What Is It and Some of the Reasons It Happens

Downsizing: What is it and Some of the Reasons it Happens

Jocquetta D. Harris

BUS610: Organizational Behavior (NAB1145A)

Dr. Anthony Daniel

Monday, December 12, 2011

Downsizing, to reduce the size of a company, often by closing, selling, or spinning off one or more divisions. Management may decide to downsize a firm in an effort to improve efficiency and to increase the returns to shareholders. Downsizing can cause a firm to grow smaller and more valuable at the same time (Merriam-Webster, N.D.). This was not my initial topic for my final paper, but just this past Friday our company received an e-mail message from the President of the company that they are reducing the workforce by ten percent. Now that does not sound like a lot unless you are part of that ten percent. The reasons discussed in the e-mail, were to make the company more efficient, and eliminate employees who are here just to collect a paycheck and no longer practice the mission of the company.

There was uproar in the office once this e-mail message went out and took lots of employees by surprise; me on the other hand was not, we lost our holiday party in lieu of a few extra days off and the company in general has grown so fast that quality was lost quite some time ago and it was time to clean house. I think management has realized this and decided it is time to act; we can only grow as a company if the dead weight is cut.

In business there are always cycles of growth and reduction, this is just the nature of the beast. The text refers to downsizing as, "reengineering", it states how this occurs for two reasons describes this process as making it much more of a requirement for employees to use a wide variety of skills and skillsets to perform their jobs and secondly, results in being understaffed due to the cuts in manpower (Kreitner, 2009). I hope to explore whether or not is it profitable to downsize without impacting the customer experience, is it really possible to do more with less and not impede the morale of the employees.

In this time of restructuring, it is important for those that remain to assume some of the responsibilities of employees that were realigned and no longer with the company. This may cause some morale issues as overtime and extra duties are usually in order for those employees who were not affected.

"No matter your relationship with your laid off coworkers, you are grieving. You feel a sense of sadness and you feel guilty that you survived the layoff. You valued your missing coworkers who may have shared your office space, lived in the cubicle next door, or held down a key position on a team you lead. Your valued coworker is gone and that jumbled set of emotions is real. Your grieving is normal.

You are also experiencing an increased level of stress relating to both the workload and your distrust of management. Depending on how respectfully the layoffs were handled in your company, this distrust may run deep. Poorly treated layoff victims deepen the distrust the survivors bear their company.

Anxiety and a lack of motivation also accompany the loss of coworkers in layoff. Research indicates that many employees polish up their resumes and begin a job search. These positive actions help the downsizing survivor feel more in control of their situation - but they are bad news for the company. Some of the key players may decide that they don't want to stay, waiting for the next bad news, in an environment of mistrust, anger, and insecurity (Heathfield, 2011)."

What does this say about the company when downsizing or realignment has to be done? To the consumers of the company and its shareholders, what does this say? This can be a Band-Aid to many things and can be used to cover mistakes in management and structuring. At my current company, the consensus seems to be that this is to correct the huge growth and lack of qualified managers to facilitate and maintain said growth. This can be just as detrimental to a company as anything else. A lack of effective leadership can run any good company into the ground. This massive growth and sudden downsizing has been a characteristic of many companies that take off and to maintain the growth ire employees that are just available and not necessarily qualified. Meggin McIntosh, states that you should hire slow and fire fast in an article written in a blog that she regularly contributes to.

"When you are growing, you have to hire slowly (which seems counterintuitive), and then fire quickly if the person is a bad 'fit.' This is true regardless of whether you are hiring employees or independent contractors. Get the right people in to help you grow - and get rid of anyone who is 'wrong' for you (McIntosh, 2011)."

This is an important step in the hiring process and if done correctly downsizing may never have to occur. If you get the right person in the position it allows for the company to focus on other endeavors and this is less of a threat. Once you allow the wrong person in the corporation that has different views and ideas of where the company is going then tis usually happens.

Many companies bring in outside firms to makes these decisions and notify the employees, I think this is done to prevent managers from being uncomfortable, and having to let go an employee that they may or may not have an outside the office working relationship. This practice allows everyone to focus on