HRM – DOWNSIZING : LESSON FOR MANAGERS

Learning From the Past – Lesson for Managers

Downsizing started to become a management issue way back in mid 1970s. Downsizing were practiced as an initiative to reduce cost and as a way to eliminate the non performer staff with the economic recession.

According to Franco Gandolfi, in the Reflecting on Downsizing: What Have Managers Learned?, there are five downsizing lessons for executive contemplating a downsizing strategy :

Lesson 1 : Organization should be fully prepared strategically and proactively for downsizing in terms of the HR plans, policies and programs a year before executing the downsizing which indirectly allows minimal disruption and pain among the surviving and the departing workforces.

Lesson 2 : Managers should provide adequate training and supports to survivors in order to proactively prepare the workforce for change and help individuals cape successfully with downsizing.

Lesson 3 : Managers must be pay considerable attention to survivors because these survivors are mentally and physically stressed with the downsizing practiced to their colleagues. The survivors faced with aftershocks of downsizing. Managers need to make sure that the survivors receive counseling, support, help, honest as well as unbiased information.

Lesson 4 : Managers must thoroughly counting the downsizing cost because there is always an indirect and hidden cost in practicing downsizing. Miscalculation of cost can result in the organization facing loss of gain due to underestimation.

Lesson 5 : Manager should consider downsizing as a last resort in encountering bad economy stage. There are other practices that can be carried out in order to survive in the economical recession such as reduce workweek, hiring freezes, natural attrition, limited overtime pay and etc.

According to Asuman Akdogan, in The Effects of Organizational Downsizing and Layoffs on Organizational Commitment : A Field Research, downsizing represents a strategy managers implement that affects the size of the organization's workforce, its cost and the work processes. The effect of downsizing are members worried about their future and employment, they believe that their workload will increase because of layoffs and remaining employees believe that downsizing politics are enforced unfairly.

In order to minimize the effect, Akdogan outlined few strategies dan can be carried out by managers as stated below :

1. 
   
   Form a well-organized downsizing plan
2. 
   
   Maintain core competencies while experiencing the downsizing process
3. 
   
   Make all employees both remaining and those leaving to participate in the downsizing process
4. 
   
   Inform all employees about the downsizing process

Basically, both writers have common idea on the action to be taken by managers should include from the perspective of the organization as a whole, from the perspective of the employees who are lay off and from the perspectives of the survivors. The process of downsizing itself created a self protective mood among employees. So, it is important for managers to ensure the organization is run on a minimal effect of downsizing and thus increasing returns in the organization in line with the main purpose of executing downsizing at the first place.

Reference :

Gandolfi, F. (2008). Reflecting on Downsizing : What Have Managers Learned?. S.A.M. Advanced Management Journal, Vol. 73, Iss.2;pg.46,11 pgs

Akdogan, A. (2009). The Effects of Organizational Downsizing and Layoffs on Organizational Commitment : A Field Research. Journal of American Academy of Business, Cambridge. Hollywood, Vol. 14, Iss. 2; pg. 337, 7 pgs