Actions taken by the management in order to improve the effectiveness and competitiveness on the market. Downsizing which is often associated with the staff reduction means lowering costs of an enterprise as well as a scale of its action. This type of reorganization has recently taken place due to the changing economic conditions. Over the years companies were producing goods to maximize the profit regardless of the produced goods. Currently demand not supply dictates the terms of playing the market.
Term downsizing means reducing. In literature downsizing means reducing the number of people who work in a company. In practice downsizing may refer to such areas as: organizational structure, making decisions, control system, employment, employees' paths of career, communication, approach to the employees' knowledge and abilities.
Downsizing and strategy
One of the most common mistakes made by the executives deciding about downsizing is no connection between the process itself and long-term strategic plans of a company. Downsizing does not bring results if it is just a process which is used to improve the financial condition of a company. Results of changes
Downsizing may produce positive as well as negative results. Among positive results are: cost reduction, an increase in productivity and efficiency of an organization. Among negative results are: low morale among employees, costs connected with reducing the number of staff, low reputation as well as uncertainty of the above-mentioned benefits.
- Nadia Labib, Steven H. Appelbaum, Strategic Downsizing: A Human Resources Perspective, Human Resource Planning 16/1993
- Nicholas J. Mathys, Elmer H. Burack, Strategic Downsizing: Human Resource Planning Approaches, Human Resource Planning 16/1993
- David A. Statt, The Routledge Dictionary of Business Management, Routledge 2004
Author: Anna Opalińska