HRM Case Study: Examining Downsizing Strategies and Consequences

This case study analyzes the increasing trend of employee downsizing in the early 21st century, exploring its negative impacts on both employees and organizations. It examines best practices for managing downsizing, including strategies for coping with job loss and seeking new employment. The study also discusses the use of contingent employment and flexible working arrangements as alternatives to minimize the adverse effects of downsizing. It highlights how companies adopted downsizing to improve productivity and competitiveness, yet often faced challenges such as reduced employee morale and loss of valuable skills. The analysis covers various downsizing methods, including compulsory termination, attrition, and voluntary retirement, and emphasizes the importance of leadership, communication, training, and motivation in implementing effective downsizing strategies. Ultimately, the study aims to understand the reasons behind downsizing and its wide-ranging impacts on the global workforce and organizational performance.

Human Resource Management

Table of Contents
Executive summary .............................................................................................................................3
INTRODUCTION................................................................................................................................4
Summary of the Case study..................................................................................................................4
Background of the case study...............................................................................................................4
Statement of problem ......................................................................................................................5
Research Questions..........................................................................................................................5
Description of the situation .................................................................................................................5
Analysis of the case .............................................................................................................................6
Findings form the analysis and recommendations...............................................................................7
Recommendations : .............................................................................................................................7
Conclusion ...........................................................................................................................................7
REFERENCES ....................................................................................................................................9

Executive summary
The case analyses the increase in the employee downsizing around the world in the early 21st
century. The case discusses the downsizing concept briefly and also identify the negative and
possible effect on the employees as well as organisations. The case also analyses the best practices
with regards to downsizing and the various steps downsizing requires and overcome trauma of
being downsized or to search other jobs. It also describes the theories and concepts such as
contingent employment and flexible working arrangements that are utilised by various organisation
to reduce or eliminate the impact of downsizing. The process of downsizing generally refers to
eliminating or dismissal of a large part from the organisation's workforce in a short time period. The
management states that this process can be defined as the organisational activities which are
designed and developed by the management in order to improve the organisational productivity,
efficiency and competitiveness.

INTRODUCTION
Employee downsizing is a major issue in the present business environment every
organisation is trying to adopt this strategy in order to increase its profitability through the reduction
of cost or expenses. This report will identify the background of the case “Downsizing Blues all over
the world” in order to understand the issue and other aspects of the employee downsizing. The
report will analyse the case of downsizing with the help of various theories. Furthermore, the report
will determine the solution to the issues and problems that will be identified in the case study.
Summary of the Case study
The activity advertises over the world looked extremely miserable in the mid 21st century,
with numerous organizations having scaled down an impressive piece of their representative base
and numerous all the more noteworthy plans to do as such soon. Organizations on the Forbes 500
and Forbes International 800 records had laid off more than 460,000 representatives' by and large,
amid mid 2001 itself. This pattern made destruction in the lives of a huge number of employees all
over the world, Many individuals lost their employments at a short or no early notification, and
numerous others lived in a condition of vulnerability with respect to their occupations or jobs.
Organizations guaranteed that overall financial log jam amid the late-1990s had constrained them to
cut back, cut expenses, streamline assets and survive the droop. In spite of the fact that the idea of
scaling back had existed for quite a while, its utilization had expanded in the recent period, since the
late-1990s Investigators remarked that cutting back accomplished more harm than great to the
organizations as it brought about low resolve of held workers, loss of representative dedication and
loss of skill as key staff/specialists left to discover more secure employments(Kato and et.al, 2015).
Background of the case study
The case study scenario described employee downsizing all around the world which was
first introduced as a management tool during the mid 20th century within US. It is the procedure to
reduce the number of employees or workers who are working of a payroll by various methods or
activities such as retirements, terminations or spin-offs. The process of downsizing generally refer
to eliminating or dismissal of a large part from the organisation's workforce in a short time period.
The management states that this process can be defined as the organisational activities which are
designed and developed by the management in order to improve the organisational productivity,
efficiency and competitiveness. According to the case scenario the downsizing activities greatly
affected the lives of many employees as well as performance of many organisations. It is important
to determine the major cause of the development of downsizing process and its impact or outcome

