...TABLE OF CONTENTS INTRODUCTION 2 ORGANIZATIONAL DOWNSIZING – A LITERATURE OVERVIEW 2 WHY DO COMPANIES DOWNSIZING? 2 STAGES OF DOWNSIZING 3 THE IMPACT OF DOWNSIZING PRACTICES ON THE PERFORMANCE 4 ALTERNATIVES TO LAYOFF 5 EARLY RETIREMENT 5 DOWNSIZING AND THE LEGAL ISSUES 6 REFERENCES: 6 INTRODUCTION Over the past decade, corporations have been under economic pressures for a long term. Consequently, some of them were eliminated from the local market, the survivors have been driven to reorganize, redesign and restructure their organization with the intention of maintaining their place in the market. According to the decision maker, downsizing can be a solution to many organizations to reduce their budgeting issues and to increase their productivities. ( Labib & Appelbaum,1994) This essay will focus on organizational downsizing. Part one present the downsizing concept, particular attention is paid to downsizing reasoning and stages, its impact on the performance and the legal issues. Part two focus on the early retirement. ORGANIZATIONAL DOWNSIZING – A LITERATURE OVERVIEW The term downsizing refers to an "elaborate decision to reduce the size of the workforce in an organization" to improve the organization performance and decrease cost. (Kozlowski et al., 1993, p. 267). Layoff and early retirement are methods of downsizing; in fact layoff is an immediate act of discharging an employee due a decline, while the early retirement is a personal decision...
Words: 1666 - Pages: 7
...to these changes. This paper focuses on the effects of Downsizing (effective way of restructuring the organization) and employee empowerment on the production and operation functions in the manufacturing industry. Employee empowerment has a positive impact on Production functions under specific conditions and with more of trust and social relationship between the management and employees. Empowerment is a boon to the manufacturing industry, as the in-depth knowledge of technical employees in operations is well utilized by the management. The Operation functions brings together raw materials with the production process to make products that customers need, here employees form the core, around which these processes revolve. Downsizing creates opportunities to identify, train and develop capable employees to fulfill more responsible roles in production and operation departments. Downsizing, from a company perspective, is a very positive event targeted to make their products better, increase their profit, and streamline operations. In organizations that have restructured, many do not handle the process of downsizing well and can suffer serious long term damage as a result. Skilled employees need to be recognized and retained for dependency on these employees in critical situations. Decision making is a central role of operation managers largely, thus managing continuity of operations is a prime consideration while downsizing or involving employees. On a long run, the cost of training...
Words: 5028 - Pages: 21
...Employment Downsizing and Society Student name Student University Abstract The purpose of this research paper is to present the implications of the downsizing to the former employees and the social environment around this individual. The author presents the theoretical implementations of the downsizing and provides the implications to the laid of employee, his/ her family, and the employee who kept his/ her work. Later, the author discusses about ethical questions related to the downsizing. Keywords: downsizing, social impact, business ethics Studying Business Ethics and examining real life situation an individual starts to see the world from a different angle. The one starts to see the other side of a dilemma and begins to realize that sometimes decision made might affect both his/ her life and the environment around them. Most of the times, the decision is like a scale of wrong and right. Therefore, understanding the consequences – both negative and positive – is an essential part of decision making process where personal benefit or strong relationship might contradict individual’s worldview or belief. In my paper, I will discuss the problem of making decision of the top managers to pursue economic benefits when restructuring the organizations and potential ramifications, such as impact of employment downsizing on employees, communities, and families of the employees. To start with, employment “downsizing refers to a company's decision...
