The affect of two cost reduction approaches on employees performance and organisational desirable outcomes

Abstract

This thesis is written to identify the cost reduction approaches of two different companies which are trying to reduce their operational costs in a financial crisis. The approach of the first company is through a salary deductions whilst the second company uses employees' dismissal. In addition, the thesis is investigating which of the two approaches has the greatest impact on employees' performance. Literature review explores the six main organizational variables that affect employee performance, namely, job satisfaction, commitment, turnover intentions, the internal stressors and motivation. A survey was employed (e.g. a questionnaire) to test whether the relationships between the variables under consideration. Almost all hypotheses being set for examining the subject of this survey have been proved, apart from the correlation between task performance and motivation for the Company X. Though, both company models have to make improvements in order to reduce the excess stress caused to employees and increase their performance.