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Resizing The Organization 35

Resizing The Organization 35. This book seeks to provide executives with useful insights, tools, guidelines, principles, and lessons learned about organizational transition and change. | The Hidden Costs and Benefits of Organizational Resizing Activities 321 drive their behavior and that customers experience these attitudes and behaviors either directly in the case of service organizations or indirectly through the quality of goods they purchase. Because employee satisfaction whether it is influenced by or is a determinant of service quality Heskett Jones Loveman Sasser Schlesinger 1994 Rucci Kirn Quinn 1998 Wiley 1996 influences their behavior and performance plummeting morale and disenchantment following downsizing activities make it less likely that such important organizational outcomes as customer satisfaction loyalty and revenue growth will be realized. Downsizing initiatives also can break down communication and information sharing potentially limiting the flow of informal information tacit knowledge about how to handle certain customers or suppliers Hilsen-rath 2001 . Organizational Reputation Although there is a tendency to use job cuts as a short-term response to economic turbulence a layoff decision can have long-term repercussions for the image and reputation of the organization. Firms that are perceived to use downsizing to increase an already adequate profit margin risk developing a negative reputation Van Buren 2000 . The media openly question the wisdom of such decisions running headline stories on corporate killers and executioners often with pictures of chief executive officers CEOs alongside the number of layoffs undertaken by their firms. Implicit in many of these stories are links between such mass firings and CEO compensation suggesting that top executives continue to receive huge bonuses for putting people out of work Boroshok 2001 Van Buren 2000 which further contributes to a negative image of these companies and their senior management. Even small businesses which in the past have resisted the pressures to downsize are creating resentment by trimming their workforces Bailey 2001 which will make it difficult for them to .