Downsizing is the process of the workforce reducing in an organization by terminating the employees’ contracts. This process is also known as a lay-off. It is often put into action to cut off costs in a recessionary situation. Some companies lay off employees annually to maintain their competitive standard and enhance effective workforce. The laid off employees are usually paid compensation or several months’ salaries. However, the management has to dedicate significant efforts to fulfill downsizing efficiently.
Downsizing not only affects the employees who have exited but also the remaining ones who may worry about own workplace stability. Downsizing has actually become an inevitable tool in business organizations. The eradication of positions may become significant for an organization to exist. Unfortunately, individuals who are tied to their positions actually face the situation of losing their livelihoods. The purpose of this paper is to summarize the article by Alan Downs “Downsizing the Business with Dignity” and identify the impacts of downsizing on employees.
Article’s Summary
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Downs claims that downsizing is a very harsh solution to an organization in terms of financial issues. Smith, Wright and Huo (2008) support this argument and explain that downsizing should be done with significant care and requires planning. Downs argues that for an organization to defend its intellectual capital, it must carry out lay-offs wisely, treat affected employees with respect, and ensure that the retained employees' morale is not affected. The author gives some of the consideration that an organization should follow, describes the possible impacts of the situation on employees, and offers efficient approaches to
Champion Enterprises Inc. is one of the leaders in the manufactured home building industry. The company specializes in factory manufactured housing and building materials, specializing in two-story homes, multi-section homes, ranch-style homes, single-style homes, Cape Cod style homes, townhouses, duplexes, and triplexes. Modular homes maintenance cost is lower than traditional homes making them a better option.
Broadway Broker’s management team is faced with the challenging task of downsizing and consolidating the organization. A thorough investigation as to how to execute proposed changes will need to occur before the organization can forge ahead. Change processes must be executed in a fashion that portrays compassion and consideration for all involved. For change to be successful the management team must have understanding and empathy for the psychological impact of imposed change and how employees will react. Most humans are fearful of change and do not embrace change in a positive manner. The road ahead will be difficult for the management team at Broadway Broker’s, however; with proper planning and understanding positive change can sustain the future of the organization.
The next problem is poor morale. Morale is the job satisfaction, outlook, and feelings of an employee. Right now, employees do not feel secure within the business and are rebelling against it. They do not have a positive outlook for the future of the business and feel betrayed because of all of the people getting let go. The employees right now have a poor morale due to all these factors.
The primary stakeholders in this case is the employees and managers who are being fired and having to firing good employees because of the change in the companies policy. The customers who are receiving poor service because of the conduct and e...
The case deals with the initial phase of this change process where the strategy was to divest noncore activities to generate the immediate requirement of cash to reduce the debts and to restructure and downsize the company to reduce the losses. In a resulting situation of high demoralization of employers, Mark Parton had to push forward the cultural changes introduced by Lord Simpson with suitable modifications needed to match the vastly changed challenges now facing the company.... ... middle of paper ... ... • Be highly capable and respected for their contribution • Say with clarity and honesty what they think and feel • Challenge the status quo, to improve business performance.
Lewis, J. 2014. Causes of Employee Downsizing. [online] Available at: http://smallbusiness.chron.com/causes-employee-downsizing-38647.html [Accessed: 25 March 2014].
Usually when a company downsizes, the results end up exactly the opposite of what they wanted, and it is usually because of the lack of planning. There are many issues involved in a corporate downsizing and with appropriate planning these issues can usually be resolved. While employees terminated usually get all the downfalls of a downsizing, the corporation had to downsize for a reason. This reason most often leaves the corporation with a better ground to stand on.
Employee turnover costs are very costly to a company. Turnover not only affects the bottom line but also affects the company’s morale. We are analyzing the problems within our company that are causing our employees to become unsatisfied with their job. Then we are going to find solutions. And then do the cost estimates of the turnover costs and the turnover savings after our solutions are implemented.
