Pros And Disadvantages Of Downsizing

In the face of slowing or declining sales, companies often downsize their employee base as a means of cutting costs to boost profitability. Although Downsizing is effective for significant cost reduction, it often produces unintended side effects, such as damaged employee morale, poor public relations, future rightsizing hiring costs and an inability to capitalize quickly on opportunities when the economy improves. Skillful Downsizing should help a company emerge from challenging economic conditions in stronger shape. Creative efforts to avoid Downsizing include hiring freezes, salary cuts or freezes, shortened workweeks, restricted overtime hours, unpaid vacations and temporary plant closures. When Downsizing proves unavoidable, the ultimate

This decrease may be due to competitors gaining a larger share of the available consumer market, or economic downturns that cause consumers to focus more on necessities and less on any luxury items. In both situations, the lack of demand means that the corporation can no longer continue to operate with the same level of expenses and remain solvent. Thus, the company is likely to limit or shut down some portion of the manufacturing facilities in order to adjust to market demands. This usually means that hourly employees and managers will be laid off for an undetermined amount of time or let go

Severance packages sometimes take some of the sting of a layoff out of the picture. Many companies who go through a downsizing process make efforts to fund job retraining programs for their former employees, while others actively seek to identify other employers who would be interested in hiring some of the laid-off work force. People who have been laid off due to corporate downsizing sometimes use the event as a springboard into an entirely new career or line of work, one that ultimately proves to be more personally fulfilling as well as more