Ch 10 Downsizing/Restructuring, 9 q's on exam Flashcards
What are the financial reasons organizations downsize?
- Declining profits
- The need to reduce costs
- Business downturn
What are the other reasons that organizations downsize?
- 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
Downsizing (df)
Strategies to improve an organization’s efficiency by reducing the workforce redesigning the work, or changing the systems of the organization.
What are survivors and what challenges do they face?
Employees who remain with an organization after downsizing.
- They are afraid, depressed, and angry.
- Negative attitudes
- Reduced performance capabilities
- Lower org. productivity.
What are the 3 types of downsizing strategies?
- Workforce reduction
- Work redesign
- Systematic Change
Workforce reduction (df)
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.
Work Redesign (df)
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.
Systematic change (df)
A long-term strategy that changes the organization’s culture and attitudes and employees values with the goals of reducing costs and enhancing quality.
What benefit do managers perceive they will achieve by downsizing but that there is evidence to suggest doesn’t happen?
Cost cutting Improved financial performance Labour costs seen as easier to adjust. - Best people leave first - morale decline = decrease in productivity
Why do most reduction program fail to meet objectives?
- 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.
What are the ethical considerations that need to be made when downsizing?
- The principal of distributive, procedural, and interactional justice
- Mismanaging of communications
- Managers abuse information as power
- Managers conceal or distorte information
What are some alternatives to downsizing?
- Cutting non personnel costs
- Cutting personnel costs
- Providing incentives for voluntary resignation or early retirement
- save money other ways than lay-offs
What are some short-term downsizing alternatives?
- Hiring freeze
- Mandatory vacation
- Reduce workweek
- Reduce overtime
- reduce salaries
- Facility shutdowns
- Employee driven alternatives
What are some medium-term downsizing alternatives?
- Extended reductions in salaries
- Voluntary sabbaticals
- Lending employees
- Exit incentives
What are some key issues to address when planning for downsizing?
- 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
Inplacement (df)
A career management approach aimed at reabsorbing exceed or inappropriately placed workers into a restructured organization.
- expensive
- Disruptive
Outplacement (df)
Provides a program of counselling and job-search assistance for workers who have been terminated.
- Can mitigate severance pay
What are some interventions and practices that help previously employed workers adjust to job loss?
- 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
What are some potential benefits to loosing one’s job?
- 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.
Procedural justice (df)
procedures or rules used to determine which employee will be down-sized
Interactional justice (df)
the interpersonal treatment employees receive during the implementation of down sizing
Distributive justice (df)
the fairness of the downsizing decision.
What are some downsizing best practices?
- Initiation from the top
- Reduction must be selective and long-term
- Special attention to those who loose their jobs, and those who remain
- Identify where inefficiencies and costs exist
- Proactive strategy focused on increasing performance.
High-involvemnet HRM (df)
A commitment to HRM practices that treat people as assets.
What are the roles that HR people play in downsizing?
Advising on restructuring the org to retain top talent
Developing skill inventories and planning charts
Effective communication
Evaluating program after complete.
