Effect of Methods of Downsizing on Retained Employee Performance in Manufacturing Firms in Nairobi

Abstract

Downsizing has been one of the main strategies that organizations use to make them stay competitive and survive in their business niche. Downsizing1 strategy1 to1 deal1 with1 the1 economic1 pressures1 in1 the1environment, downsizing1 may1 at1 times1 prove1unavoidable, thus1 the1 ultimate1 goal1 should1 be1 to1 eliminate1 nonessential1 company1 resources1 while1 minimizing1 the1 negative1 impact1 on1 the1 remaining1organization. In1 order1 for1 an1 organizational1 downsizing1 to1 be1 most1effective, management1 must1 communicate1 openly1 and1 honestly1 with1 their1 employees1 regarding1 the1 reason1 for1 the1 downsizing1 and1 the1 downsizing1plan. This study sought to establish the effect of effect of different methods of downsizing on performance of retained employees of manufacturing firms of Nairobi. The study is anchored on institutional theory, resource-based1 view1 theory1 and1 stakeholder’s1theory. This1 study1 employed1 descriptive1 research1design, and1 this1 allowed1 the1 research1 to1 describe1 the1 variables1 of1 interest1 in1 terms1 of1 their1characteristics. The study focused on 38 manufacturing firms which have downsized in the last 3 years in Nairobi and are registered by Kenya Association of Manufacturers. The respondents were the human resource managers of the respective firms. A Structured questionnaire was used to collect the primary data through drop and pick later approach. Descriptive1 statistics1 were1 also1 used1 to1 quantitatively1 describe1 the1 imperative1 structures1 of1 the1 variables1 using1 standard1deviation, frequency1 and1 the1mean. The1 quantitative1 data1 was1 analyzed1 using1 the1 SPSS1 version1 23 and1 used1 the1 multiple1 regression1models. The study concludes that employee attrition, 1voluntary termination, and early-retirement incentives1all have positive significant effects on performance of retained employees of manufacturing firms of Nairobi, while compulsory 1termination had negative significant effects on employee performance. Layoffs must be communicated clearly to employees and should be well communicated. Great care must be exercised before implementation of such policies. Before implementation of lay off measures, manufacturing companies must have an elaborate operational plan that is predictable effective and safe in the long term. It is imperative for the manufacturing companies to develop their own effective means to communicate so as to ensure best results of its implementation. Human resources managers should design policies that are more appropriate to employees who leave the organization and those who stay at work, decreasing the negative psychological, administrative and economic consequences.