(3) Downsizing causes additional financial burden on the company in terms of hefty separation pay, accrued earned and medical leave payment, pension benefits, and administrative costs. (2) Downsizing damages the reputation of the organization. Irrespective of the name used, it almost always means reducing the size of the organizations permanent full-time staff. However, large scale secondment is not possible in many cases. Most of the organizations rely on HR personnel to sell the idea of downsizing to the employees. Outplacement is a good method for implementing downsizing strategy as it involves much lesser cost as compared to its alternatives and saves the organization from bad feelings of retrenched employees. It is spreading fast, and has affected many enterprises in different sectors. Do you believe downsizing is effective? 3. It also means existing employees who are kept employed will have fewer opportunities to grow and rise to higher positions within the business. 7. Though the objectives of secondment extend beyond effecting downsizing strategy like employee development, filling key positions by secondees’ organization, etc., it can also be used as a method of implementing downsizing strategy. Career development involves those personal improvements that a person undertakes to achieve a personal career plan. During a downsizing, there’s an almost unquenchable thirst for knowledge, as well as feelings of anger, fear and uncertainty. This cannot be achieved in short span of time but needs to be taken care of during the performing time itself. The term downsizing means lowering down of size of an object. They have resorted to downsizing (or right sizing) and say good bye to the surplus staff by offering them ‘golden handshake’ under the Voluntary Retirement Scheme. It might impact some workers who would leave but those who stay back are the loyal team who the company relies on. Results in bringing transparency – Downsizing companies would need to make results transparent for the employees to see the real trends. Downsizing involves organisational restructuring which results in decreasing the size of the organisation leading to a flat organisation structure so as to respond more readily to the pace of environmental changes. Copyright 10. Downsizing is a process of laying off people wherein the laying off could be permanent or temporary. Content Filtration 6. “What Is Downsizing?” The Balance Careers. Outplacement is an effort made by a downsizing organization to help its redundant employees to find jobs outside the organization. Reasons 4. Rightsizing is thus a proactive action and not the reaction to the external forces. Outplacement fulfills this need. Human Resource Management Definit ion s – Explained! In this context, HR personnel should prepare a long-term plan indicating the human resource requirements over a period of time. When two companies merge together, the companies need to restructure in order to meet their new needs. (4) Downsizing improves the competitive ability of an organization. Downsizing occurs for a number of reasons, most often to save money. “. Helps in running business at optimal level – Downsizing actually brings in cuts and changes to all the departments in the organization. A downsizing plan must indicate the following: ii. Also known as ‘early retirement buyout’, ‘VRS’, or ‘golden handshake’, this method is widely used to encourage senior workers to leave the organization early. Recently, many organizations, under the pressure of the global economic recession, downsized their organizations by laying off or retrenching employees. Organizations which opt for downsizing may implement it in many ways. This way the profits increase and the company is said to perform under lean management. Permanent l h layoff is called redundancy. The term downsizing has virtually the same meaning. Downsizing Definition Downsizing is a strategy designed to reduce the number of employees in the workforce, often with the aim of improving organisational performance and selectively decreasing costs (Sheaffer et al., 2009). The meaning of attrition in a work environment refers to a reduction or decrease in the size or strength the work force, or a gradual reduction in labor occurring through means other than firing employees. Automation, computers, and the internet have changed the way business operations are carried out. Downsizing, rightsizing, smartsizing 1. Citigroup, an American financial company, axed 52,000 jobs globally, and its Indian arm, Citi India, laid off 37 employees, including senior executives. Downsizing as a strategy has been adopted throughout the world to achieve operational economies and increase efficiency to be able to survive and grow in the wake of uncertain environment and cut-throat competition. The company decision making is affected because the opinions and input of those departing employees will be missed. 6. It is a practice devised to maximize the performance of employees, i.e. Downsizing is a process which comes as a reaction when a company suffers from a depressing phase of having losses and not profits, and instability. As such, organizations assets include the employees that provide a viable advantage to the said organization. HR needs to identify the problems that workforce reductions are expected to solve, develop reliable selection criteria, and consider how the layoffs will impact the company as a whole in the long run. Downsizing or layoffs is the term used to refer to the practice of firing employees for various reasons in organizations. A layoff is the temporary suspension or permanent termination of employment of an employee or, more commonly, a group of employees (collective layoff) for business reasons, such as personnel management or downsizing (reducing the size of) an organization. HUMAN RESOURCE MANAGEMENT ( H R M ) Definition 1 – Integration “HRM is a series of integrated decisions that form the employment relationships; their quality contributes to the ability of the organizations and the employees to achieve their objectives.” Definition 2 – Influencing “HRM is concerned with the people dimensions in management. Thus, rightsizing is a broader mix of cost cutting strategies whereas downsizing focus is on labour reduction.