1 / 10

Downsizing

Downsizing. Downsizing: Why?. Domestic competition Foreign competition Technological change Change in firm strategy Too often… Bad Management. Sources: Cascio, 2002; Fox & Bernasek, 2003. Downsizing Trends. Source: DoL, Bureau of Labor Statistics. Downsizing: Cases For and Against.

kasimir-sullivan
Download Presentation

Downsizing

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Downsizing

  2. Downsizing: Why? • Domestic competition • Foreign competition • Technological change • Change in firm strategy • Too often…BadManagement Sources: Cascio, 2002; Fox & Bernasek, 2003 MGMT 412 | Downsizing

  3. Downsizing Trends Source: DoL, Bureau of Labor Statistics MGMT 412 | Downsizing

  4. Downsizing: Cases For and Against • Benefits of downsizing • Reduced costs • Symbolism of cutting jobs • Costs of downsizing • Costs associated with downsizing • Potential lawsuits • Public image of firm • Decreased loyalty of current employees • Danger of losing the wrong people • Difficulties in recruitment MGMT 412 | Downsizing

  5. Alternatives to Pure Downsizing • Prevent the need… • Staff with contingent workers • Treat employees as assets… • Reassign workers to different jobs within firm • Retrain workers in new technologies • Shorten hours / pay cuts • When there’s no alternative….some less painful options • Attrition • Early retirements • Layoffs (temporary) • Voluntary severance MGMT 412 | Downsizing

  6. Attrition • How and where • First, a hiring freeze, then reduce workforce as employees quit or retire on their own • Usually, the first step in most firms • Advantages • Managers not forced to make difficult decisions • Employees leave voluntarily • Disadvantages • May not work quickly enough • No control over which workers leave MGMT 412 | Downsizing

  7. Early Retirement • How and where • Financial incentives to retire • FedEx • Advantages • Less painful • Older and/or more senior workers are often paid more than younger workers, so fewer people affected • Older workers may not have skills needed for new technologies • Disadvantages • Cost • Lack of control • May not attract enough people • May attract too many people MGMT 412 | Downsizing

  8. Temporary Layoffs • How and where • Workers placed on furlough • Seasonal industries (i.e., agricultural workers, IRS) • Heavy industry (automobiles, steel) • Temporary downturns (airlines...) • Advantages • Firm can decide which jobs to eliminate • Laid-off workers can be recalled if needed • Disadvantages • Decreased loyalty and commitment • Workforce may look for permanent work Source: Zimmerman, 2001 MGMT 412 | Downsizing

  9. Voluntary Severance • How and where: • Generous severance packages offered to employees who voluntarily leave the company • More and more, today (in Memphis, at FedEx) • Pro: • Less painful • Con: • Cost • Lack of control • Too many people may accept • Not enough may accept Source: Cascio, 2002 MGMT 412 | Downsizing

  10. Responsible Downsizing • Think through what you’re doing and why • Weigh the long-term advantage of keeping people, versus short-term benefits of layoffs • Seek employee input • It’s not a quick fix • Make the process fair • Communicate • Give survivors hope • Assist employees to cope with change • Examine HR policies Sources: Barnes, 2003, Cascio, 2002 MGMT 412 | Downsizing

More Related