Effects of downsizing on surviving management employees’ commitment in the banking industry in Kenya

Abstract

Being a global phenomenon, corporate downsizing has gained legitimacy as a re-organization strategy. Given the competitive environment in the banking industry, banks have also employed downsizing as a strategy in order to gain competitive advantage. In Kenya, the banking industry has adopted downsizing as a strategy to effectively meet challenges such as evolving technology, intensifying competition and also to improve their bottom line. The purpose of this study was to explore the effects of downsizing on the surviving management employees in the banking sector and in particular how the exercise impacts on employees‟ commitment to the organization. The literature shows that employees who survive downsizing, experience some unintended consequences that affect their commitment to the organization. The current research was undertaken through a qualitative research process which utilized a single case study design. The research study was a single case in the banking industry. Data collection was by way of individual in-depth interviews with the management employees who remained in the organization following the downsizing exercise. The study presupposed that the surviving employees following a downsizing exercise were happy due to the fact that they maintained their jobs in the organization. However, the findings indicate that the surviving management employees suffered some negative effects which had an impact on their commitment to the organization. The study therefore recommends that senior management and decision makers take a more proactive approach when considering downsizing in order to ensure that all surviving employees, are taken care of in terms of support programmes, in order to foster positive employee attitude and rebuild their commitment to the organization thereby resulting in better firm results.