the impact of organizational change on the perceptions of uk managers

The impact of organizational change on the

perceptions of UK managers

Les WorrallThe Management Research Centre, Wolverhampton Business School, UK

Carole ParkesAston Business School, Aston University, Birmingham, UK

Cary L. CooperManchester School of Management (UMIST), UK

Redundancy, delayering, downsizing, and various other forms of organiza-tional change have become increasingly prevalent. This article focuses on theimpact of different forms of organizational change on managers’ perceptionsof the organizations they work within and the comparison between changesthat involve redundancy and/or delayering and those that do not involve suchchanges. The literature has many accounts of the negative effects associatedwith redundancy and delayering, but are these effects unique to these types ofchange or are they a consequence of negative experiences of a range oforganizational changes? Hypotheses were tested to assess, first, whether thereare differences between different levels of management, notably betweendirectors and nondirectors in the way they perceive organizational change,second, to assess how change has affected managers’ perceptions of theirorganizations and their working lives, and third, to explore if different forms ofchange are associated with differences in managers’ perceptions of theirorganizations ‘‘as a place to work’’. Hypotheses were tested with data from across-sectional survey with 830 managers from the UK. Organizationalchanges include cost reduction and culture change programmes, delayering,mergers/demergers, outsourcing, redundancy programmes, and contract/temporary workers. The analyses reported here indicate clearly that specific

# 2004 Psychology Press Ltd

http://www.tandf.co.uk/journals/pp/1359432X.html DOI: 10.1080/13594320444000047

Correspondence should be addressed to Carole Parkes, Work & Organizational Psychology,

Aston Business School, Aston University, Aston Triangle, Birmingham B4 7ET, UK.

Email: [email protected]

The authors wish to thank the Institute and membership of the Chartered Institute of

Management (CMI) for their involvement in the research programme and Jeremy Dawson for

his guidance on some aspects of the analysis. Special thanks are also due to Doris Fay and two

anonymous reviewers who provided very welcome support and constructive comments.

Cary L. Cooper is now at Lancaster University Management School.

EUROPEAN JOURNAL OF WORK AND ORGANIZATIONAL PSYCHOLOGY, 2004, 13 (2), 139–163

forms of change are associated with managers’ reports of their experiences atwork; some forms of change (notably redundancy and delayering) seem tohave particularly damaging implications for managers’ experiences in theworkplace. The analyses also show that there is a difference in the waydirectors and nondirectors perceive the changes. Finally, the article considersstrategies for ameliorating the effects of change including the role of HR.

Redundancy, delayering, downsizing, and various other forms of organiza-tional change are claimed to have become more increasingly prevalent sincethe 1990s. Resistance and reluctance to adapt to change are commonreactions of humans in an organizational environment (King & Anderson,2002). It is not surprising then that there is a considerable literature,developed in the context of organizational change, to show that perceptionsof uncertainty are detrimental to well-being (Ashford, 1988; Nelson,Cooper, & Jackson, 1995) and we believe that certain types of change aretherefore more likely to be detrimental to individuals, and in turn toorganizations, than other forms of change. Redundancy is probably themost evocative and fear-inducing form of organizational change andliterature in this area focuses on; the impact of redundancies onorganizations, on those directly affected by it and, particularly importantto this study, on those who survive it (e.g., Gowing, Kraft, & Campbell-Quick, 1997; Kets de Vries & Balazs, 1997; Kozlowski, Chao, Smith, &Hedlund, 1993). It has been established elsewhere that redundancy anddelayering—linked to cost reduction programmes and ‘‘downsizing’’—haveplayed a significant part in the overall process of restructuring that hasaffected many UK organizations (Worrall & Cooper, 1999). Althoughdeveloped best in the US, many UK companies have used downsizing-driven redundancy and delayering programmes as a means of ‘‘strategictransformation’’ ostensibly to change organizations’ corporate cultures andto drive down costs. A distinctive feature of changes and in particularlychange involving redundancy from this time has been its effects on white-collar workers. Cascio (2002) asserts that the ‘‘juggernaut’’ of employeedownsizing affecting white-collar workers is continuing.

In many cases downsizing appears to have been a corporate euphemismfor mass redundancies and the overenthusiastic stripping out layers ofmanagement (Vollmann & Brazas, 1993). What is of more concern is thatmany organizational change programmes have relied heavily on redundancyand delayering and we have become used to the euphemisms for whatCascio (1993) defines as ‘‘the planned elimination of positions or jobs’’(p. 95). These include ‘‘downsizing’’ or ‘‘rightsizing’’ or ‘‘business processreengineering’’ or some other management fad of the moment (Champy,1995; Hammer & Champy, 1993).

Organizations are constantly under pressure to perform well and inparticular make returns to the shareholders (Hutton, 1995). The pressure to

140 WORRALL, PARKES, COOPER

downsize—delivering more for less—is reported as the norm (Drucker,1998; Handy, 1994; ‘‘On the Battlefields’’, 1996; Sparrow, 1998). Hence,there has been an increasing use of change strategies such as downsizing ordelayering that rely heavily on redundancies; this use is driven by the hopethat it increases organizational performance. The evidence, however, on itsbeneficial effects are mixed (we report this in more detail below). There arewidespread observations that downsizing initiatives did not deliver thehoped for results. This has ignited research to understand why suchinitiatives have not succeeded and has led to the uncovering of what is nowreferred to in the literature as survivor syndrome (Brockner, Greenberg,Brockner, Bortz, & Carter, 1986). Since then, we do know one of the factorsthat explain why downsizing exercises do not deliver what is expected ofthem. However, despite the widespread claims that downsizing is harmful—since it can give rise to phenomena associated with the survivor syndrome—we believe that this has not yet been fully empirically tested.

