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Although the management and financial literature is replete with much research looking at the impact of downsizing on the financial health and market valuation of companies employing this practice, there has been very little attention paid to the size of the downsizing effort and its impact. The purpose of this paper is to try and address this lack by looking at companies that downsized in 2008, considering the relative size of the downsizing, and the ongoing financial health and market valuation of the companies.

The impact of the size or severity of the downsizing event was assessed using various financial measures as well as a measure of market valuation from one to five years after the downsizing event. A data set of 251 companies that were in the Fortune 500 in 2014 and also in the Fortune 500 in 2008, that either did not change or decreased headcount were assessed longitudinally over a five-year period.

Findings indicate that the size or severity of the downsizing did not impact any measures of profitability or efficiency or market valuation, with one exception. The size of the downsizing event was negatively related to return on investment, one year after the downsizing. On the other hand, the size or severity of the downsizing had a positive relationship on the companies’ ability to have enough cash at hand to cover expenses (current ratio) from one to four years after the downsizing.

This work may provide additional support for the “band-aid solution” theory of downsizing, as suggested by Carriger (2016), downsizing may stop the bleeding but does not address the underlying financial or strategic issue leading to the need to downsize. The hope is that this work will better inform scholars and practitioners, providing a more nuanced picture of the impact of downsizing on corporate financial health and market valuation.

Much has been written in both the management and finance literatures about the impact of downsizing on the financial health and market valuation of companies. However, surprisingly little attention has been paid to the frequency of downsizing and the impact of frequent downsizings. The purpose of this paper is to look at trends in downsizing, asking the question are companies that downsize once more likely to downsize again. The paper also looks at the impact of frequent downsizing, asking the question are frequent downsizers differentially impacted compared to less frequent downsizers.

Companies that appeared on the Fortune 500 in 2014 and were also on the list in 2008 were assessed for the impact of repeat downsizings on financial measures (profitability, efficiency, debt, and revenue) and market valuation. A trend analysis was conducted to assess the trend in downsizing and repeated downsizing from 2008 through 2014. A series of univariate analysis of variances were conducted to assess the impact of repeated downsizings on the financial and market valuation indicators.

Findings indicate that companies that downsize between 2008 and 2009 were more likely to downsize again in future years. And this repeat downsizing happened at a higher rate than would be expected by the percentage of companies that initially downsized. Findings also indicate that multiple downsizings had a significantly negative impact on the company’s financial performance as measured by two profitability ratios (return on assets and return on investment) and a borderline significant negative impact on the company’s market valuation as measured by stock equity, regardless of industry or initial financial health of the company.

Two competing theories were considered and the evidence found here support both. However, the “band-aid solution” theory, that downsizing may function as a band-aid addressing the symptoms that lead to the downsizing but not the underlying disorder or cause may be a more parsimonious explanation for the results here. It is hoped that these findings will inform both scholars and practitioners, giving both a clearer picture of the impact of multiple downsizings on corporate performance.

Given a growing literature indicating that downsizing is not an effective way to address financial decline, having either little impact or negative impact on the financial health or market valuation of financially troubled companies, what is the alternative for those companies in financial trouble? Three sets of alternatives to downsizing are available to companies suffering financial trouble: strategies addressing personnel/fix costs, strategies focused on addressing cost cutting/variable costs and strategies addressing strategic planning/revenue. Although alternatives to downsizing have been identified, little research has been conducted comparing the impact of downsizing vs alternatives to downsizing on firm performance. The paper aims to discuss this issue.

This present study looked solely at strategies focused on addressing personnel/fix costs. Focusing primarily on forced attrition (downsizing) vs temporary attrition and/or natural attrition, this research attempts to determine whether specific groupings of alternatives to downsizing are more effective at addressing financial decline that companies find themselves in as compared to downsizing. This included relying on temporary attrition, natural attrition or doing nothing at all.

The research presented here indicates that various alternatives to downsizing have an immediate positive impact on measures of profitability and a positive long-term impact on one measure of efficiency: revenue per employee. Evidence shows that temporary attrition leads to better financial outcomes than natural attrition than forced attrition or downsizing.

The research presented here indicates that various alternatives to downsizing have an immediate positive impact on measures of profitability and a positive long-term impact on one measure of efficiency: revenue per employee. This has implications for managers put in the position of having to make a decision whether to downsize or not.

There has been much written about the effects of downsizing on the financial health and the valuation of companies that engage in this practice. But this literature is fragmented, focusing on various aspects of companies, various reasons for downsizing, and various financial and market outcome measures. The purpose of this paper is to try and address some of this fragmentation by comparing those companies that downsized in 2008, whether financially healthy or not, with those companies that did not downsize.

The impact of the downsizing event was assessed by using various financial measures as well as a measure of company valuation over the short term (2009-2011) and long term (2009-2014).

Findings indicate that across all financial measures, except return on equity, downsizing makes no difference to the financial health of a company either in the short term (up to three years after the downsizing) or in the long term (up to six years after the downsizing). And with regards to return on equity, downsizing companies did more poorly immediately after the downsizing in efficiently using their equity.

The hope is that this work will better inform, not only scholars, but also senior leaders faced with a decision to downsize or not to downsize.

The purpose of this paper is to present empirical evidence for the use of narrative to deliver bad news within an organization, specifically bad news about layoffs. The attempt is to extend previous empirical work, using narrative by senior leadership to convey corporate strategy, to a different leadership challenge and further explicate a model for understanding the effectiveness of narrative as a leadership communication tool.

The paper presents further original research on the effectiveness of narrative as a leadership tool. And theoretical implications for leaders seeking effective communication tools are explored.

Data presented to substantiate that narrative use, as opposed to a PowerPoint style, bulleted list approach, for delivering bad news, an impending layoff, is not effective at producing a clear understanding of the reasons for the layoff, confidence in subjects understanding of these reasons, or the belief in the honesty and integrity of the leader delivering this narrative. However, narrative presentation of an impending layoff is more effective at limiting the negative behavior impact of the message, by decreasing the subjects’ reported likelihood that they would be seeking another job and increasing the subjects’ reported likelihood that they believe the company can be righted after the layoff.

Compared to the limited previous research on the effectiveness of narrative as opposed to a traditional PowerPoint style, bulleted list, as a leadership communication tool, the present research indicates that narrative use may be more nuanced and complicated than previously thought. Implications for the practical use of narrative and PowerPoint style, bulleted lists of information as leadership communications tools are considered.

This paper aims to argue that narratives, skillfully deployed by senior leaders in an organization, can be a very effective tool for creating, disseminating and executing corporate strategy.

The paper presents a model for narrative use by leaders and a practical guide to implementing the model.

Preliminary and anecdotal data are presented to substantiation a case for leaders' use of narrative as an alternative means for conveying corporate strategy.

Implications for the practical use of narratives by leaders are explored by this paper.

This paper aims to present theoretical and empirical foundations for the use of a particular type of narrative skillfully deployed by senior leaders in an organization as an effective tool for creating, disseminating and executing corporate strategy.

The paper presents original research on the effectiveness of the use of a “springboard story” as a leadership tool.

Data are presented to substantiate that a “springboard story” presentation of corporate strategy and competitive advantage is more effective at producing a consistent and confident choice of competitive advantage among an audience than a presentation of corporate strategy using a PowerPoint style, bulleted list approach. Theoretical implications for leaders leading change, especially change in corporate strategy, are suggested.

The paper explores the implications for the practical use of this type of narrative in strategy implementation and execution by leaders.