Downsizing – an Effective Form of Organisational Change That Seeks to Improve Business Performance?
DOWNSIZING – AN EFFECTIVE FORM OF ORGANISATIONAL CHANGE THAT SEEKS TO IMPROVE BUSINESS PERFORMANCE?
Personnel restructuring, right sizing, reductions in force or the most common term used; downsizing, is defined by Budros (1999 : 70) as “An organization’s conscious use of permanent personnel reductions in an attempt to improve its efficiency and/or effectiveness”1 Downsizing has occurred throughout the industrialized world (Ryan & Macky, 1998)2, affected blue and white collar workers (Littler et al., 1997)3, targeted lower-level workers, professionals, middle managers, and higher-level workers (Littler, 1998)4, and permeated all industries (Morris et al., 1999)5.It is simply known as reductions that organisations make in the number of employees that are on the payroll. Numerous organisational sociologists notably Freeman & Cameron (1993) state that downsizing is a strategic decision made by the organisation and that the term should not be confused with the term layoff. They state “The difference between layoffs and downsizing is that layoffs are solely concerned with the individual level of analysis, while downsizing is a broader concept applicable to other levels of analysis than solely the individual level. Additionally, downsizing is a strategic decision while layoffs are an operational mechanism used to implement a downsizing strategy.”6
Since the 1980’s downsizing in organisations has become a ubiquitous feature of all modern organisations with reductions of cost being the main catalyst for the decision by management. Many individuals believe that the main reason for downsizing is because “Foreign competition compels domestic industry to downsize by trimming fat.”7
With the prevailing gusty winds of global economic recession, the topic of organisational downsizing is making the headlines, while the question ‘Are we going to be next?’ is nervously being asked by employees around the water cooler who are anxiously waiting to find out if their position
Personnel restructuring, right sizing, reductions in force or the most common term used; downsizing, is defined by Budros (1999 : 70) as “An organization’s conscious use of permanent personnel reductions in an attempt to improve its efficiency and/or effectiveness”1 Downsizing has occurred throughout the industrialized world (Ryan & Macky, 1998)2, affected blue and white collar workers (Littler et al., 1997)3, targeted lower-level workers, professionals, middle managers, and higher-level workers (Littler, 1998)4, and permeated all industries (Morris et al., 1999)5.It is simply known as reductions that organisations make in the number of employees that are on the payroll. Numerous organisational sociologists notably Freeman & Cameron (1993) state that downsizing is a strategic decision made by the organisation and that the term should not be confused with the term layoff. They state “The difference between layoffs and downsizing is that layoffs are solely concerned with the individual level of analysis, while downsizing is a broader concept applicable to other levels of analysis than solely the individual level. Additionally, downsizing is a strategic decision while layoffs are an operational mechanism used to implement a downsizing strategy.”6
Since the 1980’s downsizing in organisations has become a ubiquitous feature of all modern organisations with reductions of cost being the main catalyst for the decision by management. Many individuals believe that the main reason for downsizing is because “Foreign competition compels domestic industry to downsize by trimming fat.”7
With the prevailing gusty winds of global economic recession, the topic of organisational downsizing is making the headlines, while the question ‘Are we going to be next?’ is nervously being asked by employees around the water cooler who are anxiously waiting to find out if their position
Bibliography: 16 Campbell-Jameson, F., Worral, L, and Cooper C, 2001. Downsizing in Britain and its effects on survivors and their organisations. ‘Anxiety, Stress and Coping’ Vol 14, p.35. 17 http://humanresources.about.com/od/layoffsdownsizing/a/downsizing2.htm