Research employing the concept of a survivor syndrome explored thevariables that can increase or mitigate the magnitude of the survivorsyndrome (Brockner et al., 1986). Littler (2000) argues that the ‘‘survivorsyndrome’’ is related to workplace morale, motivation, commitment,perceived promotion opportunities, job satisfaction, and job security. Ithas, to our knowledge, however, not been shown whether the negativeeffects associated with redundancies are actually a unique consequence ofredundancy, or whether they are the result of the general organizationalchange aspect implied in redundancy programme. As already stated, there isa tendency for employees to experience organizational change efforts asthreatening (Ashford, 1988; King & Anderson, 2002; Nelson et al., 1995);therefore, the negative reports on the effects of changes involvingredundancy could also be related to this general experience.

To obtain more evidence for the frequently claimed negative effect ofchanges involving redundancy, this study seeks to compare experiences andperceptions of managers that underwent different types of changes, i.e., costreduction, culture change, redundancy, and outsourcing (Worrall & Cooper,1998). It also compares their perceptions, experiences, and subsequenteffects, and reports on their behaviour in the workplace. The effects ofspecific types of change, namely redundancy (the removal of posts andpeople from an organization) and delayering (the removal of managementlayers/posts and often but not always people) are given particular attention.

The second goal of this article is to compare the perceptions ofindividuals located at different levels of an organization’s hierarchy.Anecdotal reports on the effectiveness of organizational change involvingredundancy and delayering have been somewhat inconsistent. We suggestthat the reason for the inconsistency of these reports may lie in the source ofthis evidence: We believe that there are differences in how these changes are

MANAGERS’ PERCEPTIONS OF ORGANIZATIONAL CHANGE 141

perceived according to level of management and that directors are morelikely to view such changes as positive compared to nondirectors.

Finally, we want to test the widespread claim that the incidence oforganizational change has increased over recent years. We will look at thisby testing whether the number of organizations that have been affected bychanges over a period of 4 years has increased.

DOES IT DELIVER THE HOPED-FOR EFFECTS ONPERFORMANCE?

A large body of literature explores the effects redundancy and delayeringhave on managers’ attitudes to their organization and on aspects of businessperformance and operation. The conventional wisdom in many practitioner-oriented management texts is that downsizing, delayering, and redundancyimprove productivity, effectiveness, efficiency, and competitiveness and thusorganizational performance (Cameron, 1994; Devanna & Tichy, 1990; Ketsde Vries & Balazs, 1997; Shaw & Barrett-Power, 1997). There are a numberof ways in which performance improvement through downsizing is allegedto be achieved: these include increased flexibility, smoother communication,and faster decision making (Fowler, 1993; Freeman & Cameron, 1993;Greenhalgh, Lawrence, & Sutton, 1988; Lewis, 1993; Turnbull & Wass,1997).

However, previous findings have called these assumptions into question.Worrall and Cooper (1998) suggest that the main consequence ofredundancy on survivors is a sharpened sense of accountability, increasedtask overload and task fragmentation, and reduced role clarity, asredundancy and delayering seem to be far more effective in removingpeople from an organization than in removing the tasks that these discardedpeople used to do. The consequence of this has been described by Burchell,Lapido, and Wilkinson (2002) as work intensification (where role, task,information, and work volume overloading takes place) and workextensification (where the work – life balance is shifted as the barrier tothe two becomes less well defined).

Other negative effects of redundancy and delayering seem to be due to itsdestabilizing effect: skills shortages, low morale, anger, and lack ofinnovation have been reported (Cameron, Freeman, & Mishra, 1993) asemployees become more fearful and risk averse. Organizations that areprepared to take risks, to innovate and to develop competences are oftendescribed as ‘‘learning organizations’’ in the contemporary managementliterature. We contend that restructuring which involves significantreductions in employee numbers can be damaging to organizations aspiringto this in two main ways: First, competencies are lost as significant ‘‘chunks’’of organizational memory are discarded; and, second, employees become


less prepared to take risks and engage with innovation in case they are ‘‘nextin line’’. To summarize, even though managers hope for changes involvingredundancy to deliver positive effects, accumulating evidence indicates thatthis is not usually the case and indeed that redundancy is more likely to havea negative effect on organizational performance.

The literature provides evidence of the negative effects of redundancy anddelayering. However, from our perspective, this effect has not yet been fullyexplored since it is not clear whether the described negative effects should beattributed to unique characteristics of redundancy and delayering, orwhether they are a result of negative experiences of organizational change.To our knowledge, studies have not explored comparisons between changesthat do not involve redundancy and delayering and those that do. This studysets out to compare the perceived effects of different types of change onassessments of organizational performance.

IMPLICATIONS FOR DIFFERENT LEVELSOF MANAGEMENT

We assume that the way in which employees are affected by redundancyand delayering depends on where they are located in the organization. Theview that residual tasks, following delayering or redundancy, are oftencascaded down the management hierarchy is supported by Tombaugh andWhite (1990), who found that senior management, following redundancy,expected more junior managers to absorb increased responsibility anddecision making at both the individual and work-group levels. They foundthat surviving managers typically were unprepared for wider spans ofcontrol both in the number of workers and in the variety of tasks theyhad to manage and this may be symptomatic of a failure of more seniormanagers to manage the change process effectively. These findings indicatethat it is inappropriate to treat managers as a homogeneous group.Indeed, earlier findings (Worrall & Cooper, 1999) have indicatedsignificant differences between managers’ perceptions at different levelsof the managerial hierarchy. Managers at chief executive and director levelwere found to have perceptions about the impact of change radicallydifferent from senior, middle, and junior managers; this study aims toextend knowledge in this area by testing the differences in perceptions ofdifferent levels of managers and specifically between directors andnondirectors.

It is our contention that directors perceive changes including thoseinvolving redundancy and delayering more positively than nondirectorsbecause they are often party to the decisions. Constant pressures to cut costsand increase profits inevitably leads to job cutting because it is one way tomake an impact on the ‘‘bottom line’’, certainly in the short term.


