The Decision to Downsize a Company 1

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Cover Page 1
Contents 2
Introduction 3
Discussion
Rules for Rebuilding 5 Share the Scaled-Down Resources 6 Use Ad Hoc Task Forces to Solve Especially Tough Problems 6 Improving Communications Among Survivors of the Downsizing 7 Understanding the Organization Down Cycle 8
Conclusion 9
Reference 10
Introduction
Downsizing is no longer seen as a last resort or a response to crisis. Instead it has become a vital tool for shaping an organization to meet new challenges and circumstances. By now, few organizations have not been through this process. The benefits are clear, but it can also bring problems. Those employees who continue to work for an organization may experience “survivor syndrome”. This paper offers organizations a model for preventing effect of downsizing.
Downsizing is the conscious use of permanent personnel reductions in an attempt to improve efficiency and/or effectiveness. Due to the recent slump in overall business, many businesses are considering to downsize their operations in order to minimize their losses and save themselves from further losses in future.
The top management of any company should consider the consequences of shutting down its several operations and lay off employees, on the employee morale and the motivation to work among employees. Companies not only downsize at the time of recession but they usually lay off employees for several other reasons as well. It is usually claimed that downsizing is done in order to quickly improve profits, a company in trouble identifies its largest expenses, which is in most of the cases payroll and starts lay off. The reasons mostly used as a basis for downsizing by companies are organizational restricting, a slump in business and business process reengineering.
The decision to downsize a company is sometimes justified when it becomes necessary for an organization to save itself from bankruptcy. Some experts



References: Brown, T. (1996, August) “Sweatshops of the 1990s.” Management Review, 85, 13-18 Bumbaugh, M. (1998, February) “Moving Beyond Survival After Downsizing.” Nursing Management, 29, 30-33 Cameron, K. (1998) “Strategic Organizational Downsizing.” Research in Organizational Behavior, 20, 185-229 Cassidy, J. (1996, April 22) “All Worked Up.” The New Yorker, 51-5 Ciccotello, M. & Green, M. (1995, July) “Industry 's Downsizing Lessons.” Government Executive, 27, 59-60 Connelly, J. (1994, November 28) “Have We Become Mad Dogs in the Office?” Fortune, 130, 197-9 Downs, A. (1995, October) “The Truth About Layoffs.” Management Review, 84, 57-61 Luthans B. & Sommer S. (1999, March) “The Impact of Downsizing on Workplace Attitude.” Group & Organization Management, 24(1), 46-70 Mishra A. (1994) “The Role of Mutual Trust in Effective Downsizing Strategies.” Human Resource Management, 33(2), 261-279 Ryan L. & Macky K. (1998) “Downsizing Organizations: Uses, Outcomes and Strategies.” Asia Pacific Journal of Human Resources, 36(2), 29-45

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