Downsizing Refers To Interventions Aimed at Reducing: Application Stages

Downsizing refers to interventions aimed at reducing
the size of the organization.

decreasing the number of employees through layoffs,
redeployment,
early retirement
reducing the number of organizational units or
managerial levels
outsourcing,
reorganization
Slide 2
Application Stages
Successful downsizing interventions tend to proceed by the following steps
Clarify the Organizations Strategy. As a first step, organization leaders specify
corporate and business strategy and communicate clearly how downsizing relates to it.
Assess Downsizing Options and Make Relevant Choices. Once the strategy is clear,
the full range of downsizing options can be identified and assessed.
workforce reduction
organization redesign
systemic change
Implement the Changes. This stage involves implementing methods for reducing the
size of the organization. Several practices characterize successful implementation.
First, downsizing is best controlled from the top down.
Second, specific areas of inefficiency and high cost need to be identified and targeted.
Third, specific actions should be linked to the organizations strategy.
Finally, communicate frequently using a variety of media.
4. Address the Needs of Survivors and Those Who Leave. Most downsizing eventually
involves reduction in the size of the workforce, and it is important to support not
only employees who remain with the organization but also those who leave.
Survivior Syndrome
This syndrome involves a narrow set of self-absorbed and risk-averse behaviors that can
threaten the organizations survival.
Organizations can address these survivor concerns with communication processes that
increase the amount and frequency of information provided.
.
Organizations have developed an array of methods to help employees who have been laid
off.
These include outplacement counseling, personal and family counseling, severance
packages, office support for job searches, relocation services, and job retraining.
5. Follow Through with Growth Plans. This final stage of downsizing involves
implementing
an organization renewal and growth process.
Results of Downsizing
These research findings paint a rather bleak picture of the success of downsizing. The results
must be interpreted cautiously, however, for three reasons.
First, many of the survey-oriented studies received responses from human resources
specialists who
might have been naturally inclined to view downsizing in a negative light.
Second, the studies of financial performance may have included a biased sample of firms. If
the companies selected for analysis had been poorly managed, then downsizing alone
would have been unlikely to improve financial performance.
Third, disappointing results may be a function of the way downsizing was implemented.
A number of organizations, such as Florida Power and Light, General Electric, Motorola,
Texas Instruments, Boeing, DaimlerChrysler, and Hewlett-Packard, have posted solid
financial returns following downsizing.40
Thus, the success of downsizing efforts may depend as much on how effectively the
intervention is applied as on the size of the layoffs or the amount of delayering.
REEngineering
The fundamental rethinking and radical redesign of business processes to achieve dramatic
improvements in performance.
successful reengineering requires an almost revolutionary change in how organizations

design their structures and their work
Reengineering seeks to leverage information technology when large-scale business
processes, such as supply chain logistics, change radically.
Reengineering also is associated with downsizing, the shift from functional to process-based
structures, and work design
Reengineering also can be linked to transformation of organization structures and

work design
. Its focus on work processes helps to break down the vertical orientation of functional and
divisional organizations
Application Stages
Prepare the Organization.
Reengineering begins with clarification and assessment of the organizations context,
including its competitive environment, strategy, and objectives.
A final task in preparing the organization is to communicate clearlythrough words and
deedswhy reengineering is necessary and the direction it will take
Fundamentally Rethink the Way Work Gets Done Identify and analyze core
business processes
Core processes are considered essential for strategic success. They include activities that
transform inputs into valued outputs
Define performance objectives.
Challenging performance goals are set in this step. The highest possible level of
performance for any particular process is identified, and dramatic goals are set for speed,
quality, cost, or other measures
of performance
Design new processes
This task involves designing new business processes
to achieve breakthrough goals. It often starts with a clean sheet of paper and
addresses the question If we were starting this company today, what is the
most effective and efficient way to deliver this product or service?
Restructure the Organization Around the New Business Processes.
This last step in reengineering involves changing the organizations structure to support the
new
business processes.
Results from Reengineering

The results from reengineering vary widely. Industry journals and the business press
regularly contain accounts of dramatic business outcomes attributable to reengineering.

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Downsizing refers to interventions aimed at reducing

the size of the organization.

successful reengineering requires an almost revolutionary change in how organizations

Reengineering also can be linked to transformation of organization structures and

Results from Reengineering

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