Corporate Downsizing: A Guide to Planning and Execution

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Table of Contents

Planning Considerations in Downsizing
Key Definitions
Planning for Downsizing
Execution Considerations in Downsizing
References

Planning Considerations in Downsizing

The decision to use downsizing is often dictated by external factors. Hostile market settings such as stiff competition affect a companys resources and resilience, which entails the necessity to downsize. By using a combination of research, communication, appropriate HRM techniques, and situational leadership, one can lead an organization to successful downsizing.

Key Definitions

The notion of downsizing is rooted in HRM practices and the allocation of corporate resources. According to Clair, Ladge, and Cotton (2015), downsizing is a constellation of stressor events centering around pressures toward workforce reductions which place demands upon the organization, workgroups, and individual employees, and require a process of coping and adaptation (p. 302).

Planning for Downsizing

Communication. Conveying the message about changes in corporate policies is the first step toward downsizing. It is imperative for all employees to understand the reasoning behind downsizing (Waddell, Creed, & Cummings, 2016).
Research. To perform downsizing properly, an HR manager has to study the key aspects of the selected workplace, including the relationships between staff members, the quality of communication, overall performance levels, and the extent of cross-disciplinary collaboration within teams.
Leadership. Flexibility in decision-making and the opportunity to exert a positive influence on staff members are essential aspects of downsizing since changes in the corporate setting will affect the organizational environment (Waddell et al., 2016). It is necessary to keep loyalty levels among employees the same throughout the process.

Execution Considerations in Downsizing

Prioritizing

Before undertaking downsizing as a part of the process of reducing a companys scope, one should reset the priorities and align them with the opportunities and capacities of the organization. To define the extent of downsizing and the rearrangement of roles and responsibilities that will be assigned to the rest of the staff, a companys key goals will have to be determined, including the domains of marketing, communication, and finances.

Communicating

When executing the process of downsizing, one should also establish a coherent communication system through which the corporate values, key messages, and other essential information will be shared with employees. To keep the loyalty levels of staff members high, company managers will require honest and direct communication with staff members supported by the active focus on corporate values (Clair et al., 2015). A system allowing the organization to receive feedback from its staff and shaping its strategy respectively should be created as well.

Setting Goals

Determining the expected outcomes of the downsizing process with regard to changes in the number of expenses taken by the firm is a critical stage of downsizing. Requiring careful planning and analysis, the described step will provide data for the further evaluation criteria. The application of the SMART framework will be needed to ensure that the objectives are sensible.

Implementing Changes

Once the desired effects are sketched, and the strategies for performing the downsizing are determined, the process has to be launched. Based on a strong leadership approach, preferably a situational one, downsizing should take place according to a previously drawn plan. The change should occur based on Lewins Model since the framework provides a detailed account of every step of the process (Waddell et al., 2016).

Assessing the Results

The analysis of the effects that downsizing will have brought to the organization should become the final stage in the implementation of the process. The results of the assessment will inform the decisions made further to improve the firms performance and shape the HRM strategies, respectively. Moreover, changes in the organizational behaviors and motivation of staff members will have to be studied to keep their motivation levels high.

References

Clair, J. A., Ladge, J. J., & Cotton, R. (2016). This is how we do it: How perceived prosocial impact offsets negative personal outcomes associated with carrying out necessary evils. Journal of Management Inquiry, 25(3), 301-321. Web.

Waddell, D., Creed, A., Cummings, T. G., & Worley, C. G. (2016). Organisational change: Development and transformation (6th ed.). Melbourne, Australia: Cengage AU.

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