Cognitive mapping the topic of organizational downsizing

Cognitive mapping the topic of organizational downsizing

Joseph Kim-keung Ho

Independent Trainer

Hong Kong, China

Abstract: The topic of organizational downsizing in the subject of Business Management is complex. By making use of the cognitive mapping technique to conduct a brief literature review on the organizational downsizing topic, the writer renders a systemic image on the topic of organizational downsizing. The result of the study, in the form of a cognitive map on organizational downsizing, should be useful to those who are interested in the topics of cognitive mapping, literature review and organizational downsizing.

Key words: Organizational downsizing, cognitive mapping, literature review

Introduction

As a topic in Business Management, organizational downsizing is complex. It is thus useful to employ some learning tool to conduct its study, notably for literature review purpose. For a teacher in research methods, systems thinking and management, the writer is specifically interested in finding out how the cognitive mapping technique can be employed to go through a literature review on  organizational downsizing. This literature review exercise is taken up and reported in this article.

On the cognitive mapping exercise for literature review

Literature review is an important intellectual learning exercise, and not just for doing final year dissertation projects for tertiary education students. On these two topics of intellectual learning and literature review, the writer has compiled some e-learning resources. They are the Managerial intellectual learning Facebook page and the Literature on literature review Facebook page. Conducting literature review with the cognitive mapping technique is not novel in the cognitive mapping literature, see Eden and Simpson (1989), Eden, Jones and Sims (1983), Open University (n.d) and the Literature on cognitive mapping Facebook page. In this article, the specific steps involved in the cognitive mapping exercise are as follows:

Step 1: gather some main points from a number of academic journal articles on Organizational downsizing. This result in the production of a table (Table 1) with the main points and associated references.

Step 2: consolidate  the main points from Table 1 to come up with a table listing the cognitive map variables (re: Table 2).

Step 3: link up the cognitive  map variables in a plausible way to produce a cognitive map (re: Figure 1) on the topic under review.

The next section applies these three steps to produce a cognitive map on organizational downsizing.

Descriptions of cognitive map variables on the organizational downsizing topic

From the reading of some academic articles on Organizational downsizing, a number of main points (e.g., viewpoints, concepts and empirical findings) were gathered by the  writer. They are shown in Table 1 with explicit referencing on the points.

Table 1: Main points from the organizational downsizing literature and referencing

