Turn Over and Downsizing


When the management of an organization realizes that they are not making profits or utilizing their labor efficiently, they turn to strategies that would boost productivity while at the same time reduce wastage. The short-term effects of downsizing include the following. Due to downsizing, the organization may experience increased cash flow from savings in fixed costs such as labor (Stadtler, Schmitt, Klarner & Straub, 2010). However, the organization should not expect a spike in their stock price. For investors, they would like to experience long-term strategies and not short-term reactions. In addition, the productivity of an organization reduces due to a decreased morale after downsizing and confusion about employee’s responsibilities (Stadtler, Schmitt, Klarner & Straub, 2010). Besides, downsizing creates distrust, the feeling of betrayal and lack of commitment to the executive. It also leads to increased workload per head.

Regarding the long-term effects, the organization will experience the inability to meet increases in demand as the economy recover. Moreover, the organization will sustain a decrease in innovation since survivors would become narrow-minded, self-absorbed and risk averse.

The impact of a layoff on survivors within the organization includes the feeling of guilty and depressed. Due to downsizing, morale, loyalty and trust in the management would decline (Stadtler, Schmitt, Klarner & Straub, 2010). Second, since workers interpret downsizing as a breach of psychological contract, surviving employees would respond through quitting, absences or withholding efforts and involvements. High performing employees would tend to take their skills elsewhere to avoid uncertainties in a downsizing organization (Stadtler, Schmitt, Klarner & Straub, 2010). The organization should employ the following strategy to minimize the effect of a layoff. The organization should give survivors a reason to stay. The organization should explain how the decision to downsize is for the interest of the organization’s long-term health. The organization should show transparency on the organization’s current condition. Employees need to hear the truth from the management thus building trust.

Reduced Turnover

I think that reducing turnover of cooks and cashiers would benefit a fast food restaurant. First, the fast food restaurant will benefit from a sustained and improved productivity level. Reducing employee turnover ensures the maintenance of quality is maintained and consistency in production. Secondly, the fast food restaurant will benefit from reduced recruiting costs. Replacing veteran workers is costly to the organization. Moreover, loss of an experienced worker means that the fast food restaurant will invest more resources hiring and training new employees (Dopson & Hayes, 2015). Besides, specialized jobs such as cashiers and cooks can cost the fast food restaurant more to fill since they are paid more. Third, the firm will benefit from administrative cost. With the existence of stable workforce composed of long-tenured employees, the firm will experience a lower administrative cost.

The restaurant could employee the following strategies to encourage employees to stay. First, the restaurant could encourage communication. Feedbacks act as a learning tool; therefore, when employee and employers engage in regular communication, they can better understand one another and resolve their issues (Dopson & Hayes, 2015). Second, the restaurant could offer recognition. Cooks and cashiers would like to know their hard work matters; therefore, when employees receive compliments, promotions, and prizes from the management, they are encouraged to stay.

When employees stay for a long time in an organization, they might develop resistance to change and defend the status quo. Since long-tenure employees are comfortable with the past, they will tend to resist significant changes in the organization. The second problem is the development of entitlement mentality. Dopson and Hayes (2015) argued that employees might feel that they have put in enough time; hence, they have earned job security and special treatment. Such mentality would have an adverse impact on other employees.



Dopson, L. R., & Hayes, D. K. (2015). Food and beverage cost control. John Wiley & Sons.

Stadtler, L., Schmitt, A., Klarner, P., & Straub, T. (2010). More than Bricks in the Wall: Organizational Perspectives for Sustainable Success. Wiesbaden: Gabler Verlag / GWV Fachverlage, Wiesbaden.