In the recent times, globalisation has made organisations to become more competitive and complex in the employment and application of resources of production. Many organisations adjust to practices that will give them an edge over their competitors. To compete effectively, they need to reduce cost, improve efficiency, and as well increase productivity and quality of output. To cope with this tough competition, many organizations have applied the management tool of downsizing.

Downsizing is a universal phenomenon the business world is experiencing. The major impact is on people, corporate organisations and the economy. An organisation, being a structured entity which is established to achieve specific goals by blending resources, is very sensitive regarding costs and benefits to get optimal returns.

The main motive for most downsizing activities is the objective of reduction of cost (Casio,1993), an increase of organisation’s level of efficiency, effectiveness, productivity (Gandolfi 2002), and competitiveness (Cameron 1994), and so an overall organisational performance. (Thornhill & Saunders 1998).

Every organisation attempts to expand or reduce its man power according to specific requirements and prevailing business conditions. The right size of human resources is indispensable for the successful survival of every organization. Many organisations are more concerned about how to become “lean and mean” and therefore face the task of reducing the size and improving the efficiency of an over-staff as a general endeavour to increase economic growth and cut deficit.

This has spread across American economy where the largest organisation has implemented a work force reduction unprecedented in its size and scope (Morris, Cascio

and Young 1999) and more recently, the phenomenon has also been documented in European (Dahl & Nashum, 1998) and Asian Firms (Ahmadjian & Robbinson,2001).

In the USA, there have been more than 4.6 million job cuts announced since 1990  with 1998 topping the decade’s biggest downsizing year (Laabs 1999).

An economist at the Federal Reserve Bank of Chicago estimated that in 1995, workers faced a 3.4 percent chance of being laid-off. A recent survey by the American Management Association (AMA) found that between one third and one half of medium and large sized organisations in the US have downsized every year since 1998 (Cole 1995).

In Nigeria since May 29, 1999, about 4.8 million Nigerians have been retrenched in the civil service of the federal statutory corporations, state owned companies, banks and insurance companies, through the policy of downsizing ( Aluko 2007). The downsizing of the public sector has consequently led to the downsizing of private sector and vice versa.

John Holt Plc is a multinational company, whose businesses spans through every sector of the economy such as manufacturing, industrial, commercial and other related businesses. In the organisation, retrenchment and retirement has become order of the day since 2005. Over the years, the organisation has been downsizing and over five hundred workers have lost their jobs. Some divisions were completely closed down while some branch network were reduced to operate only from the company’s corporate headquarter In Lagos.

The last downsizing was in August, 2011 where one Hundred and fifty workers were laid-off and this year, more names are being complied on the list of redundancy which will be released as soon as management settles the benefits of the last downsized staff. The organisation attributed their efforts, to improving global effectiveness through cutting down costs and improving organisational efficiencies.

Downsizing could be a painful process because it involves people and emotions. In organisations, the freedom for taking actions is much more and the damage such decision can make on employees and organisations can be too hard.

In private organisations, any decision about downsizing can drop like a bomb shell without any prior warnings and without giving time for employees to be prepared and management at all levels is expected to achieve results with fewer employees at less cost. Unfortunately, many employers generally lack a decent level of diplomacy in effecting retrenchment and they hide behind the legal terms and conditions under which an employee originally signed, which would normally include a virtual freedom to terminate the employee.

Therefore, downsizing as an effective management tool for reorganisation and re-engineering, needs to be carefully planned and executed in order to produce its expected result of expense reduction, increased effectiveness and efficiencies restructuring.

It is on this background that this study is set to examine the effect of downsizing on organisational performance in the organisation where the concept of downsizing and organisational performance are defined, the downsizing implementation strategies used by organisations, the rationale behind organisational downsizing, the various factors affecting organisational downsizing, its effects on individuals and the various downsizing problems in the organisation.



Downsizing has been a common feature of most firms in Nigeria and emerging economies.