Downsizing Trend May Be In Decline Only 25 Percent Expect Cuts Over Next Two Years

The corporate downsizing phenomenon may be on the decline, according to a survey by the Society of Human Resource Management.

The industry group surveyed 2,000 personnel departments nationwide to learn about their employment plans for the next two years.

The survey found that only about a quarter of the respondents said they expected jobs to be cut at their companies, down sharply from previous years. Since 1994 about 53 percent of firms cut jobs, the survey found.

“A lot of companies are saying there weren’t profitability gains from downsizing,” said Barry Lawrence, a spokesman. “They’re saying, “We cut jobs and looked at it one year later, and the revenue gains weren’t there.’ “

The companies that reported big layoffs in recent years often found their gains were less than expected and more than offset by unforeseen losses, according to the survey. Productivity gains were mixed, with 26 percent of companies reporting improvement and 58 percent saying productivity was flat or had declined, the survey found. Profit rose at 35 percent of the firms, fell at 9 percent and stayed the same at 32 percent. Not all the companies responded to every question.

Many noted negative effects on the workplace after a layoff. About 39 percent said resignations increased, 11 percent said absenteeism rose and 62 percent said employee morale declined.

Nevertheless, some payroll-slashing is likely to continue. The bigger the company, the greater the likelihood of job cuts, the SHRM survey found.

Among companies with more than 251 employees, about 38 percent said they foresaw staff reductions, while only 17 percent of companies with fewer than 250 workers made that prediction. Telecommunications firms are expecting to cut back the most, with 64 percent of those respondents saying they expect cuts over two years.

While most of the companies surveyed said employees felt secure, about 3 in 10 responded that their employees were insecure. Most of those who reported nervous workers said their fears were probably justified.