This document discusses downsizing strategies that companies use to reduce costs and improve financial performance. It defines downsizing as reducing the scale and scope of a business through workforce reductions or other means. Companies may downsize to cut costs, streamline management, increase shareholder value and productivity. Downsizing strategies include early retirements, layoffs, job cuts, and reorganizing divisions. While downsizing can provide immediate financial benefits, it can negatively impact employee confidence, risk-taking, and career growth. The document stresses the importance of ethical practices during downsizing such as valid reasons for cuts and positive references.

1. Welcome To
Group
STAR

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

10. Thank You