EFFECTS ON EMPLOYEE WELL-BEING

Previous research has found that redundancy and delayering affectssurvivors’ emotions, attitudes and behaviours (Brockner, 1990; Greenhalgh& Rosenblatt, 1984; Noer, 1993; Thornhill & Gibbons, 1995). Emotionssynonymous with grieving such as shock, anger, denial, guilt, and fear havebeen noted alongside decreased motivation, decreased trust in management,and decreased levels of organizational commitment in subsequent jobs(Brockner et al., 1986; Kozlowski et al., 1993). As organizations adoptdownsizing as a way of life, there is evidence to suggest that survivorsinitially work harder for reasons such as guilt and insecurity (Brockner,Davy, & Carter, 1985). However, parallel to this are reports of increasedworkloads and increased stress, which question whether any short-termimprovement in performance is sustainable in the longer term. It is difficultto find evidence of any completely successful redundancy programme wherethe effects have not been injurious to both survivors and victims (Cascio,2002).

A review of the literature reveals that redundancy, downsizing, anddelayering are associated with several core constructs in organizationalanalysis. ‘‘Survivor syndrome’’ is identified with workplace morale, motiva-tion, commitment, perceived promotion opportunities, job satisfaction, andjob security (Littler, 2000) and Organ (1997) similarly asserts that morale isstrongly associated with measures such as job satisfaction, job involvement,and organizational commitment. Organizational commitment (Mowday,Porter, & Steers, 1982) emerges as an important construct in the analysis ofthe effect of organizational change on workers. Significantly, Dunham,Grube, and Castaneda (1994) has identified that ‘‘positive experiences’’ canfoster commitment and individual attachment to the organization.

Robinson and Rousseau (1994) argued that employer violations of thepsychological contract increase the probability of employee turnover whiledecreasing the satisfaction of those who remain: They also argued that aviolation, such as redundancy, could reduce organizational commitment,morale, and motivation. Such violations have caused employees to reducetheir sense of obligation to employers and, at the same time, to increase theirfeelings of what they felt they were owed by their employers (Ebadan &Winstanley, 1997). In other instances, fear of redundancy may go some wayto explaining ‘‘presenteeism’’ (Handy, 1998) as managers attempt todemonstrate their indispensability by visibly working long hours (Worrall& Cooper, 2001a) and to explaining absenteeism induced by lower levels ofemployee commitment and loyalty (Worrall & Cooper, 2001b).

A model proposed by Greenhalgh and Rosenblatt (1984) listedrestructuring, mergers, and downsizing as examples of threats that act asantecedents of job insecurity. The threat to the continuation of one’s job


leads to adverse behaviours on the job (in terms of effort, propensity toleave, and resistance to change), which in turn leads to adverse impacts forthe organization (in terms of productivity, turnover, and adaptability).Although it is accepted that the relationship between job insecurity andemployees attitudes and behaviours may be moderated by some work- andnonwork-related factors, Davy, Kinicki, and Scheck (1991) found that jobsatisfaction and organizational commitment mediate job insecurity effectson withdrawal cognitions in a downsizing organization, while Hallier andLyon (1996) found that threats to managers’ positions and careers resultedin decreased trust and diminished organizational commitment.

This section highlights a wealth of employee well-being variables that canbe affected by redundancy and delayering. As pointed out earlier, it is notclear whether the reported detrimental effects are the results of specificcharacteristics of redundancy or delayering. This study sets out to compareexperiences of managers who work for organizations that underwentchanges that did not involve redundancy and delayering with managers thatdid experience redundancy and delayering; it is assumed that that thoseinvolving redundancy will have more negative effects.

CONSEQUENCES OF POOR HR PRACTICES

We argue that satisfaction with HR practices including those which affectrewards, careers, recognition, workload, and other related variablesincluding satisfaction with communication are likely to be lower inorganizations that undergo changes involving redundancy. The reason forthis is that good HR practices—even though widely preached—are notpracticed in redundancy. This is reflected for example in the fact that HRMtexts have not generally addressed the wider issues involved in restructuringand downsizing (Redman & Wilkinson, 2001) despite it being the ‘‘mostpervasive phenomenon in the business world’’ (Cameron, 1994, pp. 183 –188). Our assumption is also based on the widely practised ‘‘Mafia model’’of downsizing (Stebbins, 1989), which suggests that because it is a difficultand unpleasant process it is best hurriedly carried out and quickly forgotten.

Effective communication plays a central role in any change initiative(Tizard, 2002). Cascio (2002) argues that failure to communicate ‘‘openlyand honestly’’ contributes to the atmosphere of uncertainty. Studies havealso shown that employees who understand the reasons behind changes seethem in a more positive light and as a justified option (Gopinath & Becker,2000). A study by Brockner, Grover, Reed, and DeWitt (1992) suggests apositive correlation between the clarity of manager’s explanations and thefavourability of employee’s reactions. This is seen to be particularly true inconditions of high uncertainty for employees and high importance in termsof individuals’ needs and priorities.


The existence of a harassment culture can be determined by the extent towhich individuals have perceptions of the organization as a source of threatand fear. This can be through observations of harassment at an individual ororganizational level. In relation to this study, it should be noted that theterm can be used to denote organizational practices, such as those whichinvolve the threat of job loss. The organization presents the controls as inthe interests of the employees, for example, performance managementimprovement plans are presented as in the interests of the employee but areperceived as forms of punishment (Liefooghe & Mackenzie Davey, 2001).This is because the outcomes of performance management processes cancontribute directly to the decisions about who the victims of restructuringand downsizing will be. However, subjectivity in such systems and a lack ofobjective assessment can lead to a lack of trust and confidence in the system(Winstanley & Stuart-Smith, 1996).

Another reason for the importance of effective management ofredundancy and delayering is provided by Reilly, Brett, and Stroh (1993)who explain that, under threat of redundancy, individuals become moreloyal to their own personal development than to their employingorganization. This suggests that individuals tend to redefine and switchtheir loyalty (away from organizations and to themselves).

