...Organizational Downsizing Techniques and Handling Layoffs Team 1 Christina Berardi Bridget Quinn-Carey Tung-Yueh, Lee Over the last two decades, organizational downsizing has been a key management strategy favored by many organizations attempting to cope with fundamental and structural changes in the shifting economy. In the mid-1980’s, downsizing was implemented primarily by companies experiencing difficult economic times (Gandolfi, 2006). Companies hoped to cut costs and improve performance. By the late-1980’s, it developed into a proactive restructuring strategy for a multitude of organizations. Furthermore, since then, organizational downsizing has now transformed the corporate landscape and changed the lives of hundreds of millions of individuals around the world (Gandolfi, 2006). There are several definitions that have been developed to effectively define the phenomenon of organizational downsizing. To sum it up in one sentence, organizational downsizing refers to a set of activities, taken on by the core management of an organization, designed to improve organizational efficiency, productivity, and competitiveness. It represents a management strategy that affects three components: (a) the size of the firm’s workforce, (b) the costs, and (c) the work processes. On the surface, downsizing can be interpreted as merely a reduction in organizational size, and the process is a chaotic and uncertain experience...
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...focusing on forklifts and small trucks JKL has been offered sales rights to arrange of medium and large trucks from an overseas supplier which will benefit JKL in range over its competitors. The past five years, sale of forklift and truck have averaged 10% increase but the rental market has been in decline. JKL then come up with an idea to restructure company itself by solely focusing on retails sale and exit from rental market. JKL plan to hire the staff from rental department who wish to remain with the company. The organization intends to build and maintain a positive organizational culture, reduce risk and achieve organization goals through this following points: * Developing an effective policy framework for managing internal communication and consultation in accordance with organizational objective, business ethics and compliance requirement * Communicating and building support for organizational initiatives and objectives * Managing information flow to: * Provide employees and managers with at hand-information to perform their work responsibilities *...
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...focusing on restructuring and how it relates to cost improvement. This information has been investigated in order to gain a good knowledge on the importance of restructuring. In order to test this theory, I used random sampling of 20 different data reports relate to the issues that the company faces concerning expenditures, labor and necessary spending. Each month every section of the company has a major meeting and part of the meeting is to discuss the financial reports of the company. Many companies may not find this to be important but it is necessary for our company to do this to track spending. Companies typically do not discuss financials with everyone but they do with us because everyone is given a credit card and a budget for their particular section. We are able to access the other part of company’s financial documents if we want to use them as a tool to improve our budgets. What prompted me to do this is I started working for the company in the year of 2011. After working 5 months for the company, the employees received a letter stating that there will be pay cuts due to the government cutting funding for the program that we are in. There were many complaints from employees who have been there for many years. The employees complained stating that they were told the last pay cut they received would be the final pay cut. I was able to speak to some people in the office and found that they didn’t receive any pay cuts. The company should make the necessary restructuring if they...
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...Paper for MGMT 541 – Organizational Behavior Objective: Develop an improved knowledge of Organizational Behavior Theory and an improved ability to relate Theory to an Organizational Situation. This improved knowledge and improved ability should emphasize a solutions oriented approach. Assignment: 1. Write an 8 page paper which identifies an Organizational Behavior Theory. Provide a brief explanation of the theory. 2. Identify a situation in an organization to which this Theory can be applied. Find an article in business related publication (e.g. Wall Street Journal, Harvard Business Review, business section of New York Times or Chicago Tribune, etc) to which you can apply the theory. For example, the article might describe an action the organization is taking such as an acquisition, divestiture, employee layoff, market expansion/contraction, etc.). 3. Describe how the theory helps to identify what actions the organization should take to achieve the best outcome(s). Did the organization take these expected actions? Why or why not? 4. If the article did not contain the actions the organization should take with employees, suggest what these actions should be and why. 5. Your paper is to contain at least 4 professional references which support your statements. Identify these references both in the body of the paper and at the end. The text and any readings in the Discussion Board cannot be used as one of the 4 professional references. 6. Your...
