Downsizing Is a Common Occurrence

downsizing is a common occurrence in corporations across the globe. While it may help the firms in re-strategizing and cost cutting, this sudden loss of job can be very damaging for the terminated employee. Firms often fail to realize that downsizing doesn't have to clash with human resource building and that if done correctly; it might protect employees from emotional and psychological damage that they experience when they are suddenly shown the door. In a research article by Nadia Labib and Steven H. Appelbaum, the authors express their frustration with corporations' lack of understanding about the effects of downsizing. They maintain that in the absence of human resource building measures, downsizing directly translates into "a marked drop in employee morale and productivity" which they feel can prevent "organizations from realizing their strategic objectives."

The authors indicate that downsizing is a problematic issue. Its failure and success are both debatable since the human cost is vaguely discussed when employees are suddenly robbed of their means of livelihood. Since firms do not take into account the "psychological, social, and financial effects" of downsizing, they fail to take appropriate measures for human resource support and building hence lending seriously negative connotations to the phenomenon. And it is not only the terminated employees who suffer, the authors feel that "downsizing has a major impact on surviving employees as well as on the organization itself, both strategically and operationally."

The article discusses the human resource components of downsizing at length. These components include such critical issues as which employees to terminate, how will they be terminated, when will the notice be issued and exactly what will be the criteria for selecting employees for termination. Researches and studies agree that criteria must be crystal clear. The employees should be treated with justice so that they know why their termination is justified. It will also give the remaining employees some sense of security. Citing some researches, the authors maintain that, "the criteria used in selecting employees to be terminated must not only be clear and appropriate, but must also be perceived by all employees to be clear, appropriate, and fair. This is especially true of surviving employees as, according to Greenberg (1990), survivors are in a unique position to judge the fairness of terminations and that they respond positively to this perception by becoming more committed to the organization." This is an interesting point but one that is largely ignored by the firms. If you are too busy cutting down number of employees, you might totally forget about the remaining employees who are key to the success of the firm in this situation. They should know why they survived downsizing and the only way to achieve this to make the criteria clear and communicate it to everyone involved.

The psychological and emotional impact, which is well documented, aggravates in these times of technological advancement. What firms fail to understand is that employees have certain knowledge, skills and abilities (KSAs) for a job and may have not been updating their skills since they had what they believed to be a 'permanent job'. When they lose their jobs involuntarily, especially in days of rapid technological change, they find themselves with fewer KSAs and may now need to acquire new skills in order to be able to get a new job. The authors feel that this is "very true in the current climate of accelerated technological development. Terminated employees find they are no longer as marketable as the last time they had to search for a job and that they need a certain amount of retraining to acquire new KSAs. They face the problem of having to investigate the new KSAs required to find re-employment." What firms could have down was to lend support for acquiring new skills. They could provide employees with appropriate training from time to allow them to gain new skills that would have helped after termination. Or they could simply help them understand that they would need new KSAs and help them acquire them during the downsizing process.

Even worse can be impact on the families of terminated employees. When firms fail to invest into human resource support and building, this results in serious shock not only for the terminated employee but also his family. Citing a research, the author argue that wives of such employees suffer too but are often neglected. The research finds that they are often "ignored as a victim of the job loss experience. They contend that a wife progressively experiences shock, anger, shame and embarrassment, anxiety and fear, depression, stress, betrayal, and, finally, guilt at feeling all of these. These are only some of the effects that wives actually experience along with their husbands and family after a husband's job loss."

The authors have also focused on the effects of downsizing on surviving employees. They contend that when human resources are not properly developed and not much is done to make the criteria or the downsizing process clear, it can result in damage to surviving employees as well. This we must not forget later affects organizational goals and objectives. Citing literature available on the subjects, the authors explain that "survivors are usually not informed or are misinformed about many issues, such as their place in the newly structured organization, expected performance standards, the key people in existing networks either leaving or changing, extra work demands, the value of their expertise to the new organization, and the existence or lack of opportunities for advancement. These are further compounded by financial and job insecurities."