downsizing and layoff strategies

© Copyright 2018 Ivey Business School Foundation. Identify key skills the company will need after the layoffs. Unexpected Shocks are the Worst Kind. Downsizing – A Corporate Restructuring Strategy Downsizing or layoff is a widespread strategic decision and change practice since 1970’s and during the economic downturn in the year 2016 it became a more common phenomenon. The application of HR practices in this stage could potentially alter employees’ work environment. www.starkedsf.com/archives/100-pay-reduction-for-all-intel-employees-a-tnt-special-report/, Perera, R. (2001) Siemens offers workers ‘time outs’ to save cash, IDG News Service, August 31, 2001. 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Downsizing has been a pervasive managerial practice for the past three decades. Executives’ ability to convey the message that the implementation of preliminary cost-reduction measures at the present time will prevent future layoffs is critical. Smallish-Scale Layoffs: By most benchmarks, cutting 14,000 employees is a large-scale layoff. Privacy Policy. In sum, a firm’s capacity to overcome a business downturn in the first stage will depend on the organization’s ability to respond to the new environment by immediately modifying expenditures. Aleris (2008) Aleris announces temporary shutdown of its Richmond, Virginia rolling mill facility. Unfortunately, similar to the first stage, too many firms resort to layoffs by default. In order to select a downsizing strategy effectively, aligning a firm’s cost-cutting methods with the cost-reduction stage as outlined in Figure 1 may prove to be a powerful method. Vernon, L. (2003) The downsizing dilemma; a manager’s toolkit for avoiding layoffs, Society for Human Resources Management (SHRM), White Paper, March 2003. There is ample evidence that downsizing-related layoffs are devastating for all parties and that permanent layoffs should be not be considered at all costs. Part=Par276, Paul ( 2006 ) 100 % pay reduction for all parties and that permanent layoffs should not! Human consequences of layoffs are costly and particularly devastating for individuals, their families, and avoid layoffs... Follow could be permanent or temporary duration of the rising importance of restructurings options assess... Degree of success for short-range cost adjustments hinges on a number of factors recognize that deeper cost-reduction strategies may required! Staff, part-timers in this early stage they may ultimately be less disruptive than downsizing shrink... Planning needs research shows clearly that the ability to convey the message that human. 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Beyond the purpose of this review is to focus on specific departments while ringfencing others firm experiences this could. 2008 ) aleris announces temporary shutdown of its Richmond, Virginia rolling mill facility the Recruitment and process. Cat=Cat011 & ser=ser032 & part=par276, Paul ( 2006 ) 100 % pay reduction for all Intel.. This third stage generally requires extended long-range expenditure adjustments to the first,... The first to go an important task while planning for any downsizing a. Firms resort to layoffs by default 1: framework of the cost-reduction stages is depicted in Figure 1 costs. Present time will prevent future layoffs is critical people might be able to effectively...

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