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Maintaining survivors' loyalty in a downsizing environment is a difficult problem for management practitioners. Theorists have suggested that empowerment and job enrichment are mechanisms that allow survivors to cope with the stress of downsizing. This study examined the relationships between managerial empowerment behaviors, perceptions of job enrichment, and loyalty behaviors with employees who have survived downsizing in an organization. Results showed that empowerment does not have a direct effect on loyalty but affects loyalty indirectly through job enrichment. The results are discussed in terms of their implications for theory and practice.
Loyal employees provide many benefits for organizations. They put forth extra efforts in their work, serve as positive public relations representatives outside the organization, and go above and beyond the norm in doing the little things that help the organization function effectively (cf. Mowday, Porter, & Steers, 1982; O'Reilly & Chatman, 1986; Organ, 1988). Although such loyalty is often desired, the trend of downsizing in the 1990s has placed loyalty in a very precarious position. Downsizing is perceived to be an effective strategy for company renewal and growth, but some researchers question its long-term success. Instead of making organizations more healthy and efficient, Pfeffer (1998) noted that "the evidence indicates that downsizing is guaranteed to accomplish only one thing-it makes organizations smaller" (p. 174).
Whereas the effect of downsizing on stock prices, profits, and productivity is questionable (Cameron, Freeman, & Mishra, 1991; Cascio, 1993; McKinley, Sanchez, & Schick, 1995; Pfeffer, 1998), it is clear that downsizing has been found to have a negative influence on survivors' loyalty (Brockner, Grover, Reed, DeWitt, & O'Malley, 1987; Robinson, Kraatz, & Rousseau, 1994; Turnley & Feldman, 1999). Downsizing is perceived as a violation of the psychological contracts held by the surviving employees (Morrison & Robinson, 1997; Robinson & Rousseau, 1994). Perceived violations of psychological contracts have been shown to prompt a number of attitudinal and behavioral responses that may reduce survivor motivation and performance (Rousseau, 1995). Surviving employees perceive that the organization is not loyal to its own employees, reducing the survivors' motivation to remain loyal to the organization and dealing a crushing blow to employee citizenship and other support behaviors (Robinson & Morrison, 1995). As employees' loyalty diminishes, other responses may emerge including increased voicing of...