Words: 1961 - Pages: 8
...to the likelihood of occurrence of fishery collapse in near future, a fishery authority decided to carry out downsizing for the fishing company. Discuss the effects of such step on the welfare of the fishery community in the area. INTRODUCTION Downsizing refers to the permanent reduction of a company's workforce and is generally associated with corporate reorganization, or creating a "leaner, meaner" company. Downsizings such as these are also commonly called reorganizing, reengineering, restructuring, or rightsizing. Regardless of the label applied, however, downsizing essentially refers to layoffs that may or may not be accompanied by systematic restructuring programs, such as staff reductions, departmental consolidations, plant or office closings, or other forms of reducing payroll expenses. In essence, restructuring efforts attempt to increase the amount of work output relative to the amount of work input. Downsizings such as these are also commonly called reorganizing, reengineering, restructuring, or rightsizing. Regardless of the label applied, however, downsizing essentially refers to layoffs that may or may not be accompanied by systematic restructuring programs, such as...
Words: 1200 - Pages: 5
...Table of Contents Question 1 2 Introduction 2 Reactions to frustration 2 Analysis of organisational behaviour 3 Question 2 4 Question 3 5 Introduction 5 What is survivor syndrome? 5 Question 1 Give an overview of the frustration model and how it can be used to analyse organisational behaviour Introduction Frustration occurs when a motivated drive is blocked before a person reaches a desired goal. The barrier may either be overt (outward, or physical) or covert (inward, or mental-socio-psychological). Overt acts might include strikes, work slowdowns, grievances, or lawsuits. Covert acts would include sabotage, secret withholding of output and stealing of organisational property. A smooth progression of the need-driven incentive motivational cycle and fulfilment of one’s expectations do not always occur in reality. There are some difficulties and barriers that do not let a person achieve his goals and so they lead to frustration. The frustration model can be useful in the analysis of not only behaviour in general but also specific aspects of on-the-job behaviour as illustrated by. 12e in the model below F. Luthans (2011), Oganisational Behavior: Need Drive Goal/ (deficiency) (deficiency with direction incentives reduction of with direction) Barrier the drives and fulfilment (1) Overt deficiencies) (2) Covert Frustration Defence mechanisms (1) Aggression (2) Withdrawal (3) Fixation (4) Compromise...
Words: 1697 - Pages: 7
...Introduction to the topic Topic: impact of downsizing:- WHAT IS DOWNSIZING? Downsizing is a commonly used euphemism which refers to reducing the overall size and operating costs of a company, most directly through a reduction in the total number of employees. When the market is tight, downsizing is extremely common, as companies fight to survive in a hostile climate while competing with other companies in the same sector. For employees, downsizing can be very unnerving and upsetting. Type of downsizing Reduce workweek: Firms sometimes resort to a reduced workweek. This may translate into the reduction from 40 to 35 or fewer hours and thereby reduce the short-term payroll expenditures. While most employees appreciate the idea of being able to spend more time with their families, they may not always welcome a reduced pay check. Also, employees may find that the same amount of work still needs to be performed while they spend less time on the job. Nucor Steel Corporation in South Carolina has avoided layoffs for 35 years by reducing to two- and three-workday weeks for its employees during downturns (George, 2004). Recently, workers at a St. Thomas automotive parts plant in the UK have voted to reduce their work week rather than see 200 employees leave permanently (De Bono, 2008). Firing: Due to non-performance is difficult; laying off employees due to poor business performance is harder. The effects of downsizing are significant; understand employee rights termination...
Words: 1509 - Pages: 7
...Anthony Willis University of Maryland, University College This paper was prepared for Managing People and Groups in the Global Workplace, AMBA 620, taught by Professor Lucia Miree A. Case Synopsis During his tenure at the Information Technology department, Shanu paints the picture of a positive work environment where the employees are satisfied and happy with their jobs. After three years of working with the company, Shanu witnessed two junior members get laid off without a formal warning or explanation. The abrupt dismissal of these employees caused a shift in the culture of the work environment and generated issues that would impact the employees of the IT Department. After the abrupt dismissal the remaining employees began to exhibit unprofessional behaviors such as socializing, taking longer breaks, tardiness, and missing departmental meetings. They began to physically and psychologically withdraw from the company becoming disengaged with the department revealing their true issue, stress and job satisfaction. B. Framework for case analysis: Workplace stress is common in today’s uncertain jobs market; however, an abundance of stress can interfere with employee’s productivity and impact their physical and emotional health (Segal, Smith, & Robinson, 2013). Studies show that employees who have high stress levels tend to underperform and cannot work to their full potential, which in turn cause companies to lose profits. Employees who underperform during their job tend...