In conclusion, the need for HR to be proactive in developing andeffectively managing policies and practices to reduce the negativeconsequences of organizational changes and in particular those involvingredundancy and delayering is paramount. However, scholars of the fieldhave pointed out that HR is strongly neglected when organizationsengage in redundancy or delayering. This implies that the variablesdescribed in the previous section should be less favourable in organiza-tions that underwent redundancy or delayering in comparison to otherorganizational changes.

RESEARCH QUESTION AND HYPOTHESES

The assertions made by authors writing about organizational change being apersistent and increasing feature of organizational life is discussed in theintroduction. We believe that these assertions are mainly based on anecdotalevidence, thus the following research question was set and addressed in ouranalyses: Did the number of organizations affected by organizational changeincrease over the period 1997 to 2000?

The issue of different perceptions of the effects of organizational changeby management level is discussed earlier in this article, and this studycompares different levels of management in the way in which they experiencechanges. Furthermore, we compare managers who underwent different typesof changes with each other (including a group of managers that did not


experience change for some of the analyses) to test whether changesinvolving redundancy or delayering (or both) result in more negative reportsthan changes without either of these initiatives. The types of changereported include cost reduction and culture change programmes, delayering,mergers/demergers, outsourcing, redundancy programmes, and (with theexception of 1997) contract/temporary workers.

The following hypotheses were developed:

Hypothesis 1. When organizations undergo changes involving redun-dancy or delayering, directors perceive the effect of organizational changeon organizational outcome variables (such as organizational effectiveness,organizational performance, and competences loss) and on employee well-being variables (such as employee loyalty and job security) more positivelythan nondirectors.

The literature review presented earlier indicates that organizationalchange that involves redundancy does often not deliver the desired forresults. Here we seek to test whether the negative consequences areattributable to the specific experiences involved in redundancy or whetherthese are simply an effect of having undergone organizational change.

Hypothesis 2. We hypothesize that there are differential effects of thetypes of organizational changes on organizational performance andemployee well-being: Managers perceive the effects of change on perfor-mance and employee well-being most positively when the changes arewithout redundancy or delayering; and most negatively when changesinvolving redundancy.

Hypothesis 3. Managers’ current personal well-being depends onwhether or not their organization has undergone a change that involvesredundancy or delayering, as well as whether there is no change at all. Theway managers feel in their organizations (in terms of their satisfaction,morale) and perceive the culture in their organization (in terms of aharassment culture) is most negative for managers from organizations thatunderwent redundancy or delayering; they feel more positive when theirorganization underwent other types of change, and feel best in organizationsthat did not experience change.

Hypothesis 4. Managers’ reports on how their organizational attach-ment (in terms of reciprocal commitment to the organization andintention to quit) and work intensification has developed over the last 3years depends on whether their organization has undergone a change ornot, and if, what kind of change. We assume that managers whoexperienced redundancy and delayering report a more negative develop-


ment of their organizational attachment and a more negative develop-ment of work intensification over the last 3 years, in comparison tomanagers of organizations where the change did not involve redundancyor delayering and in comparison with managers from organizations thatdid not undergo a change.

METHODStudy and sample

This article is based on the data of a 4-year University of ManchesterInstitute of Science and Technology (UMIST) – Chartered ManagementInstitute (CMI) research programme that was designed to explore thechanging nature of managerial work in the UK and to assess the impactof different forms of organizational change on, for example, organiza-tional effectiveness and managers’ well-being variables, such as jobsecurity, motivation, morale, and commitment to the organizations theywork within.

The ‘‘Quality of Working Life’’ survey was conducted annually from1997 to 2000 using the CMI’s membership database as a sampling frame.There are no reliable, published estimates of the size, structure, andsectoral distribution of the population of UK managers. Therefore, it hasnot been possible to test whether the CMI is fully representative of UKmanagement population, and to weight the survey data in case it is notrepresentative. The panel of respondents were drawn from the CMI andthe survey was sent to 5000 randomly selected individual members of theInstitute.

The exercise generated 1362 valid responses in 1997, 1313 responses in1998, 1213 responses in 1999, and 1516 responses in 2000 (which representedresponse rates of 27%, 26%, 24%, and 30%, respectively). It is important toemphasize that the sample is representative of the structure of themembership of the Chartered Management Institute.

For the purpose of this study, which is essentially an exploration of thedifferential impact of various types of organizational change, we decided touse a reduced data set. We excluded those managers who were not full-time employees and those who worked in organizations employing lessthan 100 employees. Our rationale is that such a comparison requires ananalysis of organizations where defined managerial structures andhierarchies exist and where there is a defined internal labour market. Thisreduced the number of participants to 817 in 1997, 801 in 1998, 724 in1999, and 830 in 2000.

Data from all four years will be used to explore our research question onthe magnitude of organizational change over time. Hypotheses 1 to 4 aretested using the data of the year 2000. Different categories of management


level were assessed and for the purposes of this research, we distinguishedbetween directors (chairmen, CEOs/MDs, and directors—labelled D) andcompared their views against those of nondirectors (senior, middle, andjunior managers—labelled ND).

Measures

Effectiveness of organizational change on organizational outcomes wasmeasured with three scales—effectiveness, outcome, and competenceloss:

1. Effectiveness was measured with a scale comprising four items askingmanagers to what degree had organizational changes improveddecision making, accountability, participation, and flexibility in theirorganization. The answering format was a five-point scale (stronglydisagree to strongly agree).

2. Outcome. Changes in organizational performance were captured withtwo items, assessing how far productivity and profitability wereenhanced as a consequence of organizational changes, using the samequestion and answering format as effectiveness.

3. Competence loss was measured by a single item asking to what degreeorganizational changes had resulted in key skills and experience beinglost. Answering format was the same as for effectiveness.

