Downsizing Strategies
HR STRATEGIES THAT CAN TAKE THE STING OUT OF DOWNSIZING-RELATED LAYOFFS by Franco Gandolfi
Strategy | July / August 2008
Share on emailEmail Share on twitterShare on Twitter Share on facebookPost to Facebook Share on linkedinShare on LinkedIn Share on deliciousSave to Delicious Share on instapaperSave to Instapaper
While the pain of downsizing-related layoffs can’t be avoided entirely, it can be mitigated. Anticipating the duration and depth of an industry downturn, for example, can definitely help a manager prepare and deploy HR practices that will, in turn, help both employees and firms adjust to difficult times. This author discusses some responses that have been known to be effective.
Downsizing has been a pervasive managerial practice for the past three decades. Over the years, a firm’s standard response to finding itself in financial difficulty was to reduce its workforce. While there is ample evidence suggesting that downsizing activities rarely return the widely anticipated benefits, there is also a sobering understanding that downsized firms are forced to deal with the human, social, and societal aftereffects of downsizing, also known as secondary consequences. Research shows clearly that the human consequences of layoffs are costly and particularly devastating for individuals, their families, and entire communities. While workforce reductions cannot always be avoided, there are compelling reasons why downsizing-related layoffs must nonetheless be seen as a managerial tool of absolute last resort.
During an economic downturn a firm must carefully consider its options and assess the feasibility and applicability of cost-reduction alternatives before deciding on layoffs. While a considerable number of research articles that discuss alternatives to downsizing have been published, there is no conceptual understanding of downsizing-related layoffs as they relate to the actual cost-reduction stages of a firm. Indeed, it is critical for an
Strategy | July / August 2008
Share on emailEmail Share on twitterShare on Twitter Share on facebookPost to Facebook Share on linkedinShare on LinkedIn Share on deliciousSave to Delicious Share on instapaperSave to Instapaper
While the pain of downsizing-related layoffs can’t be avoided entirely, it can be mitigated. Anticipating the duration and depth of an industry downturn, for example, can definitely help a manager prepare and deploy HR practices that will, in turn, help both employees and firms adjust to difficult times. This author discusses some responses that have been known to be effective.
Downsizing has been a pervasive managerial practice for the past three decades. Over the years, a firm’s standard response to finding itself in financial difficulty was to reduce its workforce. While there is ample evidence suggesting that downsizing activities rarely return the widely anticipated benefits, there is also a sobering understanding that downsized firms are forced to deal with the human, social, and societal aftereffects of downsizing, also known as secondary consequences. Research shows clearly that the human consequences of layoffs are costly and particularly devastating for individuals, their families, and entire communities. While workforce reductions cannot always be avoided, there are compelling reasons why downsizing-related layoffs must nonetheless be seen as a managerial tool of absolute last resort.
During an economic downturn a firm must carefully consider its options and assess the feasibility and applicability of cost-reduction alternatives before deciding on layoffs. While a considerable number of research articles that discuss alternatives to downsizing have been published, there is no conceptual understanding of downsizing-related layoffs as they relate to the actual cost-reduction stages of a firm. Indeed, it is critical for an