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Tuesday, March 29, 2011

Downsizing

Definitions: General Meaning of Downsizing
  •  Reduction in an organization's personnel or work force.
  •  Scaling down manpower in an organization.
  •  Permanent or temporary layoff of employees of an organization.
  •  Reduction in the headcount in an organization.
  •  Dismissing people from work.
  •  Temporary suspension of employment of an employee or a number of employees from work.
  •  Permanent suspension of employment of an employee or a number of employees from work.
  •  Retrenchment of employees.

Various Terms Used for Downsizing: Terms with the Flavor of Downsizing

Following alternative terms are often used by the organizations to soften the blow of downsizing on the people affected by it.
  •  Layoff
  •  Retrenchment
  •  Excess reduction (removing the fat)
  •  Rightsizing
  •  Smart sizing
  •  Workforce optimization
  •  Workforce reduction
  •  VRS (voluntary retirement scheme)
  •  Delayering
  •  RIF (reduction in force)
  •  VRIF or IRIF (voluntary reduction in force or involuntary reduction in force)
  •  Deployment of manpower

Common Reasons for Downsizing
  •  Cyclical fall-off in organization's business or work during certain periods.
  •  Occurrence of economic or business slow-down or recession.
  •  Economic depression.
  •  Cost cutting.
  •  Improving effectiveness, efficiency, overall performance and profitability.
  •  Restructuring of companies or organizations due to mergers, full closures or partial  closures or selling of unit(s) or non-core or non-profitables businesses.
  •  Reorganization- delayering, creating flatter organization, new ways of departmentation, due to changes in business or technological processes, need for faster communication, creating a leaner organization. 
  •  Outsourcing some parts of work.
  •  Certain positions or certain skills/competencies no longer required or they became obsolete due to technology or other reasons.

Management Initiatives or Management Interventions Normally Preceding Downsizing
  •  Business process reengineering (BPR)
  •  Restructuring of the company
  •  Reorganization
  •  Rationalization of human resources
  •  Delayering or rationalization of hierarchical levels
  •  Cost management/cost control
  •  Outsourcing
  •  Introduction of VRS (voluntary retirement schemes)
  •  Redeployment of human resources

Benefits of Downsizing as Claimed by Those Who Downsize or Are Proponents of Downsizing
  • Cost reduction (cost of human resources)
  • Leaner organization
  • Better and quicker communication
  • Speedier decision making
  • Better participation of employees
  • Reduction to product development cycle time
  • Greater responsiveness to customers
  • Saves jobs of majority of people by making an organization profitable by downsizing resulting in loss of jobs of comparatively less people. If the organization keeps making losses, everyone might lose job.
  • Manpower reduction pushes people in moving from already mature and obsolete industries to emerging and growing industries thus benefiting the downsized people as well as the overall economy.
  • Due to outsourcing of certain jobs to lower labor cost organizations, the outsourcing organization may benefit and become more profitable. The net effect of this could result in the growth of the organization thus needing additional people in the higher-tier and higher emoluments positions.

Disadvantages of Downsizing as Perceived by the Critics of Downsizing
  • Downsizing is inhuman.
  • The people who lose their jobs because of downsizing and their families go through its trauma. They are likely to suffer financial difficulties, loss of dignity, loss of self-confidence, anxiety, insomnia, depression, high blood pressure, broken family relationships etc.
  • Organizations lose highly experienced, highly skilled and reliable staff.
  • Organizations may end up spending more in recruiting new people when required later on.
  • Overtime wags and salaries may go up whenever surge in workload demands presence of more manpower.
  • Morale of the people left out in the organization may get affected adversely which may show off in decline of organizational performance at least in the short term.
  • Expenses on legalities associated with downsizing or layoffs may be substantial.
  • Restructuring, reorganization and outsourcing may leave the staff unsettled and confused for quite some time to come and adversely impact on overall performance of the organization.