Two measures of employee perspectives (job security and loyalty) were alsoincluded:

4. Employee loyalty. This scale consisted of three items and askedmanagers to assess in how far organizational changes had affectedtheir employee’s loyalty, morale, and motivation. The answeringformat recorded if the managers perceived these attitudes to haveincreased, remained unchanged, or decreased.

5. Employee job security was measured by a single item asking about theeffects of the changes on employee’s job security. The answeringformat recorded if employees’ job security increased, remainedunchanged, or decreased.

Manager’s current well-being was assessed with three scales—satisfaction(two scales), morale and motivation, and index for harassment culture:

6. Satisfaction with communication was measured by two items and askedabout satisfaction in current job with team communication and


feedback. Answering format was a five-point scale (strongly agree tostrongly disagree).

7. Satisfaction with HR policies was measured by a scale consisting offour items and asked about satisfaction in current job with careeropportunities, recognition for performance, reward/remuneration,and workload, using the same answering format as satisfaction withcommunication.

8. Morale and motivation was measured by a scale consisting of six itemsconcerning organizational morale, department/team morale, havingfun at work, whether the organization has become a better place towork in past 12 months, and whether employees are treated as themost important asset. Answering format was the same as for thesatisfaction scale.

9. Harassment culture was measured by an index of two items asking howfar managers agreed that there was a blame culture in the organizationand whether they had witnessed bullying in the organization.Answering format was the same as for the satisfaction scale.

Three scales were used to assess manager’s perceptions of change in thelast 3 years—reciprocal commitment, intention to quit, and workintensification:

10. Reciprocal commitment was measured by a scale consisting of threeitems, and asked how far the manager’s commitment to their workgroup, commitment to their organization, and the organization’scommitment to them had developed over the last 3 years. Answeringformat was the same as for effectiveness.

11. Intention to quit was measured by a single item and asked how far themanager’s inclination to change jobs to pursue their career haddeveloped over the last 3 years. Answering format was the same asfor effectiveness.

12. Work intensification was measured by an index of three items askinghow far the nature of managerial work had changed over the past 3years. The items were task fragmentation, volume of information,and increased organizational politics. Answering format was thesame as for effectiveness.

Type of organizational change was measured by asking managers to recordthe occurrence (or not) of seven categories of change. These categories were:cost reduction programmes, culture change programmes, delayering,mergers/demergers, outsourcing, redundancy programmes, and the replace-ment of full-time employees by contract and/or temporary managers (nowoften called interim managers).


TA

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ron

ba

ch’s

alp

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dia

go

na

l

6M

SD

12

34

56

78

910

11

12

1.Effectiveness

3.10

0.80

(.80)

2.Outcome

3.03

0.75

.61**

(.65)

3.Competence

loss

3.61

1.06

7.28**

7.28**

—

4.Employee

loyalty

1.46

0.56

.54**

.41**

7.46**

(.66)

5.Employee

jobinsecurity

2.61

0.57

7.25**

7.20**

.30**

7.56**

—

6.Satisf.communication

3.52

0.82

.23**

.17**

7.15**

.21**

7.15**

(.76)

7.Satisf.HR

policies

3.04

0.90

.26**

.26**

7.19**

.25**

7.21**

.43**

(.77)

8.Morale

&motivation

2.87

0.75

.32**

.26**

7.27**

.37**

7.31**

.49**

.67**

(.85)

9.Harassment

2.97

0.93

7.18**

7.19**

.18**

7.15**

.08

7.32**

7.42**

7.47**

(.51)

10.Recipr.commitment

3.21

0.63

.21**

.22**

7.16**

.25**

7.14**

.28**

.41**

.50**

7.28**

(.74)

11.Intentionto

quit

3.42

0.97

7.11*

7.09

.05

7.14**

.08*

7.20**

7.30**

7.28**

.19**

7.22**

—

12.Work

intensity

3.83

0.60

.03

.01

.09*

7.05

.03

7.04

7.18**

7.18**

.21**

7.03

.07*

(.52)

*p4

.05,**p4

.01;Row

1–5,n=

745;Row

6–12,n=

855;Satisf.=

Satisfactionwith;Recipr.=Reciprocal.

151

All scale means, standard deviations, intercorrelations, and reliabilitiescan be found in Table 1. Internal consistencies can be considered assufficient in most cases regarding the limited number of items.

RESULTS

The research question was tested by comparing the numbers of managerswho reported experiencing specific types of change over a 4 year period(1997 – 2000) to those who did not experience any of the assessed changes.

Table 2 shows that over the 4 year period the proportion of managersexperiencing change increased. This trend is significant with Chi-square(3, N=830)=10.34, p5 .016. This result supports the commonly heldperceptions that organizational changes are becoming increasingly wide-spread.

All hypotheses were tested with multivariate analysis of variance(MANOVA), with management level (directors vs. nondirectors) as thefirst factor, and type of change as the second factor. Respondents weregrouped according to the type of change their organization had undergone;four groups were distinguished:

1. There was organizational change but without the use of eitherredundancy or delayering, i.e., the change process involved costreduction, culture change, mergers/demergers, the use of temporaryand/or contract staff or outsourcing or a mixture of these; changewithout redundancy or delayering (CWRD), n=253.

2. Redundancy was used without delayering; redundancy no delayering(RND), n=219 – 244.

3. Delayering was used without redundancy; delayering no redundancy(DNR), n= 67– 71.

4. Redundancy and delayering were used in parallel; redundancy anddelayering (RAD), n=201.

5. No change (NC), n=112.

TABLE 2Number of managers reporting changes and those reporting no change

1997 1998 1999 2000

No change 287 (35.1%) 261 (32.6%) 220 (30.4%) 233 (28.1%)

Reported changes 530 (64.9%) 540 (67.4%) 504 (69.6%) 597 (71.9%)

Total number of managers 817 801 724 830

Note: Changes reported include, cost reduction and culture change programmes, delayering,

mergers/demergers, outsourcing, redundancy programmes and (with the exception of 1997)

contract/temporary workers.


