Advantages Of Downsizing

Having discussed how the various strategies of downsizing can be implemented, attention now turns to discussing the advantages that can be derived from consulting with employees about the downsizing process. Research has shown that consultation, employee involvement and interactive communication can help ease the implementation of the downsizing process (Appelbaum et al., 2003). Cameron et al. (1991) suggested that the most effective strategies for downsizing were those that were actually recommended and designed by the employees themselves. Mishra et al. (2009) examined companies that had undergone downsizing successfully and found that those companies had focused on building trust and empowerment among their employees. Communication that

Wingate et al. (2003) propose that a downsizing process must begin with the company selecting a method for choosing which employees to lay off and which employees to keep. The method selected by the company should include criteria specifying relevant skills, abilities and knowledge that employees who are being laid off lack, and that employees who are being kept on possess (Schraeder et al., 2006). Companies can avail of various methods of reducing the labour force, including ‘Last in First Out’, voluntary redundancies, and performance assessments. Research has shown that performance appraisals are often used in selecting which employees to lay off during a downsizing process (Schraeder et al., 2006). Whatever strategy a company chooses to implement, there are two key issues that must be considered, namely fairness and organisational

The human consequences of downsizing are many and varied (see appendix b). Victims of downsizing can experience increased physiological and psychological health problems, financial and family problems (Appelbaum and Labib, 1993). Effective communication can help avoid uncertainty and ambiguity, and thereby reducing the occurrence and strength of any negative reactions towards the downsizing process. Employee participation in the downsizing process can help to promote acceptance and trust. The Human Resources Department should ensure that victims of downsizing are given advanced warning, financial advice, counseling, and outplacement services (Appelbaum et al.,