Tips to Management of Organization Taking Recourse to Downsizing
  • Double check if downsizing is the only solution left with management. Try out other avenues first.
  • Rather than removing the employees, check out if reduction in wages and salaries of the employees across the board may work out in favor of the organization as well as the employees. Then no one loses the job.
  • Since downsizing is quite traumatic for the affected employee, handle it with lots of human touch and care.
  • Make sure that it brings about the least harm to the employee and his family.
  • Communicate with the dismissed employees appropriately while breaking the bad news.
  • Provide assistance to dismissed employees in finding new jobs.
  • When the organization resumes recruiting new additional personnel, invite the ex-employees to re-join the firm.

Other Interesting and Related Topics

All Management Topics (General Management, Marketing and Sales, Service, Operations/Manufacturing, Quality, Maintenance, Human Resources, Finance and Accounts, Information Technology, Life Management)

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(Efficiency Techniques: Work study: Motion and Time Study) http://work-study-measurement.blogspot.com/
(Efficient Work Methods or Practices) http://efficient-work-methods.blogspot.com/
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(Empowerment) http://employee-empowerment.blogspot.com/
(Enterprise Resource Planning- ERP) http://erp-management.blogspot.com/
(Entrepreneurship and Entrepreneur)http://entrepreneurship-entrepreneur.blogspot.com/
(Executive Etiquette and Manners)http://executive-manners.blogspot.com/
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(Financial Services) http://finance-related-services.blogspot.com/
(Functions of Management) http://functions-of-management.blogspot.com/
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(Human Relations) http://human-relations-aspect.blogspot.com/
(Human Resource Planning) http://human-resource-planning.blogspot.com/
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(Interpersonal Relations) http://interpersonal-relations.blogspot.com/
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(Interview Preparation for Job Seekers) http://interview-preparation-jobs.blogspot.com/
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(Kaizen) http://kaizen-improvement.blogspot.com/
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(Life Management: Effectiveness Management: HSoftware) http://knol.google.com/k/shyam-bhatawdekar/management-in-life-profession-family/6txz9nck6g3/3#
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(Problem Solving) http://problem-solving-skill.blogspot.com/
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(Quality Function Deployment- QF and House of Quality) http://quality-function-deployment.blogspot.com/
(Quality Gurus) http://quality-gurus.blogspot.com/
(Recession) http://knol.google.com/k/shyam-bhatawdekar/recession/6txz9nck6g3/7#
(Recession Management) http://recession-management.blogspot.com/
(Recession and Opportunities) http://knol.google.com/k/kalpana-bhatawdekar/recession-and-opportunities/1268ytxl8r5dc/1
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(Sales/Selling Process) http://selling-process.blogspot.com/
(Sales Promotion) http://sales-promotion.blogspot.com/
(Self-concept) http://self-concept-image.blogspot.com/
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(Self-concept) http://knol.google.com/k/shyam-bhatawdekar/self-concept/6txz9nck6g3/12#
(Self Motivation or Internal Motivation) http://internal-motivation.blogspot.com/
(Self-confidence) http://self-confidence-improvement.blogspot.com/
(Self Development) http://managing-self.blogspot.com/
(Shyam Bhatawdekar’s Articles on Management) http://writings-of-shyam.blogspot.com/
(Six Sigma) http://six-sigma-system.blogspot.com/
(Six Thinking Hats) http://six-thinking-hats.blogspot.com/
(Soft Skills) http://soft-skills-competencies.blogspot.com/
(Soft Skills/Competencies: Details of Each Competency) http://soft-competencies-skills.blogspot.com/
(Spiritual Quotient/Intelligence)http://spiritual-quotient.blogspot.com/
(Statistics- Basic) http://statistics-basic.blogspot.com/
(Strategic Management) http://strategic-managing.blogspot.com/
(Stress Management) http://management-of-stress.blogspot.com/
(Stress Management) http://managing-stress-strain.blogspot.com/
(Success in Life or Success) http://success-achievement.blogspot.com/
(Success in Life or Success) http://knol.google.com/k/shyam-bhatawdekar/success-in-life/6txz9nck6g3/14#view
(Supply Chain Management) http://manage-supply-chain.blogspot.com/
(Supply and Demand) http://supply-demand-laws.blogspot.com/
(Talent Management) http://managing-talent.blogspot.com/
(Team Building) http://team-building-working.blogspot.com/
(Telephone Etiquette) http://telephone-etiquette.blogspot.com/
(Three Sixty Degrees Appraisal System) http://three-sixty-degrees-feedback.blogspot.com/
(Time Management) http://time-life-management.blogspot.com/
(Total Productive Maintenance- TPM) http://total-productive-maintenance.blogspot.com/
(Total Quality Management- TQM) http://total-quality-concept.blogspot.com/
(Training and Development) http://training-function.blogspot.com/
(Trainers’ Qualities) http://trainers-qualities.blogspot.com/
(Train the Trainers) http://train-trainers.blogspot.com/
(Train the Trainers) http://train-trainer.blogspot.com/
(Transaction Analysis- TA) http://transaction-analysis.blogspot.com/
(TRIZ- Inventive Problem Solving)http://triz-problem-solving.blogspot.com/
(Value Engineering/Analysis) http://value-engineering-analysis.blogspot.com/
(Winners and Losers) http://winners-losers.blogspot.com/
(Work Study: Method Study and Work Measurement) http://work-study-measurement.blogspot.com/
(Work Study: Method Study and Work Measurement) http://workstudy-measurement.blogspot.com/
(Work Methods or Practices: Efficient) http://efficient-work-methods.blogspot.com/
(World Class Manufacturing) http://world-class-manufacturing.blogspot.com/
(Writings of Shyam Bhatawdekar on Management) http://writings-of-shyam.blogspot.com/
(Written Communication) http://written-communication.blogspot.com/
(Zero Based Budgeting) http://zero-based-budgeting.blogspot.com/