The first four groups are used to test Hypothesis 2 on the different effects oftypes of organizational changes. Hypotheses 3 – 4, which relate to currentexperiences in organizations and developments over the last years, alsoinclude participants who reported that their organization had not undergonechanges.

Hypotheses 1 and 2 are tested with one MANOVA including alldependent variables implied in these hypotheses. Hypothesis 1 comparesnondirectors and directors regarding how they perceive change. The groupswere compared with respect to their perceptions of organizational outcomeof change (effectiveness, outcome, competence loss) and employee well-being (loyalty and job security). Results depicted in Tables 3 and 4 implythat directors and nondirectors differ significantly in their perceptions ofchange: multivariate F-test, F(5, 733)=17.41, p5 .001. The directorsperceive change in general more positively than nondirectors: Univariatetests imply that this applies to all variables. The nonsignificant interaction

TABLE 3Significant results of MANOVAs and post hoc tests

Measure ML Type of change

1. Effectiveness D4ND CWRD4RAD, RND

2. Outcome D4ND

3. Competence loss D5ND RAD4RND, CWRD, DNR

RND4CWRD

4. Employee loyalty D4ND RAD5CWRD, RND, DNR

RND5CWRD

5. Employee job insecurity D5ND CWRD5DNR, RND, RAD

RND5RAD

6. Satisfaction with communication D4ND NC4DNR, RND+

7. Satisfaction with HR policies D4ND NC4CWRD, RND, DNR,

RAD

8. Morale & motivation D4ND NC4CWRD, RND, DNR,

RAD

CWRD4RAD, RND

RND4RAD

9. Harassment culture D5ND NC5CWRD, RAD, DNR,

RND

CWRD5RAD

10. Reciprocal commitment D4ND NC4RAD

11. Intention to quit D5ND NC5RAD+, RND

12. Work intensity D4ND NC5DNR+, RAD, RND,

CWRD

‘‘5 ’’ and ‘‘4 ’’ indicate a difference between groups in the post hoc test, with p5 .05

(p5 .10 when indicated with +); ML=managerial level, D=director, ND=nondirector;

NC=no change, CWRD=change without redundancy and delayering, RAD=redundancy

and delayering, DNR=delayering no redundancy, RND=redundancy no delayering.


term of managerial level and change type, however, indicated that there wasno support for our assumption that nondirectors had especially negativeperceptions when affected by changes involving redundancy or delayering.Results only indicate that nondirectors give less favourable reportsregardless of the type of change they were exposed to.

Hypothesis 2 assumed differential effects of type of organizational changeon organizational outcome variables (effectiveness, outcome, and competenceloss) and employeewell-being (employee loyalty and job security). Hypothesis2 is confirmed,F(15, 2205)=6.54, p5 .001. Post hoc testswere run to identifybetween what types of changes the differences occurred (cf. Table 3).Inspections of the means (cf. Table 5) and the post hoc test support theassumption that changes that involve only redundancy (RND) or redundancyand delayering (RAD) are associated with significantly more negative reportsof all tested variables in comparison to those changes which do not includeredundancy or delayering. In most of the post hoc tests the group thatunderwent change without redundancy or delayering (CWRD) gavesignificantly more favourable reports that than all other groups. An exceptionto this is the scale outcome, where the univariate test was not significant.

The last two hypotheses predict a differential impact of the type of changeand whether there was no change on managers’ well-being (in terms of theirsatisfaction, and morale and motivation, cf. Hypothesis 3) and on thedevelopment of the organizational attachment (reciprocal commitment,intention to quit) and work intensity (Hypothesis 4). The two hypotheseswere again tested with one MANOVA, testing all dependent variables

TABLE 4Means and standard deviations for management level of participants

Director Nondirector

M SD M SD

1. Effectiveness 3.50 0.81 3.04 0.79

2. Outcome 3.40 0.73 2.98 0.74

3. Competence loss 2.95 1.04 3.70 1.03

4. Employee loyalty 1.84 0.66 1.41 0.53

5. Employee job insecurity 3.40 1.08 3.01 1.13

6. Satisfaction with communication 3.79 0.70 3.49 0.83

7. Satisfaction with HR policies 3.41 0.84 2.99 0.84

8. Morale & motivation 3.27 0.68 2.81 0.75

9. Harassment culture 2.64 0.91 3.02 0.93

10. Reciprocal commitment 3.41 0.58 3.19 0.63

11. Intention to quit 3.18 0.92 3.45 0.98

12. Work intensity 3.92 0.61 3.82 0.59

Director=Chairs, CEOs and Directors; Nondirector=Senior Managers, Middle Managers

and Junior Managers.


TA

BL

E5

Me

an

sa

nd

sta

nd

ard

de

via

tio

ns

for

typ

eo

fch

an

ge

ex

pe

rie

nce

d

Change

Type

CWRD

RND

DNR

RAD

NC

MSD

MSD

MSD

MSD

MSD

1.Effectiveness

3.28

0.76

3.04

0.80

3.35

0.82

3.02

0.85

2.Outcome

3.22

0.70

3.07

0.75

2.95

0.80

2.95

0.80

3.Competence

loss

2.80

1.11

3.60

0.98

3.30

1.18

3.92

0.95

4.Employee

loyalty

1.73

0.65

1.47

0.53

1.29

0.46

1.52

0.59

5.Employee

jobinsecurity

2.33

0.64

2.64

0.55

2.64

0.57

2.81

0.45

6.Satisfactionwithcommunication

3.52

0.83

3.48

0.81

3.35

0.81

3.56

0.80

3.72

0.83

7.SatisfactionwithHR

policies

3.09

0.81

3.00

0.85

2.99

0.90

2.89

0.85

3.43

0.80

8.Morale

&motivation

3.27

0.66

3.03

0.73

2.82

0.73

2.77

0.69

2.54

0.72

9.Harassmentculture

2.94

0.90

2.97

0.94

3.03

0.96

3.21

0.91

2.53

0.87

10.Reciprocalcommitment

3.25

0.63

3.23

0.62

3.17

0.68

3.09

0.60

3.43

0.63

11.Intentionto

quit

3.38

0.91

3.50

0.95

3.32

1.11

3.51

1.09

3.22

0.81

12.Work

intensity

3.82

0.61

3.90

0.59

3.84

0.53

3.89

0.60

3.63

0.56

Note:

CWRD=

change

without

redundancy

and

delayering,

RND=

redundancy

no

delayering,

DNR=

delayering

no

redundancy,

RAD=

redundancy

anddelayering,NC=

nochange.

