Downsizing Model Essay

CHAPTER 1: INTRODUCTION

1.0 Introduction

Norley et al. (2001) defines the restructuring of an organization as a move to re-organize the different aspects of legal, ownership, operational or structures of an organization, so that it is better organized for the challenges and present business needs, while ensuring profitability. Other reasons that may lead to restructuring may include change of ownership or ownership structure, demerger, or a strategy in response to a crisis affecting the business such as bankruptcy, repositioning or a buyout. An organization that is restructured effectively will, in theory be a much leaner and a more efficient in its operations, better organized and more focused on its core business, within the scopes of the

Such signs include occurrence of a significantly over or under staffed organization, inconsistent organizational communications, fragmented and inefficient process and technology, and/or innovation that may be creating ineffective and inefficient changes in workflow and production processes. There will also be a need to restructure when new skills and capabilities are needed to meet new, current or expected operational requirements, when accountability for results are not clearly communicated, and when results measurement become subjective and biased, which results in increased turnover, stagnant workforce productivity or deteriorating morale.

The aim of the study was to research a downsizing model which is effective as one of the options of strategic intervention to bail the organization out during the difficult time of economic downturn. The study target to uncover the effective approach an organization may take during downsizing and to know the key initiator that management chooses to downsize. Data, through questionnaires is gathered from HR practitioners, survivors and victims of the restructuring process, to build a framework on their opinion of

Determinant facilitation factors towards a good downsizing exercise?

3. Major important elements in determining the success of downsizing?

1.4 Operational Definition

Restructuring is defined as a significant modification or changes that is made to the debt, operations or structure of a company. It is usually a corporate way of responding to the current needs of the organization in instances where there are a significant problems in a company, which causes some form of financial harm and putting the overall business operations in jeopardy. The ultimate aim of a restructuring process is to ensure the organization is able to eliminate financial harm and improve the business bottom line.

Rationalization involves the reduction of production capacity or product lines. Some of the regular approaches are withdrawing from locations which are suffering from declining location advantage, simplification of organization portfolio and divesting peripheral or unprofitable activities to maintain cost competitiveness.

Downsizing is a business strategy designed to improve the financial performance of an organization by reducing and changing the structure of the workforce in order to improve efficiency and operational