Scribd
Upload
211 views14 pages

Downsizing Strategies and Justifications

This document discusses downsizing and restructuring. It defines downsizing as activities undertaken by management to improve efficiency and competitiveness. Downsizing represents strategies that affect workforce size, costs, and work processes. Common reasons for downsizing include declining profits, business downturns, mergers, new technology, and reducing costs. The main downsizing strategies are workforce reduction, work redesign, and systematic change. Perceptions of justice, including procedural, interactional, and distributive justice, play a key role in how employees react to downsizing.

Uploaded by

Imdad Khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
211 views14 pages

Downsizing Strategies and Justifications

This document discusses downsizing and restructuring. It defines downsizing as activities undertaken by management to improve efficiency and competitiveness. Downsizing represents strategies that affect workforce size, costs, and work processes. Common reasons for downsizing include declining profits, business downturns, mergers, new technology, and reducing costs. The main downsizing strategies are workforce reduction, work redesign, and systematic change. Perceptions of justice, including procedural, interactional, and distributive justice, play a key role in how employees react to downsizing.

Uploaded by

Imdad Khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

DOWNSIZING

AND
RESTRUCTURING
Learning Objectives

After reading this chapter, you should


be able to:
• Concept of Downsizing

• Downsizing Strategies

• Needs for Downsizing

• Perception of Justice in Downsizing

2
DOWNSIZING

Downsizing is a set of activities undertaken on the


part of management and designed to improve
organizational efficiency, productivity, and/or
competitiveness.

It represents a strategy implemented by managers


that affects the size of the firm’s workforce, the costs,
and the work processes.
3
Definitions

• Survivor – an employee remaining with an


organization after a downsizing

• Job insecurity - feelings of concern about the


continuing existence of a job

• Psychological contract – an unwritten commitment


between employers and their employees that
historically guaranteed job security and rewards for
loyal service
4
WHY DOWNSIZING ?

1. Declining profits
2. Business downturn or increased pressure from
competitors
3. Merging with another organization, resulting in
duplication of efforts
4. Introduction of new technology
5. The need to reduce operating costs
6. The desire to decrease levels of management
7. Getting rid of employee “deadwood”
5
DOWNSIZING
STRATEGIES

1. Work-force Reduction

2. Work Redesign

3. Systematic Change

6
DOWNSIZING
STRATEGIES
1. Work-force a short-term strategy to cut the number
Reduction
of employees through attrition, early
retirement or voluntary severance
2. Work packages, and layoffs or terminations etc.
Redesign

3. Systematic
Change 7
DOWNSIZING
STRATEGIES
1. Work-force a medium-term strategy in which
Reduction
organizations focus on work processes
and assess whether specific functions,
2. Work products, and/or services should be
Redesign
changed or eliminated.

3. Systematic
Change 8
DOWNSIZING
STRATEGIES
1. Work-force a long-term strategy that changes the
Reduction
organization’s culture, attitudes, and
employees’ values with the goal of
2. Work reducing costs and enhancing quality.
Redesign

3. Systematic
Change 9
JUSTICE
Perceptions of fairness and equity plays a key role in
understanding how survivors of a downsizing react to
the experience.

There are 3 TYPES OF JUSTICE.


1. Procedural
2. Interactional
3. Distributive
10
JUSTICE
1. Procedural procedures or rules used to determine
which employees will be downsized

2. Interactional

3. Distributive
11
JUSTICE
1. Procedural the interpersonal treatment employees
receive during the implementation of the
downsizing decision

2. Interactional

3. Distributive
12
JUSTICE
1. Procedural the fairness of the downsizing decision

2. Interactional

3. Distributive
13
End of Session

14

You might also like