LEIDY JOHANNA ANGEL HERRERA. Updated 26 October Transcript. BENCHMARKING,DOWNSIZING Y RIGHTSIZING. Right-sizing, downsizing and improving the employee and employer In my experience, the following four considerations will set you and your. Downsizing, Rightsizing or Dumbsizing?: Quality and Human “American mana gement adopted quality concepts in order to cut costs and regain. international.

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In essence, they downsized because they lacked new products that would have stimulated growth and because their existing product markets were decreasing. Top managers with responsibility for making downsizing decisions are in a difficult predicament.

Nevertheless, some companies began simply to cut their workforce without determining whether or not it was necessary and without any kind of accompanying strategy. In contrast, announcements of downsizing are well received in the stock downnsizing.

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. Harper Business Publications, Suggested alternatives to downsizing include early retirement packages and voluntary severance programs. Department of Labor, Bureau of Labor Statistics. Therefore, reports used for communication between layers of the old corporate hierarchy, for example, can be eliminated.

Laying workers off to improve competitiveness often fails to produce the intended results because downsizing can lead to the following unforeseen problems and difficulties:. In addition, advocates of downsizing contend that staff-reduction efforts help move workers from mature, moribund, and obsolete industries to emerging and growing industries, where they are needed.

The seminal work on restructuring or reengineering, Reinventing the Corporation, by Michael Hammer and James Champy, characterizes the process as the “fundamental rethinking and radical redesign of business processes to achieve rightsizinh improvements in critical, contemporary measures of performance such as cost, quality, service, and speed. Finding the balance between these outcomes is the primary challenge facing these managers.


In the twenty-first century, downsizing continued after a sharp decline in the stock market early in the century and followed by continued pressure on corporate earnings in the aftermath of the September 11,terrorist attacks. Table 1 compares the number of temporarily downsized workers with the number of permanently downsized workers. By promoting employee initiative and even employee involvement in decision-making, managers can help restore employee rightsozing and commitment and help increase employee motivation.

Occupations with the Largest Job Decline, The major industries affected by rihtsizing stiffer competition included the automotive, electronics, machine tool, and steel industries.


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. Therefore, eownsizing executives and economists see downsizing as a necessary albeit painful task, and one that ultimately saves the larger number of jobs that would be lost if a company went out business.

Economists argue that this process strengthens the economy and helps it grow. Downsizing affects most sectors of the labor market, including retail, industrial, managerial, and office jobs, impacting workers in a wide range of income levels. Downsizing refers to the permanent reduction of a company’s workforce and is generally associated with corporate reorganization, or creating a “leaner, meaner” company.


Comment about this article, ask questions, or add new information about this topic: If redundant but nonessential work cannot be completely eliminated, it perhaps can be reduced. For example, the database developer Oracle Corporation reduced its number of employees by 5, after acquiring rival PeopleSoft. These jobs might then be outsourced or handled by outside consultants and workers on a contract basis.

Consequently, downsizing often accompanies corporate calls for concentration on “core capabilities” or “core businesses,” which refers to the interest in focusing righstizing the primary revenue-generating aspects of a business. Karl Heil Revised by Scott B.

Downsizing and righhtsizing programs may result from the implementation of new, labor-saving technology. In addition, managers should encourage employee initiative and communication and provide employees with rewards for excellent work. Auto workers were among the first to rightsiing laid off during the initial wave of downsizing.


Hence, displaced workers are able find new jobs relatively easily, especially if those workers have skills that enhance the technological competence of prospective employers.

For example, governments must sometimes enact programs to help displaced workers obtain training and receive job placement assistance. Hammer, Michael, and James Champy. Regardless of whether downsizing is good or bad for the national economy, companies continue to downsize and the trend shows few signs of slowing down. As a major trend among U. To remedy these problems, U. In other words, despite the admitted discomfort and difficulties that downsizing has on displaced workers, some workers are able to locate new jobs and companies are able to achieve greater efficiency, competitiveness, and profitability.

Other articles you might like: Type the code shown: Show my email publicly. Corporate downsizing results from both poor economic rightsising and company decisions to eliminate rightsiziing in order to cut costs and maintain or achieve specific levels of profitability. Table 1 Number of U.

Advocates of downsizing counter critics’ claims by arguing that, through downsizing, the United States has maintained its position as one of the world’s leading economies. Moreover, even though downsizing may not solve all of a company’s competitive problems or bolster a company’s profits indefinitely, downsizing can help reduce costs, which can lead to greater short-term profitability.

Hence, these efforts frequently have mixed results. Managers should confer with employees regularly to discuss performance and strategies for meeting the goals. These jobs are not actually eliminated, but instead moved out of reach of the employees who lose their jobs to outsourcing.