Restructuring & Downsizing
Can Downsizing be a prudent HR Management decision?
Introduction
Human resource management has evolved from a largely administrative and operational role to one that plays an important part in strategic planning. This shift is more evident in its role towards downsizing. The decision to downsize is a decision that requires careful planning and consideration. It is critical to consider the long-term effects that short-term cost cutting measures can bring.
Downsizing creates disruptions in the organization’s relationships with customers, suppliers and employees, organization’s structure, culture and climate. As Wayne F. Cascio says “if you must downsize, do it right, that no class of employee can be disproportionately affected.” Finding the best way to downsize is crucial, because the success of organisations that have downsized in the past has not been particularly laudable.
Downsize Decision
The downsizing decision is the most demoralizing and stressful aspect of the emerging Human resource managerial role. Downsizing is viewed as having a profound effect on the organization and the personnel including those who are terminated and those who survive. Yet it is the integral part of any workforce management decision. It involves understanding the tangible pitfalls of a reduction in workforce and analyzing the emotional and practical ramifications.
Downsizing may occur intentionally as a strategic, proactive response designed to improve organizational effectiveness, increase productivity and cost cutting strategy. This response may involve mergers, acquisitions, sell-offs, or restructuring to better enable the organization to meet its mission or fill an environmental niche.
It may involve reduction in personnel through transfers, outplacement, retirement incentives, buyout packages, layoffs, attrition, and so on or may occur in which new products added, new sources of revenue are opened up, etc. It affects work processes. Fewer employees may be
Introduction
Human resource management has evolved from a largely administrative and operational role to one that plays an important part in strategic planning. This shift is more evident in its role towards downsizing. The decision to downsize is a decision that requires careful planning and consideration. It is critical to consider the long-term effects that short-term cost cutting measures can bring.
Downsizing creates disruptions in the organization’s relationships with customers, suppliers and employees, organization’s structure, culture and climate. As Wayne F. Cascio says “if you must downsize, do it right, that no class of employee can be disproportionately affected.” Finding the best way to downsize is crucial, because the success of organisations that have downsized in the past has not been particularly laudable.
Downsize Decision
The downsizing decision is the most demoralizing and stressful aspect of the emerging Human resource managerial role. Downsizing is viewed as having a profound effect on the organization and the personnel including those who are terminated and those who survive. Yet it is the integral part of any workforce management decision. It involves understanding the tangible pitfalls of a reduction in workforce and analyzing the emotional and practical ramifications.
Downsizing may occur intentionally as a strategic, proactive response designed to improve organizational effectiveness, increase productivity and cost cutting strategy. This response may involve mergers, acquisitions, sell-offs, or restructuring to better enable the organization to meet its mission or fill an environmental niche.
It may involve reduction in personnel through transfers, outplacement, retirement incentives, buyout packages, layoffs, attrition, and so on or may occur in which new products added, new sources of revenue are opened up, etc. It affects work processes. Fewer employees may be
References: Buch, K. (1992). “How does downsizing affect employee involvement?” Journal of Quality and participation, 15, 74-77. Cameron, K.S. (1994). “Strategies for successful organisational downsizing”. Academy of Management Journal, 30, 126-138. Marjorie Armstrong-Stassen, Julian Cattaneo, (2010) “The effect of downsizing on organizational practices targeting older workers”. Journal of Management Development, Vol. 29 Iss: 4, pp.344 – 363.