Why Does Cost Reduction Have A Negative Impact Concerted efforts are under way throughout a majority of economic sectors in the United States all geared toward yielding positive economic growth through cost reduction. Many of these cost reduction efforts come under the rubric of "downsizing." Thus far most of the efforts employed have reflected negatively on the morale of the workers who are survivors of the downsizing (Huselid, 1995).
The primary constituent in the concept of downsizing is the corporate culture, and this can be defined as the fundamental attitudes, practices and values, which are institutionalized as an integral aspect of the modus operandi and the policies of public and private corporations and companies. No institution, public or private, can yield the common corporate objectives of profitability and sustained growth without instituting and practicing these values, primarily those of cost control (Osterman, 1994; Snell, 1992; Youndt, Snell, Dean, & Lepak, 1996).
There are several areas of interfacing between manpower motivation and cost reduction policies. The most obvious is the relation between compensation and reduced costs. Kochan Gains and Osterman(1994) talk about the synergy that develops when firms address the concept of cost reductions. These authors point to several studies that prove that a position, open and honest approach and a clear channel of information help lubricate wide acceptance of the cost
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