There are times when management has no other option but to proceed with downsizing their current number of staff members. There are several facts that force staff reductions. These include changes in funding, new laws or regulations that limit profits for the organization, as well as mergers and many other operational setbacks. Most often mergers bring along consolidation of positions and cutbacks in the workforce because the number of employees regarded as necessary to accomplish the position tasks has changed (Fallon & McConnell, 2007).The process is different in every organization; however, many share the same reasoning for laying off a portion of their staff.
The sense-making approach of unfreezing, changing and freezing (Palmer, Dunford & Akin, 2009) was inappropriate in this scenario. Management has made a decision to reduce their workforce continuously; however, the change does not end with the layoffs, rather, it is a continuous change as they continue to reduce employees and focus on the existing employees’ morale. Middle management predominantly executes sense-making approach by as aligning the company objectives with their employees (Banker, 2012). The sense-making approach may have been the culprit of the communication breakdown between employees and British Airways CEO regarding absenteeism. The processual approach was much more fitting with continuous layoff that will allow them to pursue their next implementation. Processual approach is on-going and focused on long-term results while sense-making approach is a prescriptive change. The sense-making approach might have worked if processual approach was established first during the reduction in force, prior to introducing the swipe card implementation. Preferably, British Airways should have engaged in change management approach first to address the system change in a large scale. Organizational development approach would have assessed the entire organization and discovered that the low morale may
Voluntary and involuntary turnover have an effect on organizations. Rapid changes in job descriptions, organizational structures, and inter-organizational competitiveness increase the importance of studying turnover and its relationship with organizational change. According to Leana and Van Buren (1999), "the loss of key network members can severely damage an organization 's social fabric and perhaps eradicate its social capital altogether." When businesses lose a high number of employees, problems can occur, costing the company time and money. Some of the costs incurred are associated with training, drug testing, physicals, and orientations to hire replacements that may take several months to learn the job and to achieve competency. There is a saying, “Good help is hard to find---and harder to keep”. This saying refers to good organizations trying to reduce turnover when the competition for retaining good employees is intense.
Layoffs are one means by which an organization can reduce expenses with the intent of improving its bottom line. Despite being typically performed as a last resort, layoffs often have a negative impact on the remaining workforce. As a manager, there are numerous areas for concern in managing the workforce going forward. The human costs related to downsizing are “immense and far-reaching” with one of the most profound being survivor syndrome according to Hanson (2015, p. 187). Also known as survivor’s guilt, this condition relates to the emotions felt by those still employed and some of the effects include decreased motivation, moral, and job satisfaction, as well as an increased proclivity to search for other employment. This volunteer turnover being another grave concern for managers, and retention of the remaining workforce is usually dependent on their existing perception of the organization and its culture (Sitlington & Marshall, 2011). Also relayed by
Since every employee is afraid of the security issue regarding the job so their morale is down as they are experiencing downsizing in their organization so they might feel that they would b the next. In this situation it is recommended that internal audit department should perform its function regarding the building of confidence of employees and make sure that proper awareness has been spread between the employees that this downsizing is a strategy of reducing the cost and need not to worry for the employees who is working with honesty and integrity.
In management, effective leadership involves the daily responsibilities of monitoring employee productivity, dealing with customers and handling the technical aspects of business. Being a manager can be fun, rewarding and socially interesting. A good manager is positive and provides support and motivation for employees. However, one of the responsibilities of a manager, along with hiring, is firing. It is commonly accepted that “employment termination is usually excruciating for everyone involved” (Zins). However, by using a structured method this process can go smoothly and with as little stress as possible.
It all means a wish to quit and move on to something better and many employees are there right now. I am currently employed at a very popular hospital and I am currently seeing job dissatisfaction first hand. In the department that I work at many employees are showing their true views on how they are unsatisfied with the job. Many people feel that the job is becoming very stressful with the demands from upper management. Many employees are working long hours and are not receiving any recognition for it. In the past few months I have seen many employees quit and move on to other positions. Many of the ones remaining are not even putting 100 percent into their work because they feel like they should not if they will not be recognized for