Downsizing Survivors and their Post-Era Behavior

Abstract: The interest towards managing structural change successfully through downsizing activities has increased as a result of globalization and the recent economic, technological and demographic changes occurring across Europe. As a result of downsizing activities companies often break a Psychological Contract that an employee has established with the organization when starting the employment contract. This results in employees experiencing negative feelings, lack of motivation, inability to re-motivate oneself after the downsizings and uncertainty about one’s future within the organization. If an employee is unable to rebuild the psychological contract, one might decide to resign from the organization as a consequence. Since employees are companies most valuable asset for companies and the key asset to remain competitive, companies should focus on preventing the violation of the psychological contract. The purpose of this study is to understand why some downsizing survivors decide to voluntarily resign during the post-downsizing era. A collective case study was conducted in a form of interviews from two cases. The results from the primary and secondary data illustrated that employees who are unable to rebuild the psychological contract are more likely to voluntarily resign.