Corporate Downsizing
Corporate Downsizing Organizations in every segment of business, industry, government, and education are downsizing. Downsizing is and has been a controversial phenomenon in the last few years. The controversy that surrounds downsizing may be better described as a debate in organizational theory about whether change is adaptive or disruptive. The issues which establish the outcome of the controversy include why the downsizing is taking affect, how it is implemented, and what steps are taken to enhance its effects on organizational performance. The reasons for corporate downsizing are presented in many forms. Some companies downsize due to technological changes such as automation, which brings about the need for a reduction in the production workforce. Others may feel that competitiveness with other companies warrants the need for a reduction in the workforce. Financial setbacks due to customer demand, market shares, and loss of revenue could also initiate the need for downsizing. When will it end? Experts say it won't. For instance, the North American Free Trade Agreement (NAFTA) was established as a universal trade agreement between the US, Cannada, and Mexico to allow free imports and exports.
It was also established with the intent to help poor countries, like Mexico, export their products for economic reasons. In my opinion, it has strongly contributed to America's massive downsizing phenomenon. Companies that have experienced financial setbacks and losses seem to relish the idea that they can downsize the workforce here in the states, move operations into places like Mexico, hire cheap labor, and export their product back to the states, while making bigger profits. The sad part about this is that it is true, and NAFTA is largely responsible for this type of downsizing. Is this ethical? That remains to be seen. The truth is that unless an organization was designed expressly for the purpose, it is not in business to provide employment. Jobs are the by-product of successful organizational endeavors, not their intended output. If the decision to downsize is a response to competitive pressures, it will appear impatient or premature to those who must leave. If it is perceived as anything less than a well developed strategic response to demands on the organization, then it fails to show employees need for the criteria. Downsizing c...
... middle of paper ...
...s of the downsize process must have confidence in the company's honesty and its ability to secure their jobs. They must outline a strategic plan to keep morale and productivity on an upward trend.
Bibliography
Big payoffs from layoffs. "Business Week," G.Koretz p.30 Feb. 24 1997.
Downs, Alan; Corporate Executions. AMACON, 135 West ST. New York, N.Y. 1995
Downsizing is Bad for Business. "USA Today,"J.Challenger Vol. 125, p66-68. Jan.1997
Learn From My Mistakes. "Money," Apr. 1995, p.15 Meyer, C.J.; Executive Blues, Down and Out In Corporate America.
Franklin Square Press, 666 Broadway, New York, N.Y. 1995 Negbenebor, Willis; Principles of Economics.
CT Publishing Company, Redding Calif. 1996. North American Free Trade Agreement. Vol.1, US Government Printing Office, 192-330-817/70635, 1995.
Online News Flash. "Business Week;" Dec. 11,1996 Seeking A Payoff. J Freedman, "Business Week" p. 100 Jan. 8, 1990.
The Casualties of Downsizing, B.B. Auster. "US News And World Report." Vol.118,p.31, Jan. 9,1995.
The Ethics of Downsizing. "Navron Associates Newsletter" Apr.'95. Who Says Job Anxiety Is Easing? A. Bernstein, "Busniss Week" p.38, Apr.7,1997.
Owen, Robert, and Gertrude Coogan. "Foreward." In Money creators. Hawthorne, Calif.: Omni Publications, 1967. 1-2.
Tracing back the history of accounting scandals, major corporate scandals not only hurt the economy but also crush investor confidence on investing in company. Majority of corporate scandal are create by greedy CEOs “cooking the books” to meet the number that they expected. In this case, Richard Scrushy is one of the greedy CEOs. This is a case of a falling American dream. Richard Scrushy, was a self-made son of the new South, a former teenage parent who hauled himself up from a menial job to become an emperor of the new economy.
"North American Free Trade Agreement (NAFTA)." Encyclopædia Britannica. Encyclopædia Britannica Online. Encyclopædia Britannica Inc., 2011. Web. 23 Nov. 2011. .
