公司裁员 Downsizing

Introduction

Downsizing or restructuring refers to interventions aimed at reducing the size of the organisation. This typically is accomplished by decreasing the number of employees through layoffs, attrition, redeployment, or early retirement or by reducing the number of organisational units or managerial levels through divestiture, outsourcing, reorganisation, or de-layering.

Cummins & Worley 2005 reveal, in practice, downsizing generally involves layoff when a certain number or class of organisation members is no longer employed by the organisation.

Distinction between Downsizing and De-layering

Belbin (1996) offers a useful distinction between downsizing and de-layering when he characterises the first as random reductions in employee numbers, often based on those who offer volunteer redundancy. De-layering, on the other hand is characterised as a much more systematic process involving the removal whole tiers of management in the hierarchy. Both activities remain a popular managerial action and make the operation more cost efficient and competitive. Downsizing increases work load and stress level of retained staff and de-layering empowers the staff down the hierarchy. Important Consequence

An important consequence of downsizing has been the rise of the contingent workforce. In companies like CISCO or MOTOROLA, less expensive temporary or permanent part-time workers are often hired by the same organisations that just laid off thousands of employees. (Cummins & Worley 2005)

Factors effecting organisation’s policies

According to Stone J.R. (1998) a lean and hungry organisation rather than a fat and comfortable one is the goal. Increased domestic and international competition, deregulation, mergers and acquisitions and pressures for increased profitability and performance have all played a part in forcing organisations to cut jobs. Even successful companies such as IBM, KODAK and XEROX, long renowned for their no lay off policies, are now use downsizing as a standard business practice. Response of Downsizing

Downsizing is generally a response to at least four major conditions.

?It is associated increasingly with mergers and acquisitions. One in nine jobs cuts during 1998 was the result of the integration of two organisations.

?It can result from organisation decline caused by loss of revenue and market share and by technological and industrial change.

?Downsizing can occur when organisations implement one of the new organisational structures, for example, outsourcing.

?Downsizing can result from beliefs and social pressures that smaller is better.

Organisation may downsize for their own sake and not think about future

growth. They may lose key employees who are necessary for the future

success. In such situations, it is questionable whether downsizing is

development.

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Successful interventions of downsizing

Successful downsizing interventions tend to proceed by the following steps:?Clarify the organisation’s strategy

?Assess downsizing options and make relevant choices

?Implement of the change

?Address the need of survivors and those who leave

?Follow through with growth plans

Result of downsizing

A review conducted by the National Research Council, “downsizing as a strategy for improvement has proven to be, by and large, a failure.”

One survey of 1005 companies that used downsizing to reduce costs reported that fewer than half of the firms actually met cost targets.

Advantages and Disadvantages

The research points out to a number of problems at the individual level, including increased stress and illness, loss of self-esteem, reduced trust and loyalty, and marriage and family disruption, unhappy staff and long term profit reduction. Cummins and Worley (2005) further reveals that effects of downsizing on financial performance also shows negative results, the research concluded.

On the other hand downsizing improves the profitability of companies in the short run by reducing number of employees which results in cost reduction.

Many criticisms have been made to such practices or strategies, due to the impact that leave within relationships and motivation of employees within an organization. Leaving as a result a low performance and efficiency, because of the bad atmosphere that the cause Downsizing or de-layering on employees who remain with the company.

Thus, Downsizing is also seen as a threat to employees, due to limited and replaces their work.

According to Neito (2006) downsizing can have a bad impact on employee relations and motivation. In the modern work place where fewer people are often required to cope with larger work load, the lack of long term secure employment also places more stress on organisational cohesion. This is simply because commitment is a two way street. When staff see their organisation routinely expelling its unwanted employees, the survivors are less likely to give their whole unconditional commitment to the service and well being of that organisation.

Neito (2006) further explains with the help of diagram:

Description

In the face of slowing or declining sales, companies often Downsize their employee base as a means of cutting costs to boost profitability. Throughout 2002, large and mid-size businesses laid off

2,000,000 workers (an average of 100 workers in approximately 20,000 separate events.) 1 Although Downsizing is effective for significant cost reduction, it often produces unintended side effects such as damaged employee morale, poor public relations and future rightsizing costs. Creative efforts to avoid Downsizing include hiring freezes, salary cuts or freezes, shortened workweeks, restricted overtime hours, unpaid vacations, and temporary plant closures. When Downsizing proves unavoidable, the ultimate goal should be to eliminate non-essential company resources while minimizing the negative impact upon the remaining organization. Downsizing can be an effective tool if used correctly. However, firms must be careful to avoid sending the wrong messages to employees, clients, shareholders, and the media.

1 US Department of Labor, Bureau of Labor Statistics, Mass Layoff Statistics.

Methodology

Successful Downsizing requires managers to:

?Evaluate the overall impact of Downsizing. To evaluate the total cost of downsizing, both financial and non-financial factors must be taken into account. Managers must calculate the

present value of all costs and benefits associated with the cuts—including severance

packages, lower employee productivity due to disorder or talent loss, eventual rehiring

expenses and future rightsizing costs. The value created should exceed the effects of lower

employee morale and the potential damage to the firm’s reputation.

?Develop a smooth Downsizing process. It is crucial that managers aggressively invest in upfront planning of the job cuts. Firms typically form committees to determine the

appropriate level of Downsizing and to create a process that takes into account the firm’s and the shareholders’ best interests. Other important activities are training managers how to

conduct layoffs and assisting ex-employees in their job searches.

?Strengthen the remaining firm. Communicate to remaining employees, clients, shareholders, and the media the extent of, and the reasoning for, the Downsizing. Additionally, take steps

to ensure that remaining employees feel a sense of job security and have the training

necessary to take on any new responsibilities resulting from the Downsizing.

Common Uses

Companies use downsizing to:

?Reduce costs;

?Rightsize resources in relation to market demand;

?Signal that the company is taking proactive steps to adjust to changing business needs;

?Take advantage of cost synergies after a merger;

?Release least productive resources.

conclusion

Downsizing is an important tool through which organisations tend to cut expenses at a larger scale. Going through this we need to understand that there is a fine line difference between downsizing and de-layering and it is not important that downsizing could be implemented every where. Downsizing could help organisations reduce costs in the short run but results negatively in the long run because of the fact that it automatically leads to organisations paying overtime extra benefits to the staff kept and this very quickly leads to decrease in employee’s performance. As Neito, 2006 very well said that downzing could be applied to reduce costs especially in the

crisis period but it will leads to various employee and organisation problems in the future and will impact negatively to the society