Introduction
Downsizing or restructuring refers to interventions aimed at reducing the size of the organisation. This typically is accomplished by decreasing the number of employees through layoffs, attrition, redeployment, or early retirement or by reducing the number of organisational units or managerial levels through divestiture, outsourcing, reorganisation, or de-layering.
Cummins & Worley 2005 reveal, in practice, downsizing generally involves layoff when a certain number or class of organisation members is no longer employed by the organisation.
Distinction between Downsizing and De-layering
Belbin (1996) offers a uful distinction between downsizing and de-layering when he characteris the first as random reductions in employee numbers, often bad on tho who offer volunteer redundancy. De-layering, on the other hand is characterid as a much more systematic process involving the removal whole tiers of management in the hierarchy. Both activities remain a popular managerial action and make the operation more cost efficient and competitive. Downsizing increas work load and stress level of retained staff and de-layering empowers the staff down the hierarchy. Important Conquence
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An important conquence of downsizing has been the ri of the contingent workforce. In companies like CISCO or MOTOROLA, less expensive temporary or permanent part-time workers are often hired by the same organisations that just laid off thousands of employees. (Cummins & Worley 2005)
Factors effecting organisation’s policies
According to Stone J.R. (1998) a lean and hungry organisation rather than a fat and comfortable one is the goal. Incread domestic and international competition, deregulation, mergers and acquisitions and pressures for incread profitability and performance have all played a part in forcing organisations to cut jobs. Even successful companies such as IBM, KODAK and XEROX, long renowned for their no lay off policies, are now u downsizing as a standard business practice. Respon of Downsizing
Downsizing is generally a respon to at least four major conditions.
•It is associated increasingly with mergers and acquisitions. One in nine jobs cuts during 1998 was the result of the integration of two organisations.
•It can result from organisation decline caud by loss of revenue and market share and by technological and industrial change.
•Downsizing can occur when organisations implement one of the new organisational structures, for example, outsourcing.
•Downsizing can result from beliefs and social pressures that smaller is better.
讲笔顺
Organisation may downsize for their own sake and not think about future
growth. They may lo key employees who are necessary for the future
success. In such situations, it is questionable whether downsizing is
development.
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Successful interventions of downsizing
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Successful downsizing interventions tend to proceed by the following steps:•Clarify the organisation’
s strategy
•Asss downsizing options and make relevant choices
•Implement of the change
•Address the need of survivors and tho who leave
•Follow through with growth plans
Result of downsizing
A review conducted by the National Rearch Council, “downsizing as a strategy for improvement has proven to be, by and large, a failure.”
One survey of 1005 companies that ud downsizing to reduce costs reported that fewer than half of the firms actually met cost targets.
Advantages and Disadvantages
The rearch points out to a number of problems at the individual level, including incread stress a
nd illness, loss of lf-esteem, reduced trust and loyalty, and marriage and family disruption, unhappy staff and long term profit reduction. Cummins and Worley (2005) further reveals that effects of downsizing on financial performance also shows negative results, the rearch concluded.
On the other hand downsizing improves the profitability of companies in the short run by reducing number of employees which results in cost reduction.
Many criticisms have been made to such practices or strategies, due to the impact that leave within relationships and motivation of employees within an organization. Leaving as a result a low performance and efficiency, becau of the bad atmosphere that the cau Downsizing or de-layering on employees who remain with the company.
Thus, Downsizing is also en as a threat to employees, due to limited and replaces their work.
According to Neito (2006) downsizing can have a bad impact on employee relations and motivation. In the modern work place where fewer people are often required to cope with larger work load, the lack of long term cure employment also places more stress on organisational cohesion. This is simply becau commitment is a two way street. When staff e their organisation routinely expelling its unwanted employees, the survivors are less likely to give their whole unconditional com
mitment to the rvice and well being of that organisation.杭州怎么去乌镇
Neito (2006) further explains with the help of diagram:
Description
In the face of slowing or declining sales, companies often Downsize their employee ba as a means of cutting costs to boost profitability. Throughout 2002, large and mid-size business laid off
2,000,000 workers (an average of 100 workers in approximately 20,000 parate events.) 1 Although Downsizing is effective for significant cost reduction, it often produces unintended side effects such as damaged employee morale, poor public relations and future rightsizing costs. Creative efforts to avoid Downsizing include hiring freezes, salary cuts or freezes, shortened workweeks, restricted overtime hours, unpaid vacations, and temporary plant closures. When Downs
izing proves unavoidable, the ultimate goal should be to eliminate non-esntial company resources while minimizing the negative impact upon the remaining organization. Downsizing can be an effective tool if ud correctly. However, firms must be careful to avoid nding the wrong messages to employees, clients, shareholders, and the media.
1 US Department of Labor, Bureau of Labor Statistics, Mass Layoff Statistics.
Methodology
Successful Downsizing requires managers to:
•Evaluate the overall impact of Downsizing. To evaluate the total cost of downsizing, both financial and non-financial factors must be taken into account. Managers must calculate the
prent value of all costs and benefits associated with the cuts—including verance
packages, lower employee productivity due to disorder or talent loss, eventual rehiring
expens and future rightsizing costs. The value created should exceed the effects of lower
employee morale and the potential damage to the firm’s reputation.
•Develop a smooth Downsizing process. It is crucial that managers aggressively invest in upfront planning of the job cuts. Firms typically form committees to determine the
appropriate level of Downsizing and to create a process that takes into account the firm’s and the shareholders’ best interests. Other important activities are training managers how to
conduct layoffs and assisting ex-employees in their job arches.
•Strengthen the remaining firm. Communicate to remaining employees, clients, shareholders, and the media the extent of, and the reasoning for, the Downsizing. Additionally, take steps
to ensure that remaining employees feel a n of job curity and have the training
necessary to take on any new responsibilities resulting from the Downsizing.
Common Us
Companies u downsizing to:
•Reduce costs;
•Rightsize resources in relation to market demand;
有能力的英文•Signal that the company is taking proactive steps to adjust to changing business needs;
•Take advantage of cost synergies after a merger;
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归属感的经典语录•Relea least productive resources.
conclusion
Downsizing is an important tool through which organisations tend to cut expens at a larger scale. Going through this we need to understand that there is a fine line difference between downsizing and de-layering and it is not important that downsizing could be implemented every where. Downsizing could help organisations reduce costs in the short run but results negatively in the long run becau of the fact that it automatically leads to organisations paying overtime extra benefits to the staff kept and this very quickly leads to decrea in employee’s performance. As Neito, 2006 very well said that downzing could be applied to reduce costs especially in the
crisis period but it will leads to various employee and organisation problems in the future and will impact negatively to the society