with respect to various organisations or businesses (Marteau2 and et.al, 2015).
Statement of problem
Employee downsizing negatively affected the lives of many people, the employment level
reduced due to dismissals and termination. It also affected the market condition and economy in
various countries. The main concept of downsizing is difficult to be understood, organisations stated
that they adopted this method of reducing the employee as they were not much useful for the
business and are a sort of burden to the organisation. The market is developing due to the
globalisation, increasing demand and technological improvement in the world but still the
organisation adopted to downsize their workforce which was a weird practice observed by the
people and employees got demotivated.
Research Questions
In order to identify the main issues or achieving the research objectives a number of questionnaires
can be developed as mentioned below -
1. What was the major reason for adopting employee downsizing?
2. What were the impact of implementing downsizing?
3. What were the various theories adopted to downsize the workforce?
Aims:
“To understand the reason and impact of adopting employee downsizing by various organisations”
Objectives:
1. To identify the major reason of employee downsizing
2. To determine the impact of implementing downsizing
3. To determine the various theories and approaches used in downsizing the workforce.
Description of the situation
The first phase – The number of organisation s adopted downsizing was limited till the late
1980s but later on in the 1990s the situation changed, many big companies such as General electric
and General motors adopted employee downsizing in order to increase efficiency, optimum
utilisation of resources, surviving competition in the market and increasing productivity. Many of
the companies mainly the chemical industry supported downsizing in order to develop a valuable
position in the market and gain competitive advantage. The organisation not only adopted

downsizing but also redesigned their organisational framework and structure to improve the
business efficiency as well as cutting cost of operations(Symes and et.al, 2016). However, the most
of the companies that adopted the downsizing in the 1990s increased their profit by cutting the cost
of operation through terminating the employees but a major negative impact affected the companies
was failure to improve the productivity of the organisation. The quality of services and products as
well as the fulfilment of consumer demand was affected negatively due to the shortage of
employees or workers such as the airline industry lacks the workforce in the baggage handling,
customer service and maintenance. In respect to this the government imposed the downsizing tax on
the companies for terminating more than 40 employees. The companies who are downsizing more
than 40 employees have to report the same to the labour department in written. These organisations
need to contribute to the unemployment fund also present a plan regarding the future retraining
program to the government. It was finally observed that the downsizing did not solve many
problems or issue as it created. It negatively affected the opportunities of the job seekers to get
employed in an organisation or company. The major cause of low rate of job opportunities and high
level of unemployment in European countries was the downsizing tax(Cecil and et.al, 2018).
The second phase – Various factors such as stronger economies, increase in national income
and reduction in inflation eliminated the need of downsizing all over the world. Downsizing again
came into light in the late 1990s due to the factors such as increase in global competition, changes
in technologies and increasing availability of contract based or temporarily employees. The
organisation adopted downsizing negatively affected by the process, they lost some of their best
employees which affected the productivity and quality of services. It also developed many issues
and problem such as increased workload for the existing employees, uneven distribution of
workforce, reduced productivity etc. In order to resolve both the issue of increased global
competition and reduced productivity or quality of services the organisations got attracted towards
recruiting temporarily or contract based employees. This helped them to control the operating cost
and obtaining effectiveness within the business operations or activities. The organisations also
increased the expenditure on the overtime and decrease in the bonuses provided to the top level
managers and employees to cut down the cost.
Analysis of the case
Downsizing was adopted by many organisations or countries all around the world, these
organisations used various strategies to adopt the downsizing as analysed by many researchers.
These strategies can be described as below -
 Compulsory termination, in which leaving representatives are given no decision, is the last

downsize methodology also, is common place of planned terminations and the discount
disposal of divisions or on the other hand speciality units. Despite the fact that it is, of
course, unappealing to workers, the supervisors who settle on the choices do have the
chance to outline and actualize criteria in view of the necessities of the business. Eliminating
employments or whole special units additionally makes it more outlandish that workers will
win in claims charging discrimination.
 Attrition, in which firms don't supplant a man who leaves, the least difficult strategy. With
this approach, representatives have the opportunity to practice free decision in choosing
regardless of whether to stay or leave, and consequently the potential for struggle and
emotions of frailty is limited. At a similar time, be that as it may, wearing down may cause
major issues for administration, since it is spontaneous and not in control.
 Leave without pay, this strategy is a methodology in which the leaves without any pay is
granted to the employees with fewer benefits but with a guarantee of job whenever they
return after the completion of leave period. This strategy was beneficial for the organisations
as they can cut down the cost of operations rather than reducing the workforce.
 Voluntary retirement and buyout benefits – The Voluntary retirement benefits motivates and
encourage workers to get early retirement with reduced or full pension benefits before the
retirement age. The Buyout is a same method that consist offering a small amount of
payment to motivate the employees(Wang and et.al, 2015).
The downsizing methods were used differently by each and every organisations, the involvement of
top level or senior employees assisted in achieving the objective sand goals with a little loss of
quantity and quality of services. The organisations used various theories and approaches such as
Leadership, Communication, Trainings, Motivation etc which in order to adopt effective
downsizing process. These approaches can be described as below -
1. Leadership – The HR. managers and other top level managers of the companies took an
effective part in the entire downsizing activities, they started developing plan in order to
downsize the employees or workforce. This helped in identifying the skills needed by the
employees
2. Communication – The various modes of communication were used in order to interact with
the employees, guiding them with their roles as well as identifying their need or wants. This
helped in successfully performing the downsizing strategies.
3. Training – The employees who need development in their skills and knowledge are provided
effective training to perform various tasks and duties effectively in order to avoid the