Main points from the organizational downsizing literature	Referencing
Point 1: "Although there has been quite a bit written about the effects of downsizing on the financial health and the market valuation of companies, this literature is fragmented, focusing on various aspects of companies, various reasons for downsizing, and various financial and market outcome measures. Additionally, this work has appeared to have little to no practical impact on the corporate practice of downsizing".	Carriger, M. 2016. "To downsize or not to downsize - what does the empirical evidence suggest?" Journal of Strategy and Management 9(4), Emerald: 449-473.
Point 2: "....the management literature on downsizing suggests that downsizing has an overall negative impact on the ongoing financial health of the organization engaging in such a practice. This effect may be greater for those companies downsizing in response to previous poor financial performance, may or may not have the same negative impact on the market valuation of the company, and may dissipate over time. Additionally, other variables, such as the size and frequency of downsizing, as well as industry conditions, and the way in which the downsizing was communicated might moderate these negative financial impacts".	Carriger, M. 2016. "To downsize or not to downsize - what does the empirical evidence suggest?" Journal of Strategy and Management 9(4), Emerald: 449-473.
Point 3: "...the finance literature on downsizing suggests that downsizing leads to a negative market reaction both in terms of return on common stock and stock price. This negative reaction was particularly prominent when the downsizing was reactive (to previous and current financial struggles), large, frequent, and permanent. This negative reaction was observed in both the USA and Japanese markets".	Carriger, M. 2016. "To downsize or not to downsize - what does the empirical evidence suggest?" Journal of Strategy and Management 9(4), Emerald: 449-473.
Point 4: "Downsizing, the planned elimination of positions or jobs, seems to have become a favourite business practice for a large number of corporations. It has become synonymous with other terms used to describe organizational change, such as rightsizing, reorganization, restructuring and rationalization. Further, it is associated with the impetus to improve organizational productivity, earnings, effectiveness and efficiency through an intentional set of activities which result in a reduction of employee numbers, lowering of overheads, decreases in bureaucracy, improvements in decision making and smoothening of communication".	Noronha, E. and P. D'Cruz. 2005. "Achieving Downsizing: Managerial Perspectives" Global Business Review 6(1) [DOI: 10.1177/097215090500600106].
Point 5: "Downsizing has resulted in feelings of job insecurity, anger, job stress, decreased loyalty and organizational commitment, lowered motivation and productivity, and increased resistance to change (Brockner et al. 1987; Isabella 1989; O.Neill and Lenn 1995). Financial distress and previous attachment to the job seem to have the greatest negative impact (Leana and Feldman 1990)".	Noronha, E. and P. D'Cruz. 2005. "Achieving Downsizing: Managerial Perspectives" Global Business Review 6(1) [DOI: 10.1177/097215090500600106].
Point 6: "Often, decisions made by the top management to adopt and implement the downsizing alternative, with the objective of ensuring the financial health of the firm, are in the interest of the firm's owners, and the ethics of downsizing are not likely to be a conscious consideration as the top management formulates downsizing decisions".	Noronha, E. and P. D'Cruz. 2005. "Achieving Downsizing: Managerial Perspectives" Global Business Review 6(1) [DOI: 10.1177/097215090500600106].
Point 7: "Although reductions-in-force (RIFs) are typically motivated by the desire to cut costs or to redeploy resources in new directions, research is emerging that suggests that RIFs may not be cost-effective, and that downsizing decisions have imposed additional financial burdens on companies that, in some cases, are already struggling (Genasci 1994, p. 41). In addition to lower productivity and worker morale problems among those individuals who remain, the cost of legal claims by those who have been laid off has added to these organizations’ financial woes".	Lee, B.A. 1995. "Legal pitfalls of downsizing" Human Resource Management Review 5(1): 1-23.
Point 8: "Downsizing during the last decade has focused on middle managers and professionals as executives seek to design “flatter” organizations and to  decentralize decision making. Many of the individuals selected for separation are over forty years of age, and face difficulty finding another job in a tight economy and in a business climate that prefers younger, less highly-paid talent to older, more experienced but more expensive talent. Many of these “downsized” individuals are well-educated, conversant with their legal rights (some are former human resource staff, and faced with few, if any, career options. Litigation, either seeking reinstatement or a case settlement, is an option that many have pursued".	Lee, B.A. 1995. "Legal pitfalls of downsizing" Human Resource Management Review 5(1): 1-23.
Point 9: "The study of organizational downsizing is in its infancy, yet downsizing is ubiquitous in American organizations. Nearly all of the Fortune 1000 firms claim to have engaged in downsizing in the last five years, and many assume that downsizing will be a way of life in the future (Willis 1987). It is likely, therefore, that investigations of this phenomenon will increase in frequency and importance in the organizational studies literature in coming years".	Freeman, S.J. and K.S. Cameron. 1993. "Organizational downsizing: a convergence and reorientation framework" Organization Science 4(1) February: 10-29.
Point 10: "In theoretical terms, downsizing is important because few empirical studies, and even less theory, exist to explain what happens when organizations get smaller intentionally. This is partially due to a past bias in organization theory. Growth was accepted as not just desirable, but as an undisputed sign of success and effectiveness (Whetten 1980a). Most writing on organization change and development was implicitly based on assumptions of organizations growing or remaining stable in size (Jick and Murray 1982, Child and Kieser 1981, Cameron and Whetten 1981)".	Freeman, S.J. and K.S. Cameron. 1993. "Organizational downsizing: a convergence and reorientation framework" Organization Science 4(1) February: 10-29.
