Announced layoffs: Their effect on corporate financial performance
Human Resource Management1994Vol. 33(4), pp. 509–530
Citations Over TimeTop 10% of 1994 papers
Abstract
Abstract Conventional wisdom holds that when a firm gets into trouble due to lagging sales and rising costs, cutting the size of the organization to reduce fat and waste is a normal and effective response. In this study, evidence was found to suggest that just the opposite might be true. The financial performance of Fortune 100 companies was tracked over a five‐year period—two years prior to the announced layoff, the year of the layoff announcement, and two years following it. Contrary to expectations, the results indicate that financial performance worsened , rather than improved, following announced layoffs. Strategic and human resource implications for the management of corporate downsizing are provided.
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