DECA Human Resources Management Practice Exam

What impact can repeated downsizing have in a workplace, if not managed correctly?

1. It can improve employee productivity

2. It can create a positive work environment

3. It can harm employee morale

4. It can minimize operational costs

The correct answer is: It can harm employee morale

Repeated downsizing, if not managed correctly, can have a significant negative impact on employee morale. When employees witness ongoing layoffs or cutbacks, it creates a sense of insecurity and instability within the organization. This environment can lead to various adverse feelings such as anxiety, fear, and resentment among remaining staff. Employees may feel undervalued and question their job security, leading to disengagement from their work. Furthermore, persistent downsizing can result in a toxic workplace culture, where trust is eroded, and collaboration is hindered. Employees might become more focused on self-preservation rather than team goals or company objectives, which can decrease overall productivity and performance. In contrast, the other potential outcomes of downsizing—such as improved productivity, a positive work environment, or minimized operational costs—are often contingent on the manner in which the downsizing is conducted. If downsizing is conducted thoughtfully, with communication and support for remaining employees, it might lead to some positive outcomes. However, without proper management and consideration for employee well-being, the primary consequence is usually detrimental to morale.