Downsizing: Why Some Programs Succeed

Downsizing: Why Some Programs Succeed and Others Fail

In the midst of an unstable economy and financial crisis, some American firms are having to resolve to serious measures to keep afloat nowadays. Out of the many ways to consolidate and cut costs, downsizing a firm or company proves to be one of the most drastic, for it places the future and well being of firm employees in jeopardy. However, as more and more businesses see the end of the line coming way too soon, they have turned to the practice with some successes and some failures. Some companies are successful in their efforts to downsize because they implement the practice responsibly and with visions of a stronger future.

The act of downsizing is almost as old as business itself. According to business literature, "Downsizing refers to a company's decision to reduce its workforce for reasons other than poor performance, criminal conduct, or unethical behavior on the part of those being let go," (Weinstein 1). Thus, in order to cut prices of production, production is minimized and employees are let go. Although this s detrimental for the laid off employees, it does provide some hope in the future for the company as a whole. Yet still, "No matter how strong the justifications for reducing the workforce are or seem to be, laying off loyal and productive employees is an upsetting experience for all concerned, and those on the receiving end face not just financial but psychological injury," (Weinstein 1). Therefore downsizing must be conducted only in times calling for desperate measures. When it is necessary, the practice can prove either detrimental or successful in keeping the company afloat.

In many cases, the act of downsizing, is a gloomy omen for future bad times. In the history of American business, the last resort of downsizing can upset employees still kept on board and limit the productivity potential of the company as a whole. In fact, recent research studies, which overviewed the downsizing of 122 American firms, have statistically analyzed the success or failures of those firms after the downsizing had occurred, (Vermeulen 1). Overall, it was clear that downsizing, as a last desperate act, failed to yield the results the firms had counted on. This research showed that "The average company did not benefit from a downsizing effort, no matter what situation and industry they were in," (Vermeulen 1). Downsizing has negative side effects on the workplace and labor force. Those who were still kept on board rove unsure about the future stability of their own jobs leading to higher turnover rates and decreased employee satisfaction, "Voluntary turn over rates increased significantly after a downsizing program," (Vermeulen 1). Unhappy workers means unproductive workers, and this is one of the most challenging aspects of successfully implementing a downsizing plan.