Do downsizing decisions affect organisational knowledge and performance?

PurposeThis study seeks to examine the impact of downsizing and restructuring decisions and processes on perceptions of organisational knowledge and effectiveness after downsizing and restructuring events in “successful” and “unsuccessful” organisations.Design/methodology/approachThe study proposes a conceptual framework hypothesising that the impact of decisions and processes on levels of organisational knowledge are key determinants of effectiveness in post‐downsizing and restructuring organisations. Data were collected using a survey instrument developed through review of literature along with focus group findings. Survey data are factor‐analysed to identify stable constructs for testing hypotheses using regression analysis.FindingsThe findings indicate that the significance of the variables tested is found in those organisations considered by employees to be unsuccessful after downsizing and restructuring, rather than in their successful counterpartsPractical implicationsThe findings indicate that organisations undertaking downsizing or restructuring need to consider the organisational culture and climate with regard to knowledge retention and the potential impact of these initiatives to ensure that employee experiences are constructive. Support strategies such as counselling and training are important, as are job redesign, time for employee handover and documentation of procedures, if knowledge retention is to be maximised.Originality/valueAlthough knowledge retention within organisations is generally accepted as desirable, little previous research has considered the impact of downsizing decisions or processes on knowledge retention. Additionally, data collected for this research were drawn from multiple respondents within a large number of organisations, providing breadth and depth of data for analysis.