downsizing kinshuk
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Contemporary Issues In
Human Resource Management
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DOWNSIZING
the planned elimination of positionsor jobs.
A downsizing strategy reduces the
scale (size)and/or scope of a business to
improve its financialperformance.
-(Robbins & Pearce, 1992).
A REDUCTION OF THE WORKFORCE ISONLY ONE OF THE SEVERAL POSSIBLEWAYS OF IMPROVING PROFITABILITY
OR REDUCING COSTS.
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Why do Firms Downsize?
Reduce costs.
Reduce layers of management to increase
decision making speed and get closer to the
customer.
Sharpen focus on core competencies of the firm,
and outsource peripheral activities.
Generate positive reactions from shareholders in
order to improve valuation of stock price. Increase productivity.
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DOWNSIZING: The Aftermaths
Mixed effects on firm performance:
some short- term costs savings, but
long-term profitability & valuation not
strongly affected.
Firms reputation as a good employer
suffers. Apple Computers reputationas good employer declined after
several layoffs in 1990s.
Downsizing forces re-thinking of
Employment Strategy.
Lifelong employment policies notcredible after a downsizing. Example:
IBM abandoned lifelong employment
policy after several layoffs in early
1990s.
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DOWNSIZING: The Aftermaths
cont.
Employee motivation disrupted: increase in political behaviours,
anger, fear - which is likely to negatively impact quality of customer
service.
Violation of psychological contract, leads to cynicism, lowered work
commitment, fewer random acts of good will
Survivors experience more stress due to longer work hours with
re-designed jobs, and increased uncertainty regarding futuredownsizings
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IN QOUTES
Education is a process not a
place. Security is still an
important concept for
employees. However, employee
security should be developed bymoving away from reward for
lifetime employmentand towards
concepts which invest in lifetime
employabilityof employees.
THE WORLD IS FLAT T. L.
FRIEDMAN
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HARDNUTS TO CRACK!!!
SENIORITY VS RECENT PERFORMANCES
PREPARING THE WORKFORCE TO ADAPT TOUNCERTAINTY.
ALTERNATIVES TO DOWNSIZING
Wage Reductions
Redeployment
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HARDNUTS TO CRACK!!!
.cont
Are downsized organizations
really lean and fit, or is
downsizing risking understaffing?
Does downsizing reallycontribute to competitive
advantage, or is it a trade-off?
Can downsizing snowball into an
avalanche, or is not predictable?
Is it downsizing, or desperate
dumb-sizing?
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ISSUES
Vulnerability of technology to attack or disaster.
Work intensification as employers try to increase
productivity with fewer employees.
Rise in number of individuals and families withouthealth insurance.
Increased demand for work/life balance.
Increased use of outsourcing (off-shoring) of jobs
to other countries.
Rising health care costs.
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ISSUES
Growth in number of employees who have both
eldercare and childcare responsibilities at the
same time (sandwich generation).
Privacy concerns of employeesGreater demand for flex time
A continued change in negotiating strategies,
tactics and processes used by labour and
management caused by business pressure to
remain competitive.
Outsourcing of HR functions.
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REFERENCES
RESEARCHES
Garfield, A. (1999) Barclay shares soar as city
welcomes job cuts. The Independent, 21 May
Greengard, S. and FilipowskI, D. (1993) Dont
rush downsizin: plan, plan, plan, Personnel
Journal, 72(11): 64-73
Dougherty D. and Bowman, E. (1995) The effectsof organizational downsizing on product
innovation, California Management Review, 37
(4): 28-44
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REFERENCES
BOOKS
Contemporary Human Resource
Management Text and Cases, by Tom
Redman and Adrian Wilkinson
The World Is Flat, by Thomas L. Friedman
Ethics and Human Resource Management,
by Amanda Rose
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