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...Bankruptcy filing of Kodak Whenever a big corporation files for bankruptcy, many investors question the move. After the recession, many big corporations like Lehman Brothers etc filed Chapter 11. A chapter 11 case starts when the company voluntarily files for a petition in bankruptcy court. When the company has many outstanding, it prefers to file for the case. It was no big surprise when Eastman Kodak, 131 year old company that was founded by George Eastman filed for bankruptcy protection in 2012 under chapter 11 of US bankruptcy code in Southern District of New York. It was pioneer in introducing first automatic snapshot camera. It was the first company that provided the individuals a solution for taking their own photographs and not depends on professionals. The term ‘Kodak Moment’ became synonymous with taking pictures of precious moments and having pictures of life time of memories. Reasons for Bankruptcy An attempt is made to understand what lead to the financial distress in the company. The top management of Kodak could never innovate. Though they were pioneers in launching the concept of self photography, many competitors developed better products and took the market share from the company. The company thought that its customers would remain loyal to it but when new products and new technology was offered in the market, it lost its market. The company did not pay attention to the improvement in the technology. When digital cameras came into existence, Kodak did...
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...Growth with Recovery: Coming Back from Company Restructuring Changes From Recovery When economic times are tough the company has to look at measures to conserve costs. Over the years, a firm’s standard response to finding itself in financial difficulty was to reduce its workforce (Gandolfi, 2008). The effects of the worst recession since the Great Depression, hurt both big and small corporations, new and old, and in many different types of industries. Major industry sector that has been hit hard are corporations that deal with consumer durables. Companies like General Motors, Johnson Controls, Ford, and Harley-Davidson. The effects of layoffs will be felt on at the companies especially General Motors who is still partially owned by the U.S. Government. Recovery is a long road for some companies that are unable to pickup and improve especially when the company cannot relinquish those ties. Responsible downsizing can benefit company in making needed changes to keep up with the economy and upturns and downturns that come with it. Restructuring must be thought out properly, “A downsizing plan should be included in the strategic management plan of all organizations, regardless of whether they plan to downsize or not. By including such a plan, the organization will be better prepared to begin the staff-reduction process should it be forced to do so in response to environmental changes” (Davis, 2003). The short-term affects involves some initial costs like severances...
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...How To Make Restructuring Work for Your Company Published: | October 1, 2001 | Author: | Stuart C. Gilson | Executive Summary: A bungled corporate restructuring can turn a good idea into disaster. In an excerpt from his new book, HBS professor Stuart Gilson outlines the keys for a successful corporate makeover. Plus: Gilson Q&A. About Faculty in this Article: Stuart Gilson is the Steven R. Fenster Professor of Business Administration at Harvard Business School. * More Working Knowledge from Stuart C. Gilson * Stuart C. Gilson - Faculty Research Page Editor's Note: The following excerpt is taken from the "Lessons of Restructuring" section of Gilson's introduction to Creating Value through Corporate Restructuring. Although the case studies in this book span a wide range of companies, industries, and contexts, some common issues and themes emerge. Taken together, they suggest there are three critical hurdles or challenges that management faces in any restructuring program: 1. Design. What type of restructuring is appropriate for dealing with the specific challenge, problem, or opportunity that the company faces? 2. Execution. How should the restructuring process be managed and the many barriers to restructuring overcome so that as much value is created as possible? 3. Marketing. How should the restructuring be explained and portrayed to investors so that value created inside the company is fully credited to its stock price? Failure to address any one of...
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...A manager faces several challenges in motivating his or her employees in today's workforce. Three challenges are diversity, organizational restructuring and fewer entry-level employees. These challenges did not exist in the workforce of 50 years ago. In today's workforce, managers face both genders instead of one, different sexual orientations, different ethnicities, races, and religion. The American workforce of fifty years ago had more men and they were primarily Caucasian. The second challenge is organizational restructuring. Today there is a trend of mergers and acquisitions that did not exist fifty years ago. Mergers and acquisions leads to layoffs. Layoff's impact an employee's job performance, leaving managers unsure how to reassure them in the face of political upheaval. Lastly, today's workforce has fewer entry-level employees because the workforce is growing slower. Managers are faced with hiring qualified applicants for entry-level positions and then must also motivate those individuals to pursue higher job positions. One challenge that managers face is diversity. It is hard to come up with one motivational technique and apply it to everyone. Today's workforce is comprised of different job performance styles that are impacted by gender, sexual orientation, ethnicity, race, and religion. Several challenges are entertwined with diversity. These variables affect how the manager interacts with his or her employees. For example, communication is one area that is hugely...
