Restructuring for performance in terms of delayering and downsizing
Downsizing of a company refers to reducing the number of personnel by way of reducing the number of job types, or 'positions that are similar in their main duties', as aptly described by Child (2005). Triggers for downsizing could be a reduced market demand for the particular services or products produced by a company, an internal decision to reduce the range of diverse products - including outsourced activities - offered, a decision to reduce the volume of work accepted by the company or a combination of these.
Delayering refers to reducing the number of managerial levels in organisational hierarchy. Fewer reporting levels could increase the scope of responsibilities of managers, potentially providing managers with more managerial exposure and potentially higher salaries sooner in their careers than what might be found in taller hierarchies (Child, 2005). Although downsizing and delayering differ as concepts, they often happen together - by reducing the number of positions in a company, i.e. downsizing, the number of hierarchical levels can be reduced, i.e. delayering, since there would be fewer employees that need to be managed and the number of managers could be decreased.
Delayering and downsizing can, however, happen without the other. Child (2005) distinguishes between 'strategic' and 'reactive' downsizing; whilst the latter would be caused by external factors over which the company might not have any control, such as decline in market demand, legislative requirements that adversely affect the future of a product or production costs and so on, the former would be the form of downsizing which assists restructuring in support of optimising performance. Strategic downsizing is an outﬂow of internal assessment and planning that aim to sharpen abilities to compete in the marketplace; realignment of product offerings, reengineering of processes, amendment of the organisational chart as...
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