Point 11: "...there does not yet exist a comprehensive framework of downsizing, including implementation processes and their impact at the organizational level. In addition, the conceptual domain of downsizing has not been delimited. This is necessary in order for empirical and theoretical work on downsizing to proceed in a way that can build on and extend work done previously".	Freeman, S.J. and K.S. Cameron. 1993. "Organizational downsizing: a convergence and reorientation framework" Organization Science 4(1) February: 10-29.
Point 12: "Although the needs of the organization are usually considered to be the key factor in a downsizing plan, organizations sometimes “bend over backwards” in their efforts to be fair to exiting employees. The downsizing plan is then based largely on voluntary programmes such as voluntary retirement and voluntary termination packages which are offered to all employees. The usual result of such programmes is that the organization loses more than it planned to in expertise, company-specific skills, and number of employees".	Labib, N. and S.H. Appelbaum. 1994. "The impact of downsizing practices on corporate success" Journal of Management Development 13(7), Emerald: 59-84.
Point 13: "Cameron et al.[12] .... conclude that despite extensive downsizing in the USA, white-collar productivity has not increased significantly compared with global competitors. They attribute this failure to two factors: (1) that downsizing has not been effectively planned, managed, and implemented; (2) that downsizing has caused resentment and resistance in surviving employees".	Labib, N. and S.H. Appelbaum. 1994. "The impact of downsizing practices on corporate success" Journal of Management Development 13(7), Emerald: 59-84.
Point 14: "Downsizing has become a way of life for multinational business firms during the past few years. This period of time has therefore offered and continues to offer (as have few other times in recorded history) challenges for managerial leaders who can properly identify evolving needs and translate them into meaningful opportunities for improved operations in the organizational setting of their firms".	Darling, J. and R Nurmi. 1995. "Downsizing he multinational firm: key variables for excellence" Leadership & Organization Development Journal 16(5): 22-28.
Point 15: "When a company is creatively and meaningfully downsized, practically every aspect of the organization should be reviewed and perhaps transformed, even beyond recognition (Hammer and Champy, 1993, pp. 50-58). In the newly downsized organization, people who once did as they were instructed should now make many choices and decisions on their own. Assembly-line work may disappear. Traditional functional departments may lose their reasons for being. Managers should stop acting like supervisors and behave more like coaches and mentors. Workers should focus more on customers’ needs and less on those of their bosses".	Darling, J. and R Nurmi. 1995. "Downsizing he multinational firm: key variables for excellence" Leadership & Organization Development Journal 16(5): 22-28.
Point 16: "Much of the academic literature on downsizing deals with examples from the North American automotive industry. According to Cameron (1994a) and Mishra and Mishra (1994), this industry was selected for several reasons: its deeply competitive and dynamic environment, the extent of its downsizing activities, and its importance in the North American economy (the automotive industry accounted for nearly 40 percent of US GDP)".	Appelbaum, S.H., A. Everard and L.S. Hung. 1999. "Strategic downsizing: critical success factors" Management Decision 37(7): 535-552.
Point 17: "There are three perspectives from which downsizing can be reviewed: the industry level, the organization level, and the individual level. In terms of the industry or global perspective, related topics include mergers and acquisitions, joint ventures and national employment trends (Cameron, 1994b). The second perspective lends itself to the organization or strategy level. This perspective concerns itself mainly with how to implement downsizing and the expected benefits and pitfalls of downsizing on the firm's performance, efficiency, and effectiveness. At the individual level, also termed the micro level, areas of discussion associated with downsizing are psychological coping strategies, individual stress, and the study of the ``survivors' syndrome''.".	Appelbaum, S.H., A. Everard and L.S. Hung. 1999. "Strategic downsizing: critical success factors" Management Decision 37(7): 535-552.
Point 18: "Contemporary terms such as reengineering, rightsizing, layoffs, reductions in force, organization decline, and reorganizing are regularly used as substitutes for downsizing. While they do denote to some extent a common meaning, each has its own connotation (Cameron, 1994a; de Meuse et al., 1994; Freeman, 1994)".	Appelbaum, S.H., A. Everard and L.S. Hung. 1999. "Strategic downsizing: critical success factors" Management Decision 37(7): 535-552.
Point 19: "By the mid-1980s a new management style began to emerge. “Managing Our Work to Economic Decline”, an influential Harvard Business Review article by Robert Hayes and William Abernathy[1], helped to open executives’ eyes. And In Search of Excellence[2] reminded executives that to operate lean and stick to the knitting will provide a better firm. Further key factors are: have hands-on management; invest in people to improve productivity; and closely control only the critical activities and decentralize the rest".	Didonato, S. and B.H. Kleiner. 1994. "Successful downsizing" Work Study 43(1): 14-17.
Point 20: "Demassing was coined to mean the removal of large chunks of managers and professions from their organization. Types of demassing are listed below: * Relatively large reductions (5-15 per cent and more of the middle level workforce). * Widespread cutbacks which affect many, if not all, divisions and departments. * Deep reductions which usually cover several levels. * Priority on lowering costs by lowering headcount. * Emphasis on completing the programme as quickly as possible".	Didonato, S. and B.H. Kleiner. 1994. "Successful downsizing" Work Study 43(1): 14-17.

