Organizational Downsizing: How Communication Networks Connect with Employee Performance

Abstract

When an international hotel firm eliminated about one-quarter of the positions at its corporate headquarters, it opened a window into the turbulence that downsizing survivors experience in establishing new networks. This study shows the effects of a corporate downsizing on existing communication networks and on the employee performance that those networks support. It is in management’s interest to foster development of restored communication networks following a downsizing, because workers who feel they receive adequate job-related information are also stronger performers. Communication networks seemed to be in disarray two months after the downsizing, but employees had regained their equilibrium about four months afterward. Managers who seek to improve employees’ performance after a downsizing could focus on rebuilding their communication networks. In deciding whom to retain in a downsizing, the study points to the finding that high performers before the downsizing continued to be high performers even after a staff reduction.