Managing the workforce reduction: hospital CEO perceptions of organizational dysfunction

Over the past few years many nations have undertaken activities aimed at restructuring and reengineering their health system as a means of achieving greater cost effectiveness and consumer responsiveness. Most efforts at reforming healthcare delivery have been accompanied by the downsizing of healthcare organizations. Organizations that are undergoing decline or significant workforce contractions are widely believed to experience a number of negative or dysfunctional attributes as a consequence of reductions in, or redeployments of, their labor force. For organizations undergoing planned workforce reductions, much speculation has been made in an attempt to identify a set of "best practices" that have the potential to mitigate the dysfunctional consequences associated with large permanent reductions in the workforce. This article explores the relationships among workforce-reduction practices and perceptions of organizational dysfunction in a large sample of Canadian hospitals. Results of the analysis suggest that the application of certain "progressive" workforce-reduction practices preceding, during, and subsequent to the downsizing process may play an important role in mitigating some of these dysfunctional organizational consequences. This research provides some evidence to suggest that how a workforce reduction is carried out may have a greater effect on organizational effectiveness than either the magnitude or severity of the overall workforce reduction.