With a set of main points collected, the writer produces a set of cognitive map variables. These variables are informed by the set of main points from Table 1. These variables are presented in Table 2.

Table 2: Cognitive map variables based on Table 1

Cognitive map variables	Literature review points
Variable 1: Drivers of interest in organizational downsizing	Point 9: "The study of organizational downsizing is in its infancy, yet downsizing is ubiquitous in American organizations. Nearly all of the Fortune 1000 firms claim to have engaged in downsizing in the last five years, and many assume that downsizing will be a way of life in the future (Willis 1987). It is likely, therefore, that investigations of this phenomenon will increase in frequency and importance in the organizational studies literature in coming years". Point 14: "Downsizing has become a way of life for multinational business firms during the past few years. This period of time has therefore offered and continues to offer (as have few other times in recorded history) challenges for managerial leaders who can properly identify evolving needs and translate them into meaningful opportunities for improved operations in the organizational setting of their firms". Point 19: "By the mid-1980s a new management style began to emerge. “Managing Our Work to Economic Decline”, an influential Harvard Business Review article by Robert Hayes and William Abernathy[1], helped to open executives’ eyes. And In Search of Excellence[2] reminded executives that to operate lean and stick to the knitting will provide a better firm. Further key factors are: have hands-on management; invest in people to improve productivity; and closely control only the critical activities and decentralize the rest".
Variable 2: Improve intellectual understanding of organizational downsizing	Point 3: "...the finance literature on downsizing suggests that downsizing leads to a negative market reaction both in terms of return on common stock and stock price. This negative reaction was particularly prominent when the downsizing was reactive (to previous and current financial struggles), large, frequent, and permanent. This negative reaction was observed in both the USA and Japanese markets". Point 10: "In theoretical terms, downsizing is important because few empirical studies, and even less theory, exist to explain what happens when organizations get smaller intentionally. This is partially due to a past bias in organization theory. Growth was accepted as not just desirable, but as an undisputed sign of success and effectiveness (Whetten 1980a). Most writing on organization change and development was implicitly based on assumptions of organizations growing or remaining stable in size (Jick and Murray 1982, Child and Kieser 1981, Cameron and Whetten 1981)". Point 11: "...there does not yet exist a comprehensive framework of downsizing, including implementation processes and their impact at the organizational level. In addition, the conceptual domain of downsizing has not been delimited. This is necessary in order for empirical and theoretical work on downsizing to proceed in a way that can build on and extend work done previously". Point 16: "Much of the academic literature on downsizing deals with examples from the North American automotive industry. According to Cameron (1994a) and Mishra and Mishra (1994), this industry was selected for several reasons: its deeply competitive and dynamic environment, the extent of its downsizing activities, and its importance in the North American economy (the automotive industry accounted for nearly 40 percent of US GDP)". Point 17: "There are three perspectives from which downsizing can be reviewed: the industry level, the organization level, and the individual level. In terms of the industry or global perspective, related topics include mergers and acquisitions, joint ventures and national employment trends (Cameron, 1994b). The second perspective lends itself to the organization or strategy level. This perspective concerns itself mainly with how to implement downsizing and the expected benefits and pitfalls of downsizing on the firm's performance, efficiency, and effectiveness. At the individual level, also termed the micro level, areas of discussion associated with downsizing are psychological coping strategies, individual stress, and the study of the ``survivors' syndrome''.". Point 18: "Contemporary terms such as reengineering, rightsizing, layoffs, reductions in force, organization decline, and reorganizing are regularly used as substitutes for downsizing. While they do denote to some extent a common meaning, each has its own connotation (Cameron, 1994a; de Meuse et al., 1994; Freeman, 1994)". Point 20: "Demassing was coined to mean the removal of large chunks of managers and professions from their organization. Types of demassing are listed below: * Relatively large reductions (5-15 per cent and more of the middle level workforce). * Widespread cutbacks which affect many, if not all, divisions and departments. * Deep reductions which usually cover several levels. * Priority on lowering costs by lowering headcount. * Emphasis on completing the programme as quickly as possible".
