An exploration of how downsizing influences psychological safety of surviving employees

Abstract

Research has shown that organisations around the world are increasingly implementing employee downsizing to deal with competition. Downsizing is typically implemented to address redundancies, improve efficiency with the aim of making the company more competitive. The research on organisation downsizing started back in the 1980’s, but there are still some gaps highlighted by the scholars relating to the understanding on how downsizing impact psychological wellbeing of surviving employees. One psychological wellbeing element which has been highlighted as lacking in the current literature is psychological safety. The aim of this study was to investigate how the downsizing process impact the psychological safety of surviving employees. The outcome of the study was that psychological safety was impacted negatively in the Business Unit where employee cuts were not implemented. In this Business Unit, the number of employees increased instead as some employees from another Business Units were transferred to it as part of the restructuring component of the downsizing event. The study also found that psychological safety generally improved in the Business Unit where major employee cuts took place. This was an unexpected outcome based on the literature review.