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CHAPTER 1

INTRODUCTION

1.1 Background of the Study

According to Jared Lewis1 downsizing is a word that everyone hears once in a

while when the market is down, when the company doesn’t perform too well, when the

company merges another firm, or when the company breaks up. Downsizing isn’t easy

the way it sounds. Everyone in the company is affected, the occurrence of changes in the

organization. As the company downsize its employees there will be reconstruction of

responsibilities and add more loads to each employee.

Downsizing has its generic meaning, it has a wide range of actions such as

rightsizing, resizing, restructuring, delaying, and reengineering. Regardless of these

terminologies, downsizing still known as the most pervasive form of organizational

change.

Downsizing has become a common activity for some companies trying to reduce

their human resource for a specific purpose. From a layoff of employees it becomes a

permanent downscaling. It has also been observed in other countries for the reason of

lowering labor costs and to increase productivity.

It might have an advantage for the company for lowering their cost however the

action for this matter has still a negative effect not just for the employees who had been

downsized but as well as to those who remain. The remaining employees feel the

negative effects even after the downsizing takes place, and those can have a harmful

effect on their business.

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However, many firms are reluctant to reveal information about their downsizing

activities, citing current or potential legal actions or the desire to protect information from

the scrutiny of competitors. Downsizing is clearly a sensitive topic, making the system

study of downsizing particularly problematic.

To this regard, when this problem started to exploit in the different companies’ in

different region, specifically in Tacloban City wherein some companies keep on

downsizing employees and was observed that the remaining employees was greatly

affected due to this matter. With this, the researchers prompted to conduct this study by

the desire to look into the impact of downsizing to employees working on a certain

company.

1.2 Statement of the Problem

The research problem for this study is that downsizing affects employees who are

part of the organization during and after downsizing event, as well as employees who

remain in the organization. The objective of this study is to identify the effects of

reducing the number of employees to survivors or remaining employees.

Specifically, this study will answer the following questions:

a) What are the impacts of downsizing to survivor employees?

b) What individual effects occur as a result of downsizing?

c) How does downsizing affect employees?

1.3 Significance of the Study

The result of this study would provide baseline information on downsizing of

employees towards the business in relation to the performance of employees in the

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company in which it could enlighten other sector of the society concerns with business.

Specifically, the results of this study will be beneficial to the following:

Employees. This study would be beneficial to them as they are the main subject

of this research. The result of this study will provide them in depth understanding

towards the activity of downsizing.

Business Owners. The result of the study would provide inputs on how to

become effective business owners in order to help employees in cultivating their works.

This study will help them realize realize the importance of making a good relationship

with employees. They will be aware by the impact of downsizing to each employees

working on a certain company.

Business Company. This study would be beneficial to business companies for it

will provide them insights towards maintaining a good relationship to their employees.

Students. This study would be beneficial to students’ specifically for the ABM

students for it will provide them knowledge on doing researches with regards to their

specialized field that may lead to similar or related research.

Future Researchers. With the findings of the study, it will encourage those

individuals who wish to do more researchers. They can use this as a basis for their study

to serve as baseline information in conducting similar or related studies.

1.4 Scope and Limitation of the Study

This study would be conducted through the involvement of surviving employees

in the occurrence of downsizing in the area of Tacloban City specifically Hotel Rodolfo

and GV Hotel. The study would look into the input of downsizing of employees to its

impact to employees working in the company. Further, it ascertained the level of

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performance of the employees. After this data obtained, a recommendation will be

addressed to help employees with this kind of occurrence.

This study has a small sample size. Though small, the population effects are

important because they open up areas for future research on the influence of downsizing

to survivor employees.

1.5 Definition of Terms

In order to facilitate learning the terms were defined conceptually and

operationally.

Employee’s Performance. Conceptually, the term refers to how employees deal

with their work and how they scope with or accomplish different tasks given to them by

their superiors2. Operationally, the term refers to the performance of employees that is

being affected due to downsizing.

Business. Conceptually, the term refers to an organization or economic system

where goods and services are exchanged for one another or for money3. In this study, the

term refers to an organization that is being affected for the reason of downsizing

employees.

Company. Conceptually refers to a legal entity made up of an association of

people, be they natural, legal, or a mixture of both, for carrying on a commercial or

industrial enterprise4. Operationally, the term refers to an entity who keeps on reducing

employees that affect its employee’s performance.

Downsizing. Conceptually refers to reducing the number of employees on the

operating payroll5. In this study, the term refers to act of a company to reduce the number
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of employees for certain reasons that has resulted to several impacts to employees

working on a certain company.

Surviving Employees. Conceptually refers to those individuals working at a

certain company for the purpose of wages or salary. They are being paid to work for an

organization6. Operationally, the term refers to those individuals that are affected with

downsizing activity of a certain company they are the lucky ones that wasn’t downsized

in the organization they are with. In other sense they are those who remain in the

company after the downsizing process.

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Endnotes

1
Jared Lewis (2001), Journal of Management: Causes and Effects of Employee
Downsizing, Retrieved on January 19, 2019 from
https://smallbusiness.chron.com/causes-employee-downsizing-38647.html.
2
Employee’s Performance, Business Dictionary, Retrieved on January 19, 2019
from http://www.businessdictionary.com/definition/business.html.
3
Business, Business Dictionary, Retrieved on January 19, 2019 from
http://www.businessdictionary.com/definition/business.html.
4
Company, Business Dictionary, Retrieved on January 19, 2019 from
http://www.businessdictionary.com/definition/business.html.
5
Downsizing, Business Dictionary, Retrieved on January 19, 2019 from
http://www.businessdictionary.com/definition/business.html.
6
Survivor employees, Business Dictionary, Retrieved on January 19, 2019 from
http://www.businessdictionary.com/definition/business.html.