Variable 3: Effective organizational downsizing practices	Point 2: "....the management literature on downsizing suggests that downsizing has an overall negative impact on the ongoing financial health of the organization engaging in such a practice. This effect may be greater for those companies downsizing in response to previous poor financial performance, may or may not have the same negative impact on the market valuation of the company, and may dissipate over time. Additionally, other variables, such as the size and frequency of downsizing, as well as industry conditions, and the way in which the downsizing was communicated might moderate these negative financial impacts". Point 4: "Downsizing, the planned elimination of positions or jobs, seems to have become a favourite business practice for a large number of corporations. It has become synonymous with other terms used to describe organizational change, such as rightsizing, reorganization, restructuring and rationalization. Further, it is associated with the impetus to improve organizational productivity, earnings, effectiveness and efficiency through an intentional set of activities which result in a reduction of employee numbers, lowering of overheads, decreases in bureaucracy, improvements in decision making and smoothening of communication". Point 6: "Often, decisions made by the top management to adopt and implement the downsizing alternative, with the objective of ensuring the financial health of the firm, are in the interest of the firm's owners, and the ethics of downsizing are not likely to be a conscious consideration as the top management formulates downsizing decisions". Point 7: "Although reductions-in-force (RIFs) are typically motivated by the desire to cut costs or to redeploy resources in new directions, research is emerging that suggests that RIFs may not be cost-effective, and that downsizing decisions have imposed additional financial burdens on companies that, in some cases, are already struggling (Genasci 1994, p. 41). In addition to lower productivity and worker morale problems among those individuals who remain, the cost of legal claims by those who have been laid off has added to these organizations’ financial woes". Point 12: "Although the needs of the organization are usually considered to be the key factor in a downsizing plan, organizations sometimes “bend over backwards” in their efforts to be fair to exiting employees. The downsizing plan is then based largely on voluntary programmes such as voluntary retirement and voluntary termination packages which are offered to all employees. The usual result of such programmes is that the organization loses more than it planned to in expertise, company-specific skills, and number of employees". Point 15: "When a company is creatively and meaningfully downsized, practically every aspect of the organization should be reviewed and perhaps transformed, even beyond recognition (Hammer and Champy, 1993, pp. 50-58). In the newly downsized organization, people who once did as they were instructed should now make many choices and decisions on their own. Assembly-line work may disappear. Traditional functional departments may lose their reasons for being. Managers should stop acting like supervisors and behave more like coaches and mentors. Workers should focus more on customers’ needs and less on those of their bosses".
Variable 4: Learn from organizational downsizing practices	Point 1: "Although there has been quite a bit written about the effects of downsizing on the financial health and the market valuation of companies, this literature is fragmented, focusing on various aspects of companies, various reasons for downsizing, and various financial and market outcome measures. Additionally, this work has appeared to have little to no practical impact on the corporate practice of downsizing". Point 5: "Downsizing has resulted in feelings of job insecurity, anger, job stress, decreased loyalty and organizational commitment, lowered motivation and productivity, and increased resistance to change (Brockner et al. 1987; Isabella 1989; O.Neill and Lenn 1995). Financial distress and previous attachment to the job seem to have the greatest negative impact (Leana and Feldman 1990)". Point 8: "Downsizing during the last decade has focused on middle managers and professionals as executives seek to design “flatter” organizations and to  decentralize decision making. Many of the individuals selected for separation are over forty years of age, and face difficulty finding another job in a tight economy and in a business climate that prefers younger, less highly-paid talent to older, more experienced but more expensive talent. Many of these “downsized” individuals are well-educated, conversant with their legal rights (some are former human resource staff, and faced with few, if any, career options. Litigation, either seeking reinstatement or a case settlement, is an option that many have pursued". Point 13: "Cameron et al.[12] .... conclude that despite extensive downsizing in the USA, white-collar productivity has not increased significantly compared with global competitors. They attribute this failure to two factors: (1) that downsizing has not been effectively planned, managed, and implemented; (2) that downsizing has caused resentment and resistance in surviving employees".

