Wednesday, November 13, 2019
Corporate Downsizing Essays -- essays research papers
Downsizing has become an extremely popular strategy in todayââ¬â¢s business environment. Companies began downsizing in the late 1970ââ¬â¢s to cut costs and improve the bottom line (Mishra et al., 1998). The term ââ¬Å"downsizingâ⬠was coined to describe the action of dismissing a large portion of a companyââ¬â¢s workforce in a very short period of time. According to online encyclopedia http://en.wikipedia.org downsizing refers to ââ¬Å"layoffs initiated by a company in order to cut labor costs by reducing the size of the company.â⬠Downsizing became a familiar management mantra in the late 1980ââ¬â¢s and early 1990ââ¬â¢s. In fact, three million jobs were lost between 1989 and 1998 (Mishra et al., 1998). More than 350,000 jobs were lost in 2001 (DeSouza & Donaldson, 2002). Downsizing has become almost a way of life for U.S. companies. Typically, the first round of job cuts are followed by a second round of cuts a short time later. Not everyone agrees with t he reasoning behind downsizing. According to an article in the Journal of Banking and Financial Services, downsizing is merely ââ¬Å"a short-sighted business strategy motivated by arrogant CEOââ¬â¢s eager to appease shareholders (Unkles, 2001). Others feel downsizing is a necessary tool to ensure business survival in the face of a changing economy. Regardless, the costs of downsizing are high, and the payoffs of downsizing are mixed at best. This paper doesnââ¬â¢t serve as an approach to downsizing, rather, it explores the many aspects of downsizing, from when itââ¬â¢s time to downsize to what steps that can be taken to avoid the process altogether. Corporate Downsizing: An Overview à à à à à There are many reasons why a company downsizes. Layoffs began as a way for companies to offset a decline in earnings, but quickly became a popular practice even in companies that were doing well financially. A 1994 survey by the American Management Association found that two-thirds of all workers who were laid off were college-educated, salaried employees (Downs, 1995). Today, the term downsizing is used to refer to a narrow effort to reduce the workforce and also to broaden efforts to improve work systems or redesign the total organization. Companies may downsize to increase capital, as a result of a merge with another company (where additional staff are not needed), poor cash flow (which results in payroll issues), changes in technology, and lastly due to a chang... ...k Enterprise. Retrieved April 22, 2009, from http://www.findarticles.com Downs, A. (2005). Corporate executions: the ugly truth about layoffs-how corporate greed is shattering lives, companies, and communities. New York: AMACOM-American Management Association. Hoskisson, R., & Hitt, M. (2004). Downscoping: How to tame the diversified firm. Oxford University PR on Demand. Krepps, M. (2007). Industrial inefficiency and downsizing: A study of layoff and plant closures. New York: Garland Publishing. Mishra, K. E., Spreitzer, G. M., & Mishra, A. K. (2008, Winter). Preserving employee morale during downsizing. Sloan Management Review. Unkles, j. (2009). The downside of downsizing: after almost a decade of surging economic growth and booming share markets, many corporate and financial managers are getting their first look at a downturn in the business cycle. Journal of Banking and Financial Services, 115(6), 2. Retrieved April 22, 2009, from Baker College Web Site: http://web2.infotrac.galegroup.com Zimmerman, E. (2007, November). Why deep layoffs hurt long-term recovery (HR's tools for recovery). Workforce. Retrieved April 20, 2009, from http://www.findarticles.com
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