duplication of work or need of different employees to perform a particular task or activity.
4. Motivation – The employees were encouraged and motivated to understand the benefits of
downsizing strategies, the employees were provided special benefits to support the
organisation in adopting downsizing practices.
Findings form the analysis and recommendations
Investigators commented that reducing achieved more negative impact than positive ones to
the organisations as it realized low purpose of held labourers, loss of delegate devotion and loss of
aptitude as key staff/masters left to find more secure jobs. Likewise, the flawed action condition
made by decreasing unfavourably influenced the idea of the work made. Inspectors moreover felt
that most associations held onto downsizing correspondingly as a 'me-too' methodology despite
when it was not required. Disregarding these stresses, the amount of associations that downsized
their labourer base extended in the mid-21st century. Downsizing framework was developed by
each huge industry, for instance, dealing with a record, automobiles, substance, information
advancement, surfaces, FMCG, air transportation and oil. In mid-2002, a bit of the genuine
associations that pronounced downsizing designs including endless included Jaguar (UK), Boeing
(US), Charles Schwab (US), Alactel (France), Dresdner (Germany), Lucent Technologies (US),
Ciena Corp. (US) and Goldman Sachs Group (US). To be sure, even in associations' developing
nations, for instance, India, Indonesia, Thailand, Malaysia and South Korea were going in for
downsizing(Drzensky and Heinz,2016).
The analysis of the case identified that the organisations were highly influenced by the
downsizing concept. The various factors such as increased global competition, low profitability and
enhanced operation cost encouraged many organisations in the world to adopt various strategies of
downsizing. These strategies were somewhat helpful for the organisation in cutting down the cost of
operations but also have various negative impacts on the organisation's service quality and quantity.
The theories based ion the analysis can be described as below -
Leadership – The leadership theory helped the employees to understand the need and effectiveness
of downsizing, it also helped them internal working environment. In organisation leadership is one
of the most important part and make some changes in overall working environment(Nègre and et.al,
2017).
Communication :- In internal working environment communication is improved working
environment and remove any barrier between two parties and make some changes in overall work
place. This is help to identify need and wants of organisation and improve overall working

environment.
Training :- It is most important for new employees in organisation. With the help of training is to be
provided by worker for future improvement in market share and make some changes in overall
working environment. This is help to future development of organisation and make some changes in
growth rate.
Motivation :- In this context motivation of employees is help to improve working environment and
make some changes in overall development. Motivate each and every employees is most important,
it is strategies to improve overall performance in working environment (Turner and et.al, 2014).
Recommendations:
The issue was a major concern for the governments as employment rate was also decreasing
giving rise to poverty and negative impact on the economic conditions of the country. Therefore,
many researchers conducted investigations and studies related to this case for analysing and
identified the real cause for downsizing (Hirschmann and et.al, 2014).
 Treat employees with respects in working environment and companies follow one expiration
process, no substance the reason for the worker termination.
 To be honest at work place is one of the best recommendation provided by me. This is help
to improve internal working environment and make some changes in growth rate.
 Incentivizing them on regular basis can help in building up their interest in such a manner
that employees are motivated enough to maintain a long-term relationship with the employer
can help in motivating and retaining them for longer period of time. It also helps in maintain
retention ratio as well.
 Providing an effective and positive environment to work can also help in retaining them for
longer period of time. It motivates them to work in the best possible manner and remain
associated with it as well.
 Initiation of growth in the environment is such a way that personal objectives of the
employees is not hampered. It also helps in ensuring higher level of satisfaction from the
side of employees.
 Sometimes downsizing becomes important for the organization due to losses and inadequate
profits earned by it. In such cases, adequate amount of time must be given to the employees
so that they can search for some other jobs. Management can also involve in recommending
employees to some other organizations or sister concerns for attaining better outputs.

Conclusion
Form the above report is based on concept of downsizing is difficult to be understood,
organisations stated that they adopted this method of reducing the employee as they were not much
useful for the business and are a sort of burden to the organisation. As per the above report is focus
on increased global competition, low profitability and enhanced operation cost encouraged many
organisations in the world to adopt various strategies of downsizing.

Project 2

Table of Contents
Executive Summary.........................................................................................................................2
Background, scope and purpose of the study ..................................................................................3
Human resource management and strategies...................................................................................3
CONCLUSION ...............................................................................................................................6