The next step is to relate the cognitive map variables to make up a cognitive map on organizational downsizing. The cognitive map and its explanation are presented in the next section.

A cognitive map on organizational downsizing and its interpretation

By relating the four variables identified in Table 2, the writer comes up with a cognitive map on organizational downsizing, as shown in Figure 1.

These cognitive  map variables, four of them altogether, are related to constitute a systemic image of organizational downsizing. The links in the cognitive map (re: Figure 1) indicate direction of influences between variables. The + sign shows that an increase in one variable leads to an increase in another variable while a -ve sign tells us that in increase in one variable leads to a decrease in another variable.  If there no signs shown on the arrows, that means the influences can be positive or negative.  For further information on organizational downsizing, readers are referred to the Literature on downsizing Facebook page.

Concluding remarks

The cognitive mapping exercise captures in one diagram some of the main variables involved in organizational downsizing. The resultant cognitive map promotes an exploratory way to study organizational downsizing in a holistic tone. The experience of the cognitive mapping exercise is that it can be a quick, efficient and entertaining way to explore a complex topic such as organizational downsizing in Business Management. Finally, readers who are interested in cognitive mapping should also find the article informative on this mapping topic.

Bibliography

1.      Appelbaum, S.H., A. Everard and L.S. Hung. 1999. "Strategic downsizing: critical success factors" Management Decision 37(7): 535-552.

2.      Carriger, M. 2016. "To downsize or not to downsize - what does the empirical evidence suggest?" Journal of Strategy and Management 9(4), Emerald: 449-473.

3.      Darling, J. and R Nurmi. 1995. "Downsizing he multinational firm: key variables for excellence" Leadership & Organization Development Journal 16(5): 22-28.

4.      Didonato, S. and B.H. Kleiner. 1994. "Successful downsizing" Work Study 43(1): 14-17.

5.      Eden, C. and P. Simpson. 1989. "SODA and cognitive mapping in practice", pp. 43-70, in Rosenhead, J. (editor) Rational Analysis for a Problematic World, Wiley, Chichester.

6.      Eden, C., C. Jones and D. Sims. 1983. Messing about in Problems: An informal structured approach to their identification and management, Pergamon Press, Oxford.

7.      Freeman, S.J. and K.S. Cameron. 1993. "Organizational downsizing: a convergence and reorientation framework" Organization Science 4(1) February: 10-29.

8.      Labib, N. and S.H. Appelbaum. 1994. "The impact of downsizing practices on corporate success" Journal of Management Development 13(7), Emerald: 59-84.

9.      Lee, B.A. 1995. "Legal pitfalls of downsizing" Human Resource Management Review 5(1): 1-23.

10. Literature on cognitive mapping Facebook page, maintained by Joseph, K.K. Ho (url address: https://www.facebook.com/Literature-on-cognitive-mapping-800894476751355/).

11. Literature on downsizing Facebook page, maintained by Joseph, K.K. Ho (url address: https://www.facebook.com/Literature-on-downsizing-283532795446973/).

12. Literature on literature review Facebook page, maintained by Joseph, K.K. Ho (url address: https://www.facebook.com/literature.literaturereview/).

13. Managerial intellectual learning Facebook page, maintained by Joseph, K.K. Ho (url address: https://www.facebook.com/managerial.intellectual.learning/).

14. Noronha, E. and P. D'Cruz. 2005. "Achieving Downsizing: Managerial Perspectives" Global Business Review 6(1) [DOI: 10.1177/097215090500600106].

15. Open University. n.d. "Sign graph" Systems Thinking and Practice (T552): Diagramming, Open University, U.K. (url address: http://systems.open.ac.uk/materials/T552/) [visited at April 10, 2017].