Ch 10 Downsizing/Restructuring, 9 q's on exam

Question 1

What are the financial reasons organizations downsize?

Answer 1

• Declining profits
• The need to reduce costs
• Business downturn

Question 2

What are the other reasons that organizations downsize?

Answer 2

• Increase pressure from competitors
• Merging with other company
• Introduction of new technology
• To decrease levels of management
• Get rid of employee dead wood
• Sudden external change
• planned long-term change

Question 3

Downsizing (df)

Answer 3

Strategies to improve an organization’s efficiency by reducing the workforce redesigning the work, or changing the systems of the organization.

Question 4

What are survivors and what challenges do they face?

Answer 4

Employees who remain with an organization after downsizing.

• They are afraid, depressed, and angry.
• Negative attitudes
• Reduced performance capabilities
• Lower org. productivity.

Question 5

What are the 3 types of downsizing strategies?

Answer 5

1. Workforce reduction
2. Work redesign
3. Systematic Change

Question 6

Workforce reduction (df)

Answer 6

A short-term strategy to cut number of employees through attrition, early retirement, or voluntary severance packages and lay-offs/terminations.
Quick reduction but short-term gain.

Question 7

Work Redesign (df)

Answer 7

A medium-term strategy in which organizations focus on work processes and assess whereto specific functions, products, and or services should be eliminated.
Planning required
Doesn’t just do the somethings with less.

Question 8

Systematic change (df)

Answer 8

A long-term strategy that changes the organization’s culture and attitudes and employees values with the goals of reducing costs and enhancing quality.

Question 9

What benefit do managers perceive they will achieve by downsizing but that there is evidence to suggest doesn’t happen?

Answer 9

Cost cutting 
Improved financial performance
Labour costs seen as easier to adjust.
- Best people leave first
- morale decline = decrease in productivity

Question 10

Why do most reduction program fail to meet objectives?

Answer 10

• surviving employees become narrow minded, self absorbed, and risk adverse.
• decrease in moral and productivity
• distrust of management
• programs not well planned
• don’t investigate alternatives to downsizing.

Question 11

What are the ethical considerations that need to be made when downsizing?

Answer 11

• The principal of distributive, procedural, and interactional justice
• Mismanaging of communications
• Managers abuse information as power
• Managers conceal or distorte information

Question 12

What are some alternatives to downsizing?

Answer 12

1. Cutting non personnel costs
2. Cutting personnel costs
3. Providing incentives for voluntary resignation or early retirement
   - save money other ways than lay-offs

Question 13

What are some short-term downsizing alternatives?

Answer 13

1. Hiring freeze
2. Mandatory vacation
3. Reduce workweek
4. Reduce overtime
5. reduce salaries
6. Facility shutdowns
7. Employee driven alternatives

Question 14

What are some medium-term downsizing alternatives?

Answer 14

1. Extended reductions in salaries
2. Voluntary sabbaticals
3. Lending employees
4. Exit incentives

Question 15

What are some key issues to address when planning for downsizing?

Answer 15

• How many people will lose their jobs?
• Who will be let go and on what bases?
• How will reductions be carried out - all at once?
• What are the legal consequences
• How will current and future work be designed?
• Implementation through communication, timing, security issues, severance, outplacement, etc.
• Follow-up and evaluation

Question 16

Inplacement (df)

Answer 16

A career management approach aimed at reabsorbing exceed or inappropriately placed workers into a restructured organization.

• expensive
• Disruptive

Question 17

Outplacement (df)

Answer 17

Provides a program of counselling and job-search assistance for workers who have been terminated.
- Can mitigate severance pay

Question 18

What are some interventions and practices that help previously employed workers adjust to job loss?

Answer 18

• Advance notification of lay-offs
• Severance pay and extended benefits
• Education and retraining programs
• Outplacement services
• Clear, direct, and empathetic communications of lay-offs
• HR practices that represent alternatives to lay-offs

Question 19

What are some potential benefits to loosing one’s job?

Answer 19

• time to reflect
• grow new ideas/direct/career path
• got out of a job that was substandard
• spend more time with family and other interests.

Question 20

Procedural justice (df)

Answer 20

procedures or rules used to determine which employee will be down-sized

Question 21

Interactional justice (df)

Answer 21

the interpersonal treatment employees receive during the implementation of down sizing

Question 22

Distributive justice (df)

Answer 22

the fairness of the downsizing decision.

Question 23

What are some downsizing best practices?

Answer 23

1. Initiation from the top
2. Reduction must be selective and long-term
3. Special attention to those who loose their jobs, and those who remain
4. Identify where inefficiencies and costs exist
5. Proactive strategy focused on increasing performance.

Question 24

High-involvemnet HRM (df)

Answer 24

A commitment to HRM practices that treat people as assets.

Question 25

What are the roles that HR people play in downsizing?

Answer 25

Advising on restructuring the org to retain top talent
Developing skill inventories and planning charts
Effective communication
Evaluating program after complete.