ASSIGNMENT ON DOWN SIZING

Prepared by : Bharti A Jogdhankar

Submitted to : Prof. Megha Mahajan

DOWNSIZING
QUESTIONS
1. 2. 3. 4. What is down sizing? What are the reasons for downsizing? What are the strategies for down sizing What are the after effects of downsizing on company and on employees? 5. How can down sizing be made more effective? 6. How to tackle the evil effects of downsizing?

What is down sizing?

There are various definitions for downsizing. Some of them are : 1. Downsizing is a cutback in a company's operations and usually implies a reduction in its employee headcount as well. 2. Downsizing is a commonly used euphemism which refers to reducing the overall size and operating costs of a company, most directly through a reduction in the total number of employees.

What are the reasons for downsizing?

The various reasons why a company downsizes its employee base: 1. Merging of two or more firms. 2. Acquisition 3. Change in Management. 4. Economic Crisis. 5. Strategy Changes. 7. Excessive workforce 8. in efficient work flow and computerized services. 9. Outsourcing practice.

What are the strategies for down sizing

There are the three distinct type of implementation strategies they are Workforce reduction strategy Examples :-Natural attrition Hiring freeze Early retirement Buyout packages Layoffs Retrenchments

What are the strategies for down sizing

Organisation Redesign Strategy Examples Abolition of functions Merging of units Job redesign De-layering Reducing overall work hours Systematic Strategy Examples Staff involvement Simplification of processes Bottom up change Continuous improvement

What are the after effects of downsizing on company and on employees?

Downsizing effects: Overall Mixed effects on firm performance: some short-term costs savings, but long-term profitability & valuation not strongly affected. Firms reputation as a good employer suffers. Example: Apple Computers reputation as good employer declined after several layoffs in 1990s. Downsizing forces re-thinking of Employment Strategy. Lifelong employment policies not credible after a downsizing. Example: IBM abandoned lifelong policy after several layoffs in early 1990s.

What are the after effects of downsizing on company and on employees?

Downsizing Effects: Employee Morale Employee motivation disrupted: increase in political behaviors, anger, fear - which is likely to negatively impact quality of customer service Violation of psychological contract, leads to cynicism, lowered work commitment, fewer random acts of good will Survivors experience more stress due to longer work hours with redesigned jobs, and increased uncertainty regarding future downsizings Downsizing Effects: Workforce Quality Many senior employees leave due to application of early retirement incentives: result is loss of institutional memory. The use of voluntary workforce reductions (buyouts) results in the most marketable employees leaving (stars) -- difficult to control since all employees must be legally eligible to qualify. Early retirements & voluntary reductions often result in too many people quitting, and some are hired back as consultants at higher cost to firm.

How can down sizing be made more effective?

Following are the key factors for successful downsizing: Formulation and communication of a proper planning and downsizing strategy. Communication is a primary success factor of effective downsizing program. Support of senior leaders. Employees expected senior leaders to communicate openly and honestly about the circumstances the company is facing. Incentive and compensation planning and effective monitoring system.

 Many organizations encouraged employees to voice their ideas, concerns or suggestions regarding the downsizing process. According to them , employee inputs contributed considerably to the success of their downsizing activities as they frequently gave valuable ideas regarding the restructuring, increase in production, and assistance required by employees during downsizing Advance planning for downsizing also contribute to the success of a downsizing exercise.

How to tackle the evil effects of downsizing?

Offering flexible work arrangements to their employees which will result in Increased morale and productivity Decreased absenteeism and employee turnover Reduced stress on employees Increased ability to recruit and retain superior quality improved service to clients in various time zones. Better use of office equipment and space Gives More time to pursue their education hobbies,professional development and handle personal responsibilities

Introducing the concept of contigent employment Hired directly by company or through external agency on contract basis. No retirement or health benefits payment Not covered under employee handbook