Companies operate in an environment full of differing challenges. The current operational business environment is very dynamic and competitive, and it calls for organization structure to be very flexible to accommodate changes within the environment to suit the dominant operation, change or strategy in the environment. This, therefore, means that personnel such as the human resource managers need to be very vigilant to ensure that such changes if any are implemented in a way that they bring about a positive impact to the organization. Due to the issue of peak and off-peak season, and many other factors such as cost reduction strategies, many businesses prefer reducing the size of the organization when the company is faced with changes in its operational environment which forces it to lower the cost operation to make any meaningful positive returns. This is where strategies such downsizing are mentioned. Downsizing is a management strategy and an effort to have the organization use of capital resources and human resources reduced for the organization to correct misalignments and to have the organization performance increased. These strategies work for some organization, however, in some situations; it has been pointed out many times that it fails. Downsizing is a very critical and delicate management strategy; it depends on the approach and the management effort to makes it succeed or fail within the organization.
Downsizing
Challenges in an organization are inevitable since the operational organization environment is very dynamic. Managing changes need strategies such as reducing the number of employees on the payroll to have the organization run smoothly and efficiently within the necessary cost. However, it has to be noted that no organization usually lay off other workers due to their wish, organization are forced with circumstances surrounding the business to downsize the employees to achieve the business objective under strict or unfavorable environment. Downsizing is usually the last option for some organization due to the instability it brings with it in the organization (Sitlington & Marshall, 2011). It brings about the restructuring of the organization in regards to changes in the duties, operation, salaries and many others. It is also characterized by fear, unrest, reduction in concentration for the employees and many others. However, sometimes, this seems to be the only way to achieve the business aim at given situation.
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Downsizing is done in an organization to achieve some specific objective within the firm. The first reason is to reduce the cost of the business operation. The payroll is one of the most significant liabilities in the organization and contributes a major part to the reduction of the organization's equity. Reducing the number of employees when an organization seems to be heading to the wrong path helps in reducing the cost. Downsizing is also done to achieve high production at low cost. The last reason why some organization downsizes the employees is to outsource others. Outsourcing in has been on the trend for the organization to be culturally oriented. To add other employees to the organization, some companies downsize the current employees (Mellahi & Wilkinson, 2010). Downsizing is associated with any advantages to the enterprise. First, it reduces the operational cost to the enterprise, and alternatively, it is a tool for the organization reputation sustainment. Moreover, it offers the company a chance to re-evaluate itself, and lastly, it enhances decision-making.
Why downsizing work on other organization and fails on others
The downsizing success is very selective. It is not a mandatory for this critical strategy to work in any organization which decides to use it as a strategy to streamline its operation. The success of downsizing depends on many factors which the organization puts in place to complete support or boosts it. The success of this strategy depends entirely on the organization approach, preparation to have it function well within the organization, the involvement, the leadership of the organization, communication and the implementation strategies. These factors are different from one organization to the other, and the way an organization is organized to have the factors looked at before; during and after downsizing have a huge influence on its success or failure. There are several reasons why an organization may succeed with downsizing while another one may fail in the same process.
Approach
The approach is the organization plan to carry out downsizing. How human resources manager approaches this critical strategy will either make them succeed or fall flat. First, the organizations which approach downsizing as a long-term strategy and makes it look like a way of life usually manage. This organization anticipates challenges which the organization often faces at a particular time and makes downsizing part of the organizational strategic plan. On the contrary, managers who approach downsizing as one day or one moth program mostly fall flat and the strategy ends up causing confusion and unrest in an organization. The rationale behind the failure is that the survivors of the downsizing are usually shocked at the action, and their position within the organization is threatened with the organization decision. Such employees end up losing concentration, and hence their productivity reduces.
Secondly, the organization which approaches downsizing as an opportunity for improve usually succeeds. On the other hand, an organization which approaches this strategy as a reaction to the threat within its environment often struggles to make it successful. Downsizing should be a strategy to make an organization achieve its objectives within unfavorable conditions. For instance, it should be done when the organization so facing a lot of competition; there is an increase in the cost of supply, there are an off-peak season and many others as a strategy to improve production, reduce the cost of operation and enhance organization value and reputation. If used with this intention, the organization will always succeed. Those organizations which downsize their employees to react to the threat in the organization environment usually fail. The threat can be due to high competition which has reduced sales, increase the quality of products in the market, reduction in market prices and many others. Such organization reduces the number of employees since they have panicked and hence may not know the department within the organization which should retain its current employees and the employees are of surplus to the requirements.