After three years of debate NAFTA was established in 1994. Fears concerning NAFTA included job creation, loss and transfer, wages and infrastructure. (Ganster/Lorey 188-189) However, with the implementation of NAFTA the economy grew. Ganster and Lorey reveal that bilateral trade increased by $211.4 per year from 1989 to 2004. Commerce grew by 20 percent in the first six months of 1994. There were advantages and disadvantages of NAFTA, nevertheless, NAFTA “intensified the integration of the two economies rather than distancing them.” (Ganster/Lorey 190)
On January 1st, 1994, a treaty that created the largest free trade area were signed into place by the trilateral of United States, Canada, and Mexico. NAFTA is a promise made by world’s most significant corporations claiming to create many high paying jobs and raise the standard of living in the US, Canada and Mexico. As we approach its 21st birthday, NAFTA now links 450 million people producing trillion dollars’ worth of goods and services each year. However, behind this seemingly good deal, it also created many underlying issues. Beginning with NAFTA giving corporation opportunities to move factories aboard to the lower-cost Mexico. Manufacturing aboard did not only outsourced American jobs, it also caused manufacturers that remained to lower
A number of companies that specifically promised to create new jobs actually laid workers off because of the agreement. Allied Signal, General Electric, Mattel, Proctor and Gamble, Scott Paper and Zenith all made specific promises to create jobs, and all have laid workers off because of NAFTA as certified by the U.S. Department of Labor?s special NAFTA unemployment assistance program (NAFTA TAA). (1) These are not the only companies who broke their promise of new jobs. In February 1997, Public Citizen?s Global Trade Watch conducted an investigation ...
The NAFTA is involved in this phenomenon because since the agreement involves Mexico it in turn creates job opportunities for the Mexicans and on top of that Mexican workers are part of an underdeveloped country which in turn means they are going to get less money due to the condition of their economy. And for American businessmen that is a very desirable quality in a potential employee due to how much profit the companies and factories will make simply by giving more low paying jobs to Mexicans and decreasing the American workforce. This source relates to economic globalization, because the NAFTA is essentially an economic agreement between major countries to save money and reduce trading taxes. This agreement causes an economic rise in all of these countries by causing an increase in jobs in Mexico and increasing companies’ profits in the US and
Preston, A. (2012). You eat what you kill: from scandal to catastrophe, the rise and fall of the investment bank. New Statesman, 141, 22
Lipsey, Richard G.. "Will there be a Canadian-American Free Trade Association? ." The World Economy 9 (2008): 218-238.
Unattributed, (2014). Keeping Remaining Employees Engaged After a Layoff, Retrieved February 09, 2014 from Internet site http://hrweb.mit.edu/system/files/all/oec/toolkit/engaged_layoff_0409.pdf
A noted scholar recently assessed downsizing as "probably the most pervasive yet understudied phenomenon in the business world" 1. While we have become numbed by the near daily accounts of new layoffs, a New York Times national survey finding is perhaps more telling: since 1980, a family member in one-third of all U.S. households has been laid off 2. By some measures, downsizing has failed abjectly as a tool to achieve the main raison d’etre, reduced costs. According to a Wyatt Company survey covering the period between 1985 and 1990, 89 percent of organizations which engaged in downsizing reported expense reduction as their primary goal, while only 42 percent actually reduced expenses. Downsizing for the sake of cost reduction alone has been castigated intellectually as ...
...re is a great need to reduce workforce, McConnell (2006) argues that measures such as early retirement, attrition, hiring freezes ,voluntary separation and reduced work hours should be explored first before resorting to layoffs .
Downsizing of staff is often undertaken when an organization needs to quickly improve its profits. A company under siege (or claiming to be) takes a look at its largest expense typically payroll and benefits and starts slashing. Many accounts exist that depict the sad consequences of worker displacement: the breakup of families, the loss of homes, and the blow to self-esteem from which the downsized never recover. Some researchers go so far as to describe the downsized worker as clinically traumatized, comparing the experience of downsizing as “similar to that of other trauma: death, combat, abuse, violence, natural catastrophe, crime, chemical dependence…disease and terrorism” (Bumbaugh 30). The most well-known of these is a seven-part series published by The New York Times entitled “The Downsizing of America.” This series of articles (since enlarged and published as a book with the same title) was the largest set of related articles printed by the paper since it covered the Watergate scandal. Some proponents of downsizing claim that the media has distorted the statistics on the number of people downsized, their fate and the impact on their former workplaces. The New York Times series has especially been attacked for too freely extrapolating statistics. There is no doubt that downsizing reeks havoc in the lives of those who lose their jobs, but critics claim that downsized workers find employment fairly quickly, and point to the statistics that show that jobs have been created at record numbers throughout the 1990’s'’. Record numbers of jobs have been created, but U.S. Labor Department figures “show that ...
Globalization is just around the corner, in fact, it is already here, and competition has become tougher, due to the different overseas companies that can access almost any market. National borders now do not stop them anymore, so the risk of getting bulldozed out of the market is real and it is happening everyday. It does not matter how big your company is, but it does matter how financially stable it is. Business debt consolidation teaches how to accomplish this.
keeping least amount of employees. Failing to streamline will come up with great losses and may