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...FOR BANKS ON CORPORATE ETHICAL STRATEGY THESIS STATEMENT The thesis statement of this research paper is “The impact of corporate America downsizing for banks on corporate ethical strategy”. The paper shall cover issues such as the causes of downsizing, how to go about the downsizing process, impacts of downsizing and measures that can be put in place to curb such adverse impacts to the downsized and those employees left behind at large and ethical issues that relate to downsizing. INTRODUCTION Downsizing is the process whereby companies reduce the number of employees for a short while or for an unknown period of time. Companies downsize due to radical changes in the external and internal environment of the organization such as restructuring of the organization, poor performance of businesses and business processes reengineering .Globalization and collapsing of trade barriers within nations and the cropping up of technology and computerization has compelled companies to downsize. Several steps are necessary for successful downsizing: education, fortifying of the organizations goals and values, trustworthiness and pride every time, designing, and communication. Other vital points to note when conducting downsizing, including putting in place a clear vision and goals, achieving the transition successfully, planning, joint effort, concern and skills. Downsizing has shown to cause family breakup, lowering of self-esteem, trauma, involvement in crime and also death to those...
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...consumer electronics company in global terms due to its decisive attempt of organizational development. In order to be very competitive, strong research would be vital to its success and survival in the company’s post war era. It wasn’t a success at first try, but after recapturing their target market through successive roles of CEO’s with strong incentives, it slowly began to regain its corporate goals of success. The most important period in the company’s history in terms of overturning its slow growth would be during the Boonstra’s Reorganization period. At the end of this period, the company succeeded in achieving the objective of retaining a 24% return on net assets which eventually increased the market value of the firm by five-fold. The consequential growth was the result of shifting major corporate resources to marketing, including 40% increase in advertising which was an attempt to raise awareness of the firm. At the beginning of the last decade, the firm still continued their interest on broad range of volatile, high-volume products such as consumer electronics, semiconductors, and components. For a company to grow, it needs to focus on a wide array of goods with high quality. The last CEO, Kleisterlee, was determined to “organize from the outside in” and therefore committed to leave a company that continues to strive for corporate success through innovation and the continuance of organizational restructure. Like any other successful firm, the products that are being...
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...that brought on the need for restructure as seen in Hitt (2013), was a difficult merger between Kimberly-Clark and Scott Paper, lack of growth in developed countries and loosing market shares to competition. Kimberly-Clark came up with a unique restructuring strategy that would place products into categories based upon their selling strength (Grow, Sustain, or Fix). This strategy was not well received by shareholders and the stock market. Kimberly-Clark then choose to revise this strategy into a more acceptable one. Products would be placed into three categories. Personal care, washroom products, and emerging markets. IDENTIFYING PROBLEMS The obstacle that Kimberly-Clark faced during this restructuring phase would include the reorganization of production equipment and personal. By categorizing products into new categories management and production would have to be reorganized. The original restructuring plan would have products utilizing the same type of equipment being moved elsewhere due to its sales performance. Another disadvantage of this restructuring would be the cost. For example, an article seen in USA Today (2013), Kimberly-Clark anticipated restructuring costs between $130 million and $160 million. These restructuring costs along with a decrease in sales brought on by competition from business rivals were proven to be a major obstacle. KIMBERLY-CLARK QUESTIONS 1. Why would Kimberly-Clark executives restructure the company based on “grow, sustain, and...
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...Final Exam MGMT365 July 2, 2015 Abstract The new economy has ushered in both great business opportunities and great turmoil. Not since the Industrial Revolution have the stakes of dealing with change been so high. Most traditional organizations have accepted, in theory at least, that they must either change or die. And even Internet companies such as eBay, Amazon.com, and America Online recognize that they need to manage the changes associated with rapid entrepreneurial growth. Despite some individual successes, however, change remains difficult to pull off, and few companies manage the process as well as they would like. Most of their initiatives (installing new technology, downsizing, restructuring, or trying to change corporate culture) have had low success rates. The brutal fact is that about 70% of all change initiatives fail (Beer, 2000). This paper will discuss the two change theories E and O. Final Exam Research shows that the reason for most change initiative failures is that in their rush to change their organizations, managers end up immersing themselves in an alphabet soup of initiatives. They lose focus and become mesmerized by all the advice available in print and on-line about why companies should change, what they should try to accomplish, and how they should do it (Brown, 2005). This proliferation of recommendations often leads to muddle when change is attempted. The result is that most change efforts exert a heavy toll, both human and economic. To improve the...