Words: 2358 - Pages: 10
...TITLE OF THESIS: THE IMPACT OF CORPORATE AMERICA DOWNSIZING 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...
Words: 2323 - Pages: 10
...Impact on Employee Morale during Company Restructuring The worldwide economic crisis has caused too many companies to restructure their corporate setting in order to survive and meet their financial challenges. If you turn on the TV or browse internet these days, it is almost impossible to avoid the bad news of more and more massive layoffs in United States as well as the rest of the world. As this financial crisis deepens, one can’t help asking “Is downsizing or more job cuts our only way out? What is the long term effect of these massive job cuts to our corporation employees? Will we need even longer time to recover from this emotional and morale crisis if the downsizing wasn’t done right?” In this paper, impacts of corporate restructuring on employees’ morale have been explored by reviewing several research papers. Figures were illustrated, strategies were suggested. It is not the question why companies have to downsize or cut jobs, it is how they should do it strategically right to reach the expected goal of benefit and continue to retain the trust and loyalty of the surviving workers. “Trust is one of the most valuable yet brittle assets in any enterprise. So over the long term, it’s far better for companies to downsize in a humane way.” - Robert Reich (Mishra and Spreizer, 1998) During the economic recession, many companies started to restructure their legal, ownership or operation structure in order to be more profitable, competitive and...
Words: 1971 - Pages: 8
...Downsizing and Restructuring: A Scenario in Malaysia as Dell Malaysia Offers VSS to 700 Penang StaffsUNIVERSITY OF MARA TECHNOLOGY MASTER IN BUSINESS ADMINISTRATION 24rd April, 2011 HUMAN RESOURCE MANAGEMENT ASSIGNMENT 1 HRM 730 VIDYAMALA BINTI MOHAMAD 2010153603 Contents Abstract 2 The Arguments 4 Are downsizing legal? 4 Why firms keep repeating downsizing? 5 Why firms didn’t achieve their goals after downsizing being implemented? What has goes wrong? 7 What roles does government play in the downsizing issues? 7 The Conclusions 9 References 10 Abstract Downsizing in Malaysia has been implemented a quiet time ago. The firms that using this kind of approach in Malaysia were the foreigner company (under the FDI). During the world recessions as happened in 1997 and 2009, recently. For my personal experienced, my brother in-law has accepted from Black and Decker, Kuantan Plant in 1997 and my husband has accepted from Pepsi Co. Malaysia in 2006. Downsizing became a new trend and not limited to foreign company, even the local company have also used this approach. As in 2000, Telekom have retrenched 4000 staffs. The mergers of several local banks in 1997 have affected a few hundred more. As reported from the statistics of Retrenchment Management Office at the Human Resources Ministry’s Labour Department show that 19, 325 workers, 12, 627 of them locals, were retrenched by 624 employers between October, 2008 and mid-March, 2009. And...
Words: 2212 - Pages: 9
...Implication of Downsizing to the Employees, Communities, and families of the Employees OMM 640 Keanon Alderson June 13, 2011 In an organization there will be times where certain decisions have to be made whether bad or good. The decisions will affect the company, stakeholders, and the employees in one way or another. Changes can come from many different factors. It can be changes to improve the company, compete with the competition, or the economy. Now and days the changes that many companies are making is changes due to the economy. Companies are looking to save money. Companies are cutting back the matching of the 401K, cutting back on employees hours, and some companies are even shutting down all together. We will be taking a look at how a wealthy popular car company, Chrysler, has filed for bankruptcy in this economic downturn which in turn has an effect on employees, the community, and the families of the employees. In the past two years America has been hit pretty hard economically. Gas prices have risen to almost 5.00 a gallon in some states. Peoples light bills have been as high as 500.00 or more. People have lost many jobs and can’t find a job because so many employers are cutting back to try and save what’s left of their company. Many homes are being foreclosed because people can’t afford to pay their house note because they don’t have a job or because there were cutbacks on their commission. Its many factors that have played a part in why the economy...
