Restructuring and

downsiging

 Q.1
DEFINITION of 'Restructuring'
A significant modification made to the debt, operations or structure of a
company. This type ofcorporate actionis usually made when there are
significant problems in a company, which are causing some form of
financial harm and putting the overall business in jeopardy. The hope is
that through restructuring, a company can eliminate financial harm and
improve the business.
DEFINITION of 'Downsize'
In a business enterprise, downsizing is reducing the number of employees
on the operating payroll. Some users distinguish downsizing from a layoff ,
with downsizing intended to be a permanent downscaling and a layoff
intended to be a temporary downscaling in which employees may later be
rehired. Businesses use several techniques in downsizing, including
providing incentives to take early retirement and transfer to subsidiary
companies, but the most common technique is to simply terminate the
employment of a certain number of people.

 Rightsizing is downsizing in the belief that an enterprise really should operate with fewer people. Dumb sizing is downsizing
that, in retrospect, failed to achieve the desired effect.
DEFINITION of 'Downsize'
Reducing the size of a company by eliminating workers and/or divisions within the company.

It is sometimes referred to as "trimming the fat".

BREAKING DOWN 'Downsize'
When a company downsizes, it is attempting to find ways to improve efficiency and increase profitability.
Five important points to downsizing
Global organisations downsize for a whole raft of reasons, and not always disconnected from the demands of shareholders.
But at the SME level it's often a financial necessity for keeping the business or department afloat. That said, it also comes
with a number of sometimes unforeseen downsides that can be exacerbated by a poorly planned downsizing strategy. For
example, whilst staff morale is always going to dip, it can be made far worse if the issue is not handled sensitively and fairly.
It also sends out messages to customers and other associated companies that you need to be aware of.
1.Total Transparency

Be transparent to staff about the difficulties that the company finds itself in, and also make any plan to overcome them as
simple, clear and fair as possible. Some companies fear that employees will panic and act irrationally if they know the true
score, but actually there is no evidence whatsoever to support this. Moreover, when companies don't tell it like it is, or try to
hold back information, employees begin speculating about what's going on and start rumours going that often make things
far worse.
2.Timing
Timing is everything. If you downsize as a knee-jerk reaction, even if it saves big money in the short term, you may be seen
as a shallow-employer and, even worse, you'll actually be unable to respond when things upturn. Moreover, purely looking
at costs without a sense of business values and an eye to the future will just define your company as a reactive, rather than
proactive one. Remember, downsizing is actually a business plan, not just a cost-cutting exercise.

 3.Plan Thoroughly
Once the situation is defined clearly and fairly, then so too should be the plan for recovery or action. Once
people understand the need for cutbacks, it's no good not having a follow up plan; otherwise it could be cynically
interpreted as a management method of keeping people working harder and fearful of losing their jobs. A
structured plan is crucial to keeping people focused on the need for downsizing, and will help towards their
acceptance of it. The process should also try to make the downsizing a singular event, rather than a number of
sequential events which will hinder the company's ability to draw a line under the cuts and move forward.
4.Allow Sufficient Time
Time is a valuable commodity, and never more than when people are being laid off. Allow sufficient time to
develop and implement a transition plan. If it is unfairly swift or poorly executed, it can cause reputational
damage and also result in legal issues. Even if you cannot offer generous redundancy packages, giving
employees plenty of notice before their last day, perhaps offering excellent references and other help as
appropriate, allows people to make their own plans effectively going forward. It may also encourage quality
employees to come back to you in the future.
5.The Personal Touch
In the final instance, the redundancy selection criteria needs to be fair and logical. Every employee (even those
not being made redundant), will soon see through something which has its own agenda or which favours certain
individuals or groups. Once the plan is implemented, redundancies should never be undertaken during times with
emotional connotations, i.e. Easter, Christmas or other such seasonal breaks. It shows a lack of feeling and
also a lack of professionalism on the part of your company.

Q.

 Downsizing refers to a process where a company or a firm simply reduces its workforce in order to cut the operating costs and improve efficiency. It has become a legitimate option for
business growth strategies, especially after the 1980s. It is in fact, the most preferred option of companies to sustain operating costs and comply with the existing scope of the business.
It is an important management venture, and requires large assistance from the human resource management team. Let's have a look at all the reasons that may compel an organization
to resort to downsizing.
Merging of Two or More Firms
When a certain firm combines its operations with another firm and operates as a single entity, in order to stay in profit or expand market reach, it is called a merger. In case of a merger,
certain positions become redundant. The same work is done by two different staff members. Usually, in such a case, the company cuts staff to eliminate redundancy in work. It is
characterized by some employees leaving an organization voluntarily, or by layoffs, especially in case of higher management positions.
Acquisition
If one organization purchases another, there is a definite change in the management, and the staff of the acquired company has to face the prospect of unemployment. The reason for
this is the same as the earlier case, viz, to cut costs and increase revenue.
Change in Management
A change in the top brass of a company can also result in downsizing. The working methods and procedures vary with different management teams. Therefore, a significant change in
the management may drastically affect the employee size, to suit a particular style of working.
Economic Crisis
This is the single biggest cause of downsizing. Often, it consists huge layoffs by a number of organizations across various domains. The recent economic recession triggered a number of
layoffs in many reputed and popular firms around the world. According to a survey conducted by the US Bureau of the Census, organizations consisting of a higher percentage of
managerial staff downsize more than the ones with a higher percentage of production process employees.
Strategy Changes
Some companies may reduce certain areas of operation and focus on other areas. For example, if a company is working on a project in which there are no assured returns, it may
downsize its employees working on that particular project. It will then focus its resources on specific projects which could be profitable ventures.
Excessive Workforce
In a period of high growth, a company hires excess staff to meet the needs of a growing business. However, in times of recession, the business opportunities dwindle, leading to the
need for downsizing of the surplus staff that was hired.
Automation
If an organization work process is extremely fast and easily meets the requirements of the market, it may downsize some of its workforce. Similarly, if manual work can be done by a
machine in a much better and cost-efficient way, that also results in the reduction in the number of employees.
Outsourcing
Organizations catering to international markets require a huge and efficient employee base. If this labor can be obtained by 'exporting' the job to other countries, a huge downsizing
takes place in the parent country. For instance, if a certain job can be done more effectively in India, and is more economically viable there than in the United States, then processes
would be shifted out to cut costs.