Downsizing is becoming an extremely popular strategy in today's business environment. Companies started downsizing in the late 1970's to slice costs and improve the bottom line (Mishra et al., 1998). The term " downsizing" was coined to explain the actions of disregarding a large part of a industry’s workforce in an exceedingly short period of your time. According to online encyclopedia http://en.wikipedia.org downsizing refers to " layoffs started by a organization in order to lower labor costs by lowering the size of the business. " Downsizing became a familiar management mantra in the late 1980's and early 1990's. Actually three , 000, 000 jobs were lost among 1989 and 1998 (Mishra et 's., 1998). A lot more than 350, 500 jobs were lost in 2001 (DeSouza & Donaldson, 2002). Downsizing has become practically a way of life for U. S. companies. Typically, the first rounded of task cuts happen to be followed by a second round of cuts a short time later. Not everyone agrees with the reasoning behind downsizing. According to a article in the Journal of Banking and Financial Services, downsizing is merely " a short-sighted business strategy motivated by arrogant CEO's eager to appease shareholders (Unkles, 2001). Other folks feel downsizing is a necessary tool to assure business your survival in the face of a changing economy. Regardless, the expense of downsizing are high, and the payoffs of downsizing are combined at best. This kind of paper doesn't serve as a technique for downsizing, alternatively, it is exploring the many aspects of downsizing, coming from when it's the perfect time to downsize as to the steps that could be taken to avoid the process completely.
Corporate Downsizing: A summary
There are numerous reasons why a business downsizes. Layoffs began as a way for companies to offset a decline in earnings, although quickly started to be a popular practice even in companies that were doing well financially. A year 1994 survey by the American Managing Association identified that two-thirds of all personnel who were laid off were college-educated, salaried staff (Downs, 1995). Today, the definition of downsizing is utilized to refer into a narrow work to reduce the workforce and also to broaden efforts to improve work systems or perhaps redesign the total organization. Firms may downsize to increase capital, as a result of a merge with another company (where additional staff are generally not needed), poor cash flow (which results in salaries issues), within technology, not only that due to a change in company structure (Krepps, 1997).
Companies often " downsize" using the subsequent techniques:
a. Reorganization/Restructuring. Reorganization involves changing the distribution of responsibility. It also provides technical, personal, economic and social elements. Restructuring entails moving, adding, or the removal of departments which aren't needed. Restructuring also helps by simply focusing on the strengths in the company (Hoskisson & Hitt, 1994). w. Workforce reduction. Downsizing or workforce decrease is a technique to streamline, tighten and shrink the company structure with respect to the number of people the business employs. c. Reengineering. This involves changing the way work procedures are accomplished (to better serve the customer or customer). This method is likewise used to give new meaning to and reduce the business enterprise practices associated with an organization. deb. Rightsizing. Rightsizing can involve reducing the workforce along with eliminating features, reducing bills, and redecorating systems and policies. electronic. De-layering. De-layering involves eliminating one or more amounts of management (those deemed least necessary). The Upside of downsizing
Even in an ideal overall economy, downsizing can happen. Although downsizing is typically thought in a bad respect, there are some benefits to downsizing. This kind of benefits incorporate: a. Harder working personnel. Remaining staff may see this kind of as a wake-up call, hence improving their particular performance. b. Having fewer employees causes managers to carefully control work flow. In some cases, these types of layoffs can result...
References: AskMen. Com. (n. d. ). AskMen. Com. Retrieved April 22, 2005, from http://www.askmen.com
DeSouza, Watts., & Donaldson, S. (2002, Feb). Where jobs will be: this overall economy is the two best and the worst of that time period. Black Organization. Retrieved Apr 22, 2005, from http://www.findarticles.com
Downs, A. (1995). Corporate and business executions: the ugly truth about layoffs-how corporate greed is shattering lives, businesses, and areas. New York: AMACOM-American Management Connection.
Hoskisson, R., & Hitt, Meters. (1994). Downscoping: How to control the diversified firm. Oxford University PUBLIC RELATIONS on Demand.
Krepps, M. (1997). Industrial inefficiency and downsizing: A study of layoff and plant closures. New York: Garland Publishing.
Mishra, K. At the., Spreitzer, G. M., & Mishra, A. K. (1998, Winter). Preserving employee well-being during downsizing. Sloan Administration Review.
Unkles, m. (2001). The downside of downsizing: after nearly a decade of surging economic growth and booming reveal markets, many corporate and financial managers are getting their first look at a downturn in the industry cycle. Diary of Bank and Financial Services, 115(6), installment payments on your Retrieved April 22, 2005, from Baker College Website: http://web2.infotrac.galegroup.com
Zimmerman, E. (2001, November). How come deep layoffs hurt long-term recovery (HR 's equipment for recovery). Workforce. Recovered April 20, 2004, via http://www.findarticles.com
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