most downsized was done. The study has explored the reasons for which an organization uses downsizing as a corporate policy, its impact on employee performance and investigate the various negative impacts of downsizing on the survivors' attitude in terms of job security, morale, turn over rate, absenteeism, degree of organizational citizenship, commitment towards long term goals and projects in the banking sector in general and Habib Bank Ltd in particular. The conclusions developed through this study will be useful in developing a set of guidelines on how the banking industry in Pakistan can effectively implement layoff strategies while maintaining employee performance, organizational citizenship and commitment among the survivors.