Downsizing: what do we know? What have we learned?

Article Abstract:

Approaches to organisation management and design need to be changed to gain benefits from downsizing, or planned job layoffs. Expected economic advantages through downsizing often do not become reality for many companies, particularly in terms of higher investment return and increased profit. Expected organisational advantages such as higher productivity, better communications and reduced overheads also often fail to materialise. Personnel cuts must be made as part of a continuous improvement strategy, where changes can be implemented to eradicate inefficiency and waste.

Economic aspects, Industrial organization

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Organizational downsizing: constraining, cloning, learning

Article Abstract:

Downsizing has spread rapidly among American corporations and reached a peak rate for Jan. 1994 that was higher for any other month since 1989. This process of deliberate personnel reduction has been justified as a cost-cutting measure and as an incentive to increase productivity. However, evidence has shown that downsizing negatively affects employee morale and productivity. Institutional theory has identified social factors of constraining, cloning and learning as reasons why firms continue to downsize despite its negative effects.

Social aspects, Analysis, Layoffs

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Downsizing and firm performance: panacea or paradise lost?

Article Abstract:

An investigation of corporate downsizing in 537 companies for 12 years revealed that employment downsizing had very little effect on a company's return on assets. On the other hand, asset downsizing increased the return on assets. Taking both employment and asset downsizing into consideration, downsizing had negligible impact on profitability. Downsizing initiatives must systematically consider both human resource and physical assets to maximize the impact of downsizing on return on assets and profitability.

Management Functions NEC, Research, Organizational change, Career development, Corporate size

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