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What is Downsizing?
 A downsizing strategy reduces the scale (size) and scope of a business to improve
its financial performance.
 A reduction of the workforce is one of only several possible ways of improving
profitability or reducing costs.
Why do Firms Downsize?
 Reduce costs.
 Reduce layers of management to increase decision making speed and get closer
to the customer.
 Generate positive reactions from shareholders in order to improve valuation of
stock price.
 Increase productivity
Downsizing Strategies
Workforce Reduction Organizational Redesign
1. early retirement
2. transfers
3. Job banks
4. lay-offs
5. firing
1. eliminate functions
2. cut hierarchical levels
3. drop divisions or products
4. consolidate or merge units
5. reduce work hours
6. lengthen shifts
Alternatives of Downsizing
Employment Policies Pay/ Benefit policies
1. Hiring freeze
2. Cut Interns
3. Cut temps
4. Voluntary time of
5. Reduce work hour
1. Pay Freeze
2. Cut Overtime
3. Use vacation and leave days
4. Cut profit sharing or variable pay
Alternatives of Downsizing (Cont.…)
Changes in job Design Training
1. Transfer
2. Relocation
3. Demotion
1. Retraining
Effect of Downsizing ( Positive)
 Immediate financial relief
 Reorganization as a leaner, efficient company
 Opportunity to change the work place culture for the better
 Opportunities for remaining employees to show
initiative, perform higher level tasks and to be rewarded
Effect of Downsizing ( Negative )
In staff perceptive :
 Have lower confidence
 Become risk averse
 Question the company's future
 See limitation in career progression
 Miss reliable sources for information
Ethical Issue in Downsizing
 Providing valid reason to reduce mental stress
 Promising to re-hire in near future, If Possible
 Giving positive feedback to future employer.
 Fulfill the company rules and benefit during Downsizing
 Practicing ethical to make sure SCR & Company Reputation
Thank You

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Presentation on Downsizing

  • 2. What is Downsizing?  A downsizing strategy reduces the scale (size) and scope of a business to improve its financial performance.  A reduction of the workforce is one of only several possible ways of improving profitability or reducing costs.
  • 3. Why do Firms Downsize?  Reduce costs.  Reduce layers of management to increase decision making speed and get closer to the customer.  Generate positive reactions from shareholders in order to improve valuation of stock price.  Increase productivity
  • 4. Downsizing Strategies Workforce Reduction Organizational Redesign 1. early retirement 2. transfers 3. Job banks 4. lay-offs 5. firing 1. eliminate functions 2. cut hierarchical levels 3. drop divisions or products 4. consolidate or merge units 5. reduce work hours 6. lengthen shifts
  • 5. Alternatives of Downsizing Employment Policies Pay/ Benefit policies 1. Hiring freeze 2. Cut Interns 3. Cut temps 4. Voluntary time of 5. Reduce work hour 1. Pay Freeze 2. Cut Overtime 3. Use vacation and leave days 4. Cut profit sharing or variable pay
  • 6. Alternatives of Downsizing (Cont.…) Changes in job Design Training 1. Transfer 2. Relocation 3. Demotion 1. Retraining
  • 7. Effect of Downsizing ( Positive)  Immediate financial relief  Reorganization as a leaner, efficient company  Opportunity to change the work place culture for the better  Opportunities for remaining employees to show initiative, perform higher level tasks and to be rewarded
  • 8. Effect of Downsizing ( Negative ) In staff perceptive :  Have lower confidence  Become risk averse  Question the company's future  See limitation in career progression  Miss reliable sources for information
  • 9. Ethical Issue in Downsizing  Providing valid reason to reduce mental stress  Promising to re-hire in near future, If Possible  Giving positive feedback to future employer.  Fulfill the company rules and benefit during Downsizing  Practicing ethical to make sure SCR & Company Reputation