155

implied in the two hypotheses. The multivariate F-value for type of changeindicated a significant effect of the type of change, F(28, 3384)=4.66,p5 .001.

Post hoc tests showed for all variables implied in Hypothesis 3 that theno-change group made significantly more positive statements than any ormost of the other groups (Table 3). For managers’ morale and motivationand the observation of a harassment culture, the particular negative effect ofredundancy combined with delayering (RAD) appeared again: This groupreported significantly lower morale and motivation and higher observationof harassment culture than the group that underwent change withoutredundancy or delayering. With respect to the variables implied inHypothesis 4, the post hoc tests show that no change is perceived morepositively than some of the change groups; it was, however not the case thatthe redundancy and delayering group stuck out.

We also tested for all variables, whether there was an interaction betweenmanagement level and type of change. The multivariate test of theinteractions between the factor management level and type of change wasnot significant, F(28, 3368)=0.96, p 4 .1.

DISCUSSION

Our findings have revealed that our panel of respondents experiencedsignificant organizational change between 1997 and 2000. The figures showthat an increasing number of managers reported changes each year over thisperiod. Changes in the global economy and increased competition providemore uncertain business conditions, which in turn lead to a more insecurework environment as organizations respond with restructurings andmeasures such as redundancy and delayering. According to Hutton (1997)such decisions are often brought about because of the intense pressure onprivate and public sector alike to improve their profitability and efficiency,the lack of labour market protection, and the weakness of the unions.

The prime driver for redundancy and delayering is often cost cutting.Looking at the number of people affected by change involving redundancyand delayering in the year 2000 (individuals in groups 2 – 4=492) comparedto those where changes did not involve redundancy and delayering (n=253)shows that overwhelmingly, change seemed to have focused on reducingcosts with a view to enhancing profitability and productivity in a businessclimate where improving competitiveness was increasingly seen as the key tosurvival. This pattern also occurred in the previous years (data not shownhere).

In the comparison of perceptions of change between directors andnondirectors, the views of managers within the board room differed fromother managers. The perspectives of board-level managers and other


managers were found to be quite different on a host of measures. Directorsappeared to view organizational changes in a more positive light than theirmore junior counterparts, i.e., nondirectors. This was only a general trendbut it was not confined to changes involving redundancy and delayering butwas also found in all types of changes.

We believe our results are symptomatic of increased power distance inUK business organizations and contend that the experience of working lifein the board room has become more distanced from the experience ofworking life outside the board room (Worrall & Cooper, 2001b). This hasbeen taken up in the media and epitomized by the reporting of ‘‘fat-cat’’pay, which is now included in assessments of FTSE 100 company profiles(Ashworth, Butler, & Buckley, 2004).

We also compared different types of changes in order to test whetherredundancy and delayering is more harmful than other types of change. Interms of organizational effectiveness, change that did not involveredundancy and delayering is received more positively than change thatdid involve such changes. While organizational change is often predicatedin terms of improving organizational effectiveness and efficiency, managersshowed a considerable degree of ambivalence about the effect of change onorganizational performance. This supports Thornhill, Saunders, and Stead(1997) who suggested that, following a redundancy programme, indivi-duals become indecisive and risk averse as spans of control and taskoverload both increase and role clarity declines. More colloquially,managers are less willing to ‘‘stick their neck out’’ following redundancies,which might explain why managers perceive decision making to haveslowed down.

There is evidence that the perceived impact of change is to cause theattrition of organizations’ skills and knowledge bases: This is paradoxicalgiven the emphasis on knowledge management and ‘‘the learning organiza-tion’’ in the current management discourse. In those organizations whereredundancy with delayering occurred, the loss of knowledge and skill wasperceived to have been most pronounced. We suggest an explanation for thismay be that the selection criteria used by organizations to pick individualsfor redundancy may be more geared to taking out high cost employees thanto preserving organizational knowledge. This may be accentuated by theincreasing use of temporary and contract staff who do not hold companyknowledge and often leave after short periods taking the knowledge theyhave acquired with them.

The analysis showed that managers who had experienced redundancy anddelayering as part of organizational change and restructuring programmeswere far more likely to report negative impact on employee variables such asthe employees’ loyalty, morale, motivation, and sense of job security.Furthermore, redundancy, particularly when it is used in conjunction with


delayering, is often a short-term action that erodes trust within anorganization creating a culture of blame and harassment that is damagingto the employee – employer relationship. Our analysis revealed that it wasnot only employee loyalty that was affected negatively by organizationalchange involving redundancy. In particular, redundancy appears to havereduced managers’ perceptions of employee morale and (not surprisingly)their sense of their employee’s job security. Different types of changeincrease job insecurity but this was particularly pronounced in organizationswhere redundancy and delayering had been used in parallel. Managersshowed a substantially reduced sense of job security even though they hadsurvived.

For a number of variables we found that managers only report morepositive perceptions when they experience change which does not involveredundancy and/or delayering compared to those that do. Differentialimpacts were found of change/no change and type of change on managersperceptions of well-being variables including loyalty, morale and motiva-tion, commitment, intention to quit, work intensification, and perceivedorganizational climate (satisfaction with communication, HR policies, andthe extent to which a harassment culture was perceived). Significantly, nochange is perceived more positively than any other group.

