Changes and Impact of Downsizing at Oz Industries

This document discusses the changes and impact of downsizing at Oz Industries. It covers the reasons for the new direction, the repercussions for the organization, ethical and HR issues that may arise, and how the changes will impact current employees.

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Question 1  Identify the changes at Oz Industries and determine the reasons for the
new direction
Answer 2  At Oz industries, the senior level management has been concerned about the
financial losses that the company has incurred of late. As a result, the management has been
implementing a number of changes in the field of human resource management. The
company has become aggressively focused on performance and profits and is giving a greater
priority to employees having a greater potential over those who have been with the company
for a long period of time. The new direction of the company is aiming more at increasing the
profitability while its focus from human resource management is shifting. As a result, the
company has bene implementing a number of changes in the workplace.
Question 2  Describe the issues which contributed to Carmelita’s position being made
redundant. What are the possible repercussions for the organisation.
Answer 2  Carmelita had been working as a personnel and administration manager with Oz
industries but was recently promoted to the post of a human resource manager and was given
an insurance that her job was going to be secure. The financial losses incurred by the
company lead to the senior level management introducing certain changes in the workplace.
The management has started to downsize its workforce and is focusing aggressively on
performance and goal setting. The company has also stopped giving an importance to its
relations and loyal employees whereas it is giving a priority to younger employees that have a
higher potential. The changes have not been sitting well with Carmelita herself and she has
started asking questions from the senior level management. Further, she has also started to
talk about her negative feelings and frustration openly with the long-serving colleagues,
which has led to her post being considered as redundant by the senior level management.
The repercussions of making Carmelita’s post redundant can be harmful for the organisation.
The organisation might get into legal trouble for not having a solid ground for dismissal of an
employee or for not providing an advance notice (MacDonald, n.d.). In case of such a
dismissal, the organisation might also have to pay an additional compensation to an
employee, who is being dismissed because of a restructuring initiative (Rogers & Johnston,
2015). Furthermore, such an action on the company’s behalf can lower down the morale of
the remaining employees as they would become insecure about their jobs (Heathfield, 2018).
Question 3  What ethical and HR issues may arise to challenge the proposed changes?

Answer 3  Downsizing is never easy for business organizations as well as for the
employees. It can have a long-lasting impact on the company, on the employees asked to
leave and also on the remaining employees. The ethical and HR issues related to the changes
being made at Oz industries are discussed below:
Ethical issues:
- Terminating employees during a downfall can be against the corporate social
responsibility of a company (Freeney, Fu, & Harney, 2018).
- At times, terminating an employee can be a breach in the psychological contract
- The basis on which an employee is selected for being terminated can also be an
ethical issue (Cohee, 2019)
HR issues:
- Terminating an employee without a proper notification can prove to be a challenge
- Terminating an employee against the clauses or criteria mentioned in the employment
contract can be another human resource issue
- Downsizing of the workforce can have an impact on the morale, motivation and
performance level of the remaining employees (Ashe-Edmunds, n.d.)
Question 4  How will the changes impact on current employees?
Answer 4  Downsizing can have a huge impact on the remaining employees as well as on
the outgoing employees. Some of the effects that the workplace changes at Oz industries
would have on the employees are discussed below:
- The current employees would develop a feeling of job insecurity and would spread
the negativity amongst the other employees as well (Zorn, Norman, Butler, &
Bhussar, 2017)
- The employees would become less committed to their companies and would leave the
company as soon as they find a better job that can also offer them job security
- Making the performance management system too rigid might foster a wrong behavior
amongst the remaining employees (Affum-Osei, Acquaah, & Acheampong, 2015)
- Being biased towards younger employees might increase job dissatisfaction amongst
the talented employees that have been serving the company since a couple of years
(Andreeva., Brenner, Theorell, & Goldberg, 2017)

Question 5  Based on the topics you have studied, explain how the restructure could
have been better managed: a. What additional initiatives could be proposed in order to
avoid resignations and redundancies. b. How would these benefit the organisation
Answer 5  Downsizing is never easy in the contemporary business world, which makes it
important for business organizations to look for alternative strategies. Some of the strategies
that could have helped the company are:
- Cutting down on the compensation and benefits of the employees for a short period of
time, which would help in bringing down the operational costs (Datta & Basuil, 2015)
- Instead of terminating employees, the company can arrange for training or
development programs for their employees that would allow them to prepare new
resumes and look for new jobs (Workforce, 2001)
- Oz industries can also get in touch with other companies that are closely related to it
and can redeploy its employees in those companies rather than terminating them and
leaving them unemployed (Redman, 2016)
Such strategies would not just make the process of downsizing easier for the employees but
will also save the company from staining its reputation as an employer.

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