Words: 1994 - Pages: 8
...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...
Words: 4982 - Pages: 20
...Leading for the Future LEAD5004 Leading For the Future Instructor: Cyd Strickland, PhD, MA, BA Leaders of the future have a slew of challenges that are going to be faced with. Whether it is a failing economy or downsizing, leaders of the future must be prepared to take their organization through turbulent times. The need to be able to help the employees deal with stress as well as take the necessary steps to help them flourish in trying times. Stress can lead to loss of productivity, increased sick days, lack of cooperation, escalation on human resource complaints and poor decision making. Leaders must be able to recognize the signs of stress and put the mechanisms in place to help limit the time spent on the stressful incidences as well as diminish the reactions to the stress that can be harmful for the organization. They must be vigilant in how they cope with their own personal stress to be able to help their employees deal with theirs. Leaders should be taking into considerations how much work related stress has an impact on the personal stress of an employee. A company faced with layoffs and or downsizing causes an employee to face a high stress environment which requires the employee to work with job requirement that don’t match the capabilities, resources, or needs of the worker. This also leaves the employee in the situation of wondering if they are next to in line fired. This stress can lead to health...
Words: 772 - Pages: 4
...Running head: HERSHEY’S SWEET MISSION Assignment 1: Hershey’s Sweet Miss Running head: HERSHEY’S SWEET MISSION Recommend the redesign of Hershey’s performance management system to appeal to the diverse groups that it employs: Hershey’s company deals mainly with confectionary products. Their products consist mainly of chocolates and the candies. It has existed in the market since 1890’s. They market their products worldwide. My recommendation to the redesign of Hershey’s performance management would be to keep their current performance management system. Hershey’s have a redesign system that caters for different generations and more specific to two. These generations may include the baby boomers and the younger generation. In reference to these systems, they entail a situation where the baby boomers train or mentor the new recruits to the company. The main aim of this is to leave a long term legacy with betterment of the whole world. This particular system has been known to be particularly enthusiastic in mentoring the younger colleagues in order to cope with company’s policies (Wright, 2011). Hershey benefits from the baby boomers as the role models, coaches and as well as their advocates in the business and cooperate world. In terms of younger generations, the company has strategized their systems to attract the younger generations. This is suppose to offer the young generation with a lot of eagerness for challenge, self independent, achieve results in the...
Words: 1169 - Pages: 5
...1 LITERATURE REVIEW ABSTRACT The economic recession that hit the world in 2007 resulted in global downsizing in many prestige organizations and its effects of workers productivity. This literature reviews focuses on affective organizational commitment among survivors of organizational restructuring and downsizing. It focused on middle level managers and employees in supervisory positions because survivors of this group are often called upon to assume expanded roles, functions and responsibilities in a post restructuring and downsizing environment. This paper also explores the impact of recession for those still in employment by looking at a key indicator of employee wellbeing, work pressure staff reductions and company reorganization both increase work pressure, as does current job insecurity. Other job changes, like large pay cuts, increases in responsibility, autonomy and monitoring also increase work pressure. Keywords: Recession, downsizing, layoffs, economic downturns, organizational behavior, commitment, motivation, loss and grief, leaders, employees, stakeholders. 2 INTRODUCTION The great recession of 2007 started on the month of December. National Bureau of Economic Research (NBER), the prestigious private research institute declared it officially. The government of US acknowledged the NBER's declaration, aware of the downfall since August 2007; the White House did not change its course on coping with the financial crisis. This was the third longest...
Words: 3597 - Pages: 15
