New directions for psychological contracts and downsizing: delivering and managing the bad news, layoff footprint, and algorithmic management

Maria Tomprou, Sandra Costa and Tiago Rôxo Aguiar

Chapter 8 in A Concise Guide to Corporate Downsizing, 2025, pp 257-284 from Edward Elgar Publishing

Abstract: In this chapter, we delve into the effect of downsizing and employees’ psychological contracts. We begin by offering the theoretical underpinnings and existing research on psychological contracts in the context of downsizing. Given the limited research on the topic, we analyze the multifaceted impact of downsizing on both victims and survivors, highlighting how these experiences shape relationships with future employers and possible re-employment as a boomerang employee. We discuss the importance of delivering bad news with dignity and respect, emphasizing the benefits for corporate reputation and employee morale. We also introduce the “layoff footprint” concept by analyzing how psychological contract types and experiences influence recovery, emotions, and future expectations. Finally, we address the role of algorithmic management in downsizing, considering its impact on psychological contract breach. This chapter offers a dynamic perspective on psychological contracts that integrates workplace reality and underscores the ongoing nature of downsizing.

Keywords: Psychological contract, Algorithmic management, Layoff footprint, Boomerang employees; Delivery of bad news; Downsizing (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035311002
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