Our study adds to the literature as we show that the people who staysuffer under redundancy and delayering; and this result is not attributable tothe general negative effect of organizational changes but to the specificnature of redundancy and delayering. We have revealed that the impact ofredundancy on organizations is considerable and the organizational contextand culture in which the individuals work.

It should be borne in mind when interpreting the results that, due to thenature of CMI membership and self-selection issues, the panel ofrespondents tends to overrepresent managers at more senior levels.However, the survey elicited an average of 800 responses and we believethis depicts a balanced view of change processes in organizations. It is alsoaccepted that for a few of the measures used, the alpha coefficient for thescales is not particularly high but these are the exception and they have beenincluded to add to the picture provided by the main scales (see Table 1).

Our research has important implications for the management of change:In particular, we suggest that organizations should seek alternative methodsof reducing their costs rather than immediately reducing the headcount and,to paraphrase Cascio (2002), organizations should use redundancy anddownsizing as a last resort and not as the first option. Change managers alsoneed to be aware of the structural problems that exist in many organizationswhere the views of the board and the views of other, more junior managersare radically different indicating the existence of different value systems andseparate agendas for organizational development. It is our contention that


this polarization of views indicates the existence of a fundamental structuralproblem that militates against the more effective and sympathetic manage-ment of strategic change in many organizations.

We contend that redundancy makes managers more risk averse. It canerode the skill and knowledge bases of organizations, it may reduce trust, itcan be associated with the existence of a harassment culture withinorganizations, and it contributes to reducing individuals’ quality of workinglife. Each of these negative consequences has the ability to inhibit the futuredevelopment of the postredundancy organization and make the manage-ment of postredundancy survivors problematic, in terms of having to rebuildtheir commitment, reestablish their perception that the organization hassome commitment to them, redevelop their sense of job security, andrekindle their sense of identification with the perceptions and feelings, whichwill ultimately find form in changed managerial behaviours in theworkplace.

We argue that the high and persistent rate of organizational change andthe use of redundancy as a mechanism for change (either singly or inconjunction with delayering) has brought about changed pressures, changedattitudes, and changed managerial behaviours in the workplace. An increasein the tensions that arise from managers having to balance work andnonwork commitments (Worrall & Cooper, 2001b) and changes inbehavioural patterns indicate that managers may be becoming moremercenary as their loyalty switches from the organization to their ownself-interest.

HR can play a crucial role in effective management of workforcereduction particularly in ameliorating the serious negative affects of itsmismanagement (Redman & Wilkinson, 2001). Cascio (2002) emphasizesthe importance of the processes used in relation to those affected bychanges and we propose that satisfaction with HR practices and theimpact this has on organizational climate is important in the perceptionsof managers when they experience organizational change. This isparticularly important when changes involve redundancy and delayeringcompared to those that do not involve such changes. What might beenseen as almost indifference towards HR policies switches to real concernswhen individuals are personally affected by such decisions in terms oftheir career and/or livelihood. Although once decisions to instigateredundancies and/or delayering are made, they are rarely reversed, themanner in which the processes are undertaken can vitally affect the viewsof the ‘‘survivors’’ as well as the climate and reputation of theorganization. It is a case of ‘‘it ain’t what you do, it’s the way thatyou do it’’ and certainly avoiding the Stebbins (1989) ‘‘Mafia model’’ ofdownsizing. It is in this respect that good HR practices can make adifference.


Campbell, Thornhill, and Saunders (1997) suggested that mismanagingchange programmes and relying on redundancy has led organizations into aspiral of decline where more emphasis becomes focused on internal politicsand on managerial positioning in new structures than on products, markets,and customers. Our concern is that much change in the UK is beingdriven—in the private sector—by a singular focus on maximizing share-holder value and an unwillingness to take into consideration the interests ofa wider set of stakeholders. In the public sector, central government seems tobe driving modernzation at a pace that many organizations cannot copewith, causing many public sector organizations to restructure, reduce costs,and to outsource services. While change is inevitable in organizations, doesit usually have to be so injurious and so badly managed? If only one messageis taken from this article by practitioners, it should be that those managerswho had not experienced change had more positive perceptions than allother groups. Perhaps change initiatives should be awarded ‘‘a very highprice tag, to be used sparingly and only with great care’’.

Cascio (2002) provides a checklist of ‘‘mistakes to avoid’’ whenrestructuring, which includes failures in goal setting, communication,employee involvement, managing departing employees, survivors, and otherstakeholders, and using downsizing as a last resort. Our findings supportthese assertions. Changes involving redundancy and delayering areparticularly damaging but, where such changes are unavoidable, the waythe processes are managed is of critical importance. In this case, it may bethat it ‘‘ain’t what you do, it’s the way that you do it’’. Brockner andGreenberg’s (1990) framework of organizational justice in relation to layoffsis of particular importance in understanding the dilemmas and reactions tothe processes and decisions involved in these changes.

Cascio (2002) also asserts that, unless firms are brutally honest about theprocesses and outcomes of their restructuring efforts, they are doomed torepeat the same mistakes over and over again. Similarly, organizations needto have a clarity of the implications when managing downsizing (Herriot &Pemberton, 1997) and accept that the best way to manage process ofdownsizing is to learn from experience gained by other organizations(Cameron, 1994).

This research has implications for managing change and the HR strategyof organizations. The pressures to increase performance and develop humanpotential are paramount but cannot be done using blunt instruments such asredundancy without thinking through the consequences for the future andworking effectively with fewer resources should put the value of utilizinghuman potential at the top of the agenda.

The integration of HRM with business strategy is crucial to ensure thatthe people factor is included in the equations of such decisions but a moreproactive approach by HR to create new cultures and structures within


which strategy is formulated, would provide a more preferable reciprocalrelationship between HR policy making and business strategy (Legge, 1995).

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