Strategies for Downsizing

Abstract

Layoffs, frequently called downsizing, describe the process in which companies remove temporarily or indefinitely a number of employees from their payroll. The reasons why companies downsize are related to dramatic changes occurring in the environment of the organization. Globalization and the breakdown of trade barriers among nations and the emergence of technology and automation have also necessitated companies to downsize. For companies to practice effective downsizing they must follow the following steps: education, reinforcement of company goals and values, honesty and dignity at all time, planning, and communication. Besides the steps described above there are other important points to consider when conducting downsizing, including setting a clear vision and goals, managing the transition effectively, planning, insight, teamwork, compassion and skills. Following, I will use two best practices- the Japanese approach and Taiwanese company- to describe the best way to do layoffs and downsizing.

Introduction

Facing the threat of job loss and seeing others lose their jobs can be a traumatic and bitter experience. This is one reason why many excellent companies do everything possible to avoid layoffs. However, even the most employee-friendly companies may deal with difficult economic conditions by reducing their workforce. Companies therefore have to ensure that they develop appropriate and well thought-out plans before implementing the downsizing and layoff process.

Layoffs and Downsizing

Layoffs, frequently called downsizing, describe the process in which companies remove temporarily or indefinitely a number of employees from their payroll. The general purpose of this practice is to reduce the organi...

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...ventec Corp. has chosen to reduce personnel costs by transferring their assembly lines from Taiwan to China in order to stay competitive. With the careful planning, Inventec Corp. received little complaints and protests when downsizing and layoff.

Conclusions

With the current global economic crisis, companies are increasingly turning to downsizing and layoffs to maintain their survival and ability to compete in the global economy. This has resulted in decrease of morale, productivity, loyalty and commitment of employees. Both the "survivors" and the displaced workers also experience tremendous emotional and psychological trauma. Companies therefore have to ensure that they develop appropriate and well thought-out plans before implementing the downsizing process and even more importantly after the downsizing process has been completed to meet these challenges.