Joe,the CEO of TexTel Inc.,studies the structure of his organization and finds that many of its processes are inefficient.His company has a team-oriented culture in which people perform as groups and complete short-term projects to earn revenue.He decides to downsize the organization to increase profits and use the profits to enhance the organization's efficiency.Emily,the company's HR manager,thinks downsizing is detrimental to the organization's growth.Which one of them is right?
A) Joe is right because downsizing yields slow but long-term profits.
B) Joe is right because downsizing is the simplest way to ensure current and future competitiveness.
C) Emily is right because downsizing will affect the organization's team culture and result in poor productivity.
D) Emily is right because downsizing often results in acquisition of companies by other organizations.
E) Emily is right because downsizing requires moving to relatively expensive locations.

Question

Quizplus · Accepted Answer

In this scenario, Emily is right because the negative effect of downsizing is especially high among firms that engaged in high-involvement work practices, such as the use of teams and performance-related pay incentives. As a result, the more a company tries to compete through its human resources, the more layoffs hurt productivity.