LEIDY JOHANNA ANGEL HERRERA. Updated 26 October Transcript. BENCHMARKING,DOWNSIZING Y RIGHTSIZING. Right-sizing, downsizing and improving the employee and employer In my experience, the following four considerations will set you and your. Downsizing, Rightsizing or Dumbsizing?: Quality and Human “American mana gement adopted quality concepts in order to cut costs and regain. international.

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Downsizing poses the immediate managerial problem of dismissing a large number of employees in a dignified manner in order to help minimize the trauma associated with downsizing. Downsizing is certainly not limited to righfsizing U. The aftermath of downsizing also places greater demands on managers to make do with less.

A trend toward outsourcing jobs overseas to countries with lower labor costs is a form of downsizing that affects some U. Corporate downsizing results from both poor economic conditions and company decisions downsizint eliminate jobs in order to cut costs and maintain or achieve specific levels of profitability. Hence, displaced workers are able find new jobs relatively easily, especially if those workers have skills that enhance the technological competence of prospective employers.

In essence, restructuring efforts attempt to increase the amount of work output relative to the amount of work input.

Karl Heil Revised by Scott B.

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Downsizing generally accompanies some kind of restructuring and reorganizing, either as part of the downsizing plan or as a consequence of downsizing. Unemployed Persons by Reason of Unemployment. Downsizings such as these are also commonly called reorganizing, reengineering, restructuring, or rightsizing. In the twenty-first century, downsizing continued after a sharp decline in the stock market early in the century and followed by continued pressure on corporate earnings in the aftermath of the September 11,terrorist attacks.

This process also enables companies with growing competitive advantages to maintain their positions in the market in the face of greater domestic and global competition, and it is the difficult but necessary result of the transition toward a global economy.


Consequently, downsizing often accompanies corporate calls for concentration on “core capabilities” or “core businesses,” which refers to the interest in focusing on the primary revenue-generating aspects of a business.

The seminal work on restructuring or reengineering, Reinventing the Corporation, by Michael Hammer and James Champy, characterizes the process as the “fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service, and speed. Besides laying off workers, restructuring efforts may involve closing plants, selling non-core operations, acquiring or merging with related companies, and over-hauling the internal structure of a company.

Hammer, Michael, and James Champy. Companies in these industries, like those in the auto industry, suffered from higher per-unit costs and greater overhead than their Japanese counterparts due to lower labor productivity and a glut of white-collar workers in many U. Suggested alternatives to downsizing include early retirement packages and voluntary severance programs. Economists point out that despite the downsizing that has become commonplace since the s, overall U.

In addition, downsizing may stem from restructuring efforts to maximize efficiency, to cut corporate bureaucracy and hierarchy and thereby reduce costs, to focus on core business functions and outsource non-core functions, and to use part-time and temporary workers to complete tasks previously performed by full-time workers in order to trim payroll costs.

For some sectors, this trend is projected to be particularly prevalent throughas shown in Table 2. Downsizing appears to be an ongoing practice for the foreseeable future.

Downsizing has repercussions that extend beyond the companies and their employees. Some studies have indicated that the economic advantages of downsizing have failed to come about in many cases, and that downsizing may have had a negative impact on company competitiveness and profitability in some cases.


Type the code shown: In other words, despite the admitted discomfort and difficulties that downsizing has on displaced workers, some workers are able to locate new jobs and companies are able to achieve greater efficiency, competitiveness, rightsizng profitability. Other articles you might like: Hence, these efforts frequently have mixed results.


Only a small percentage of this cost difference could be attributed to labor costs, however, but labor costs were among the first to be cut despite other costs associated with the general structure of the auto companies and their oversupply of middle managers and engineers.

Harper Business Publications, Occupations with the Largest Job Decline, Therefore, reports used for communication between layers of the old corporate hierarchy, for example, can be eliminated.

In essence, they downsized because they lacked new products that ddownsizing have stimulated growth and dosnsizing their existing product markets were decreasing.

To remedy these problems, U. Advocates of downsizing counter critics’ claims by arguing that, through downsizing, the United States has maintained its position as one of rigbtsizing world’s leading economies. Downsizing refers to the permanent reduction of a company’s workforce and is generally associated with corporate reorganization, or creating a “leaner, meaner” company.

Because of the possible negative effects that occur after downsizing, managers may have to implement measures to counteract employee apathy, improve customer service, and restore employee trust.

These jobs are not actually eliminated, but instead moved out of reach of the employees who lose their jobs to outsourcing.

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While layoffs are a customary measure for companies to help compensate for the effects of recessions, downsizing also occurs during periods of economic prosperity, even when companies themselves are doing well. Advocates of downsizing also argue that job creation from technological advances offsets job declines from downsizing.

As a major trend among U. In contrast, announcements of downsizing are well received in the stock markets. Show my email publicly.