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DOWNSIZING
AND
RESTRUCTURINNG

Concept of Downsizing and

Restructuring

It is important to clarify what is meant by the word

downsizing. Managers academies use it to mean a
number of different activities: some example of words
used as synonymous for downsizing including building
down, de-hiring, de-recruitment, reduction in force,
resizing etc. Downsizing activities undertaken to
improve organizational efficiency, competitiveness
that affect the size of the firms workforce, the cost
and the work processes.

CONCEPT (cont..)
Downsizing strategies to improve an

organizational efficiency by reducing

workforce, redesigning the work, or changing

the systems of the organization.
Cameron identifies three types of downsizing
strategies:
Workforce reduction: Short term strategy to
cut the number of employees through
attrition, early retirement or voluntary
severance packages, and layoff or termination
etc.
Work designing:Medium term strategy in
which organization focus on work process and
assess whether specific function, products,
and service should be changed or eliminated.

CONCEPT (cont..)

Systematic Change: A long term strategy that

changes the organizations culture and
attitudes and values of employees with the
goal of reducing costs and enhancing quality.

Restructuring:
Any major configuration of internal
administration structure that is associated
with an intentional management change
program.

Why Do Organization downsize?

There are several reasons why organizations
decide to downsize the workforce. Some of
are:
Declining profits
Increased pressure from competitors
Merging with another organization
Introduction of new technology
The need to reduce operating costs
The desire to decrease levels of
management
Getting rid of employee deadwood.

The Downsizing Decision:

For many organization going through a downsizing

is a very painful and difficult experiences. Too
often organizations embark on a downsizing
program without careful consideration whether
there are feasible alternative to downsizing.
Alternative To downsizing:
some of the alternative includeCutting non-personal cost
Cutting personnel cost
Providing incentives for voluntary resignation or
early retirement.

The Downsizing
Decision(cont)
Inplacement And Outpalcement Issues:
Inplacement is reabsorbing excess or
inappropriately placed workers into a
restructured organization.
Outplacement providing a program of
counselling and job search assistance for
workers who have been terminated.


Planning
For Downsizing:
The issues involve
The Downsizing
Decision(cont..)
in planning for downsizing

Determining how many employees will lose

their job

Determining who will be let go

Determining how the reduction will be

carried out

Determining the legal consequences

Designing current and future work plans

Implementing the decision

Performing follow up evaluation and

assessment

Survivors Reaction:
There is considerable evidence that
downsizing may produce a number of
dysfunctional behaviors among the
employees who remain with the organization.
Some of these impact are
Negative attitudes and behavior: in a number
downsizing, employees who retain there jobs
report increased job insecurity, fear, stress,
and burnout. They may also experience lower
self confidence, reduced job satisfaction and
lower commitment to the organization.

Survivors Reaction(cont..)

Reduced performance capabilities: There is

evidence that it is not necessarily the poor
performers who leave the downsized
organization. Best employees will leave,
since quality workers are more attractive to
other firms.
Lower organizational productivity: Negative
employee attitudes and behavior often
result in lower productivity.

Few studies have focused specifically on

managers reactions to downsizing. The
managers were trying to come to grips with
what happened, attempting to figure out
their new roles as change agents and
mentors in new organization, and struggling
to make sense of what had happened.
Among the emotion that emerged were
anger, anxiety , cynicism, resentment,
retribution, hope.