Preparation
Preparation matters in downsizing. Preparation, therefore, is one of the factors which will either make an organization succeed or fail in downsizing. An organization which prepare for this process early enough usually achieve with it. These are the organization or managers which anticipate a problem and have it in their plan rather than waiting until the process is mandated. Such managers usually identify the position where the change may be necessary than have contract agreements with employees working in that department that when it reaches such period, their contract expires. However, other human resource managers are poor at anticipating problems which may face organization in the specified department at a particular time. Such a manager waits for such issues to occur or crucial moments to occur where it is mandated for downsizing to take place. This manager waits for situations where ready for fire is necessary for the organization. Such organization fails since they create a lot of tension and state of unrest and fear which reduces the worker's concentration and hence lower their rate of production within the organization. Such states have also been associated with workers strike and role conflicts in the organization and hence they organization fails flat to achieve the primary purpose for downsizing.
Also, downsizing objectives are only obtained by the organization or managers which identify the future organization mission, its structure and the core competencies which will achieve the organization mission actually via the core competencies as a way of having the downsizing strategies developed. However, the organization which formulates the downsizing plan based on merely headcount targets get confused with the strategy and end up failing at last.
Involvements
The organizations which achieve the targets when using downsizing as a strategy usually involve their employees in identifying the positions which they think need changes. Such is the organization which collects data through interviewing staff in areas they suspect to have an issue and also distribute questionnaire and survey forms to gather data on the view of the employees in the position they think have issues. They then use the data from the employees to identify where and who need to be replaced or which department needs to have fewer employees for the organization to achieve its objectives. On the other hand, that organization which imposes change or downsizing strategies from the top may not know exactly where the changes needed. They may not know who may is very important at certain department and whose importance in the departments is insignificant (Chipunza & Berry, 2010). Such organization may end up firing their best employees or their most valuable employees and may end up jeopardizing the entire department operations. This kind of managers or organizations usually fails to realize the aim of downsizing and may end up on the losing end. Moreover, downsizing is always successful in an organization which involves their stakeholders such as suppliers, customers and others in knowing exactly where change is needed. These organizations include their most trusted clients and supplies in designing and suggesting areas where the organization should improve. The managers then react by adjusting to the improvement by reducing the number of employees and outsourcing others if necessary. However, those organizations which focus only on the internal environmental factors while undertaking to downsize sometimes get it wrong. Lastly, the downsizing should not be a blame game in the organization; every employee should be held accountable for it. The goal for downsizing should not be shouldered on the management only, in this case, its risk failing. The goal should be a shared responsibility where every person within the organization shares responsibility.
Leadership
Downsizing success also receives a boost where the leaders take it upon themselves to get in touch with those who are affected by the strategy. The leaders within the company ought to interact, and physical hold talks with those affected by downsizing to encourage them and make them understand the situation. This is very important in wiping away the uncertainties and fears among employees. However, in an organization where the leaders avoid, internationally inflict pain, and discomfort on affected employees risk losing it and may not achieve the intended objectives since, this may lead to frustration, fear, and low concentration among the employees (Cummings & Worley, 2014). Moreover, the leaders may also initiate strategies to motivate workers who are affected by the issue of downsizing and those who have survived the strategies to reassure them of their position within the organization, encourage them and help them stabilize within the organization. However, in an organization where leaders ignore employees after downsizing others and sit back like nothing have happened always find it difficult to have employees reassured of their position and, may end up on the losing side.
Implementation
Putting downsizing plan into action is another challenging issue, and it set a part organization and how they either fail or succeed in this mission. The organizations which succeed with downsizing strategy usually implement it differently from others. Such organizations implement a broad array of strategic downsizing which is inclusive of systematic strategies such as culture and design strategies; they don't rely on a narrow aspect of the downsizing as this leads to failure (Iverson & Zatzick, 2011). Also, such organizations ensure that downsizing strategies impact is felt equitably by all employees not only a section of the employees. This is done to ensure that the minority group does not feel some kind bias, on the other hand, the leaders or organization which implements this strategy in a biased manner usually fails to make it count and the objective of the entire process is often jeopardized.
The downsizing strategy success or failure in an organization depends on its strategies, implantation, approach and management of the process. Downsizing is a very critical process. It helps an organization achieve its objective in the unfavorable environment. It is a strategy which when done well helps in improving productivity, reducing costs and helping the entire organization achieve its goal despite the challenges it faces in the operational environment. However, some organizations succeed in their downsizing goals while others fail due to the way they handle the process from planning to implementation.
References
Chipunza, C., & Berry, D. M. (2010). The relationship among survivor qualities-attitude, commitment and motivation-after downsizing. African Journal of Business Management , 4 (5), 604.
Cummings, T. G., & Worley, C. G. (2014). Organization development and change . Cengage Learning.
Iverson, R. D., & Zatzick, C. D. (2011). The effects of downsizing on labour productivity: The value of showing consideration for employees' morale and welfare in high‐performance work systems. Human Resource Management , 50 (1), 29-44.
Mellahi, K., & Wilkinson, A. (2010). A study of the association between level of slack reduction following downsizing and innovation output. Journal of Management Studies , 47 (3), 483-508.
Sitlington, H., & Marshall, V. (2011). Do downsizing decisions affect organisational knowledge and performance?. Management Decision , 49 (1), 116-129.