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(Anger Management) http://controlling-anger.blogspot.com/
(Children’s Behavior Problems) http://child-behavior-problems.blogspot.com/
(Cholesterol Control) http://controlling-cholesterol.blogspot.com/
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(Executive Etiquette and Manners)http://executive-manners.blogspot.com/
(Exercises) http://exercises-plan.blogspot.com/
(Family Counseling) http://family-harmony.blogspot.com/
(Health: Homeopathy) http://homeopathy-medicines.blogspot.com/
(LifeManagement: Competencies) http://knol.google.com/k/shyam-bhatawdekar/competency-matrix/6txz9nck6g3/4#
(Life Management: Effectiveness Management: HSoftware) http://knol.google.com/k/shyam-bhatawdekar/management-in-life-profession-family/6txz9nck6g3/3#
(Life management: I Am Liberated)http://knol.google.com/k/shyam-bhatawdekar/i-am-liberated/6txz9nck6g3/6#view
(Marriage Counseling) http://marriage-counsel.blogspot.com/
(Ownership on Job) http://job-ownership.blogspot.com/
(Parental Responsibilities) http://parental-responsibilities.blogspot.com/
(Personality) http://human-personality.blogspot.com/
(Qualities of Spouse) http://spouse-qualities.blogspot.com/
(Quit Smoking) http://quit-smoking-plan.blogspot.com/
(Self Development) http://managing-self.blogspot.com/
(Self-confidence) http://self-confidence-improvement.blogspot.com/
(Spiritual Quotient/Intelligence)http://spiritual-quotient.blogspot.com/
(Stress Management) http://managing-stress-strain.blogspot.com/
(Stress Management) http://management-of-stress.blogspot.com/
(Success in Life or Success) http://success-achievement.blogspot.com/
(Success in Life or Success) http://knol.google.com/k/shyam-bhatawdekar/success-in-life/6txz9nck6g3/14#view
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