How do organizations implement downsizing? – An Australian and New Zealand study

Abstract

The Australian and New Zealand banking industries have been cutting their workforces steadily since the mid-1990s. With further rounds of workforce downsizing predicted, it was of considerable interest and importance to examine the implementation strategies that large Australian and New Zealand banks have adopted in their latest downsizing endeavors. This study has revealed three major findings. First, Australian banks tended to primarily adopt workforce reduction strategies, whereas New Zealand banks employed a mixture of organization redesign strategies, workforce reduction strategies, and systemic strategies. Second, Australian banks were perceived to have considerable depth in their downsizing, whereas New Zealand banks had more breadth in their overall strategies. Third, Australian banks favored to adopt reorientation approaches, whereas New Zealand banks were more inclined to embrace reinforcement (convergence) approaches. It remains unclear as to why large Australian and New Zealand banks have diverged in their approaches and strategies to downsizing and in their differing selection of available implementation strategies. Government interference, executive remuneration, industrial relations demands, competitive national and international market pressures, and the downsizing history of individual industries and organizations, on the one hand, and differences in national cultures and cultural values on the other, may have influenced the adoption of downsizing implementation strategies. At the same time, it has also been shown that downsizing has engendered negative financial, organizational, and social consequences in both Australia and New Zealand.