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...Manager’s Instituting downsizing change Corporate downsizing as a restructuring strategy has been around for many years. It was implemented primarily by companies experiencing difficult economic times ,However, since the downsizing has become a leading strategy of choice for a multitude of companies around the world. ..... Click the link for more information. Most downsizing intentions are immediate reduction of costs and increased levels of efficiency, productivity, profitability, and competitiveness. The adoption of strategic downsizing by my company remained popular yet suggests that the overall consequences are negative .Downsizing has deep financial, organizational, and social consequences. The overall picture of the financial effects of downsizing is negative and I feel is a total failure. While my company reported financial improvements, the majority have failed to report increased levels of efficiency, effectiveness, productivity, and profitability. Downsizing produces considerable human consequences; such as in my company the paid sick days were revoked to regain man hours to increase production and profitability, thus penalizing the employee. This evolution came into effect after the company wanted to cut cost, but implemented the process by labeling it as a repercussion of employees abusing the company. Some companies have reported positive financial reports in the short term, yet the long-term financial consequences of downsizing have...
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...that there are some major flaws lying inside our organizational architecture. These flaws lay in the foundation of Kodak`s organization structure and so we cannot move forward until these basic errors are corrected. We are seeking companywide success and must act as a company to achieve this. Throughout its history we`ve experienced dramatic economic upturns and downturns. We are currently trying to pull ourselves out of bankruptcy and I believe the way to do so is through changes in our organizational architecture. These changes alone will not lead to success, as we still face problems in the digital technology area however they will certainly contribute positively. This means making changes in performance-evaluation methods, reward systems and responsibility assignments. Our previous attempts; decentralization in 1984 and the MAPP plan in 1987 have been widely unsuccessful. This means we must look closely at what went wrong within these plans, and restructure accordingly. Now, I’d like to specify what the flaws were in our initial organization restructure plans. 1987 saw Kodak change the assignments of decision rights within our company. Clearly between 1983 and 1987, Kodak leadership realized the need for more change, and we restructured the management’s evaluation and reward systems with the MAPP program. I believe we at Kodak have taken two out of three steps towards a complete and successful organizational restructuring. However the final step must be taken; analyzing...
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...Contents ABSTRACT 3 INTRODUCTION 4 BACKGROUND 5 METHODOLOGY 6 FINDINGS 7 INTERNAL PROBLEMS 7 EXTERNAL PROBLEMS 8 RECOMMENDATIONS 10 PORTFOLIO RESTRUCTURING 10 ORGANIZATIONAL RESTRUCTURING 11 PRODUCT DIVERSIFICATION 11 STAKEHOLDERS CONCILIATION 12 CONCLUSION 13 REFERENCES 14 Abstract This report focuses on the United States-based ice cream producer, Dreyer’s, Inc., which used to be the largest ice cream company in America. In order to consolidate the ice cream industry, Rogers and Cronk, CEO of Dreyer’s, carried out some advancing operation philosophies including the launch of a strategic plan named the “Grand Plan” in the year 1994. The report gives a description of the expectations of the “Grand Plan” and their company culture in details and demonstrates why they are unlikely to be implemented successfully. Therefore, the 4 years from 1994 to 1998 witnessed a dramatic sales performance downturn. After analyzing the strategies and the industry situation, it appears that both the internal and external problems, such as the huge spending of the Grand Plan, fierce competition among rivals and increased costs raised by raw material prices, etc. led to Dreyer’s failure. Based on the findings, this report gives recommendations on portfolio restructuring, corporate restructuring, product diversification, and stakeholder conciliation. The aim is to help Dreyer’s manage through the current crisis and establish a firm ground in the market. Introduction Dreyer’s...
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