EMPLOYEE DOWNSIZING STRATEGIES AND FIRM PERFORMANCE: EVIDENCE FROM THE KENYAN CONTEXT

Abstract

Purpose: Employee downsizing has various ramifications on firm performance outcomes. Employees’ responses to the downsizing actions are manifested in performance outcomes. This paper examines the effects of employee downsizing strategies on firm performance outcomes in a manufacturing firm. The study was based on the Institutional Theory on downsizing and the Theory of the natural and Duration of Employment.

Methodology: A survey research design was adopted targeting 436 employees of Unga Milling Companies Limited, and   a sample of 148 respondents was selected for the study.  Stratified and simple random sampling strategies were used to select respondents who participated in the study. The main data collection instrument was a questionnaire. Data was analysed using descriptive and inferential statistical techniques. Correlation tests and multiple regression were conducted.  Finding of this study indicate that employee downsizing, has negative significant effects on firm performance outcomes.

Results: This study concludes that employee separation has serious ramifications on firm performance.

Recommendations: The implications of this study point to the need for a cordial working relationships between management and firm employees. Hence, execution of downsizing activities should be participatory.