Chapter 10 Downsizing and Restructuring Flashcards
Why do organizations downsize?
- declining profits
- business downturn
- increased pressure from competitors
- merging with another org
- intro of new technology
- the need to reduce costs
- the desire to decrease levels of management
- getting rid of employee deadwood
What is downsizing?
Strategies to improve an org’s efficiency by reducing the workforce, redesigning the work, or changing the systems of the organization.
What is a survivor?
an employee remaining with an organization after downsizing
What are 3 types of downsizing strategies?
- Workforce reduction
- Work redesign
- Systematic change
What negative things happen when you downsize(4)?
- Best people leave
- Productivity goes down
- PTSD
- Workers are depressed their friends are gone
* therefore do one wave of downsizing so that employees know their jobs are secure
What do workforce reduction mean?
- Short-term strategy
- Attrition
- Early retirement
- Voluntary severance packages, and layoffs or terminations
What does work redesign mean?
- A medium-term strategy
- Focuses on work processes
- Assess whether functions, products, or services should be changed or eliminated
What does systematic change mean?
- A long term strategy
- Change an org’s culture, attitudes and values
* with the goal of reducing costs and/or enhancing quality
What are 3 downsizing alternatives?
- Cutting nonpersonnel costs
- Cutting personnel costs
- Providing incentives for voluntary resignation or early retirement
What are short-term downsizing alternatives?
- up to a year or starts right away
- hiring freeze
- mandatory vacation
- reduce workweek
- reduce overtime
- reduce salaries
- facility shutdowns
- employee input for alternative cutbacks
What are medium-term downsizing alternatives?
- Extending reductions in salaries
- voluntary sabbaticals
- lending employees
- exit incentives
What is outplacement vs inplacement?
Outplacement: Providing a program of counseling and job-search assistance for workers who have been terminated
Inplacement: Reabsorbing excess or inappropriately placed workers into restructured org. - trying to hire within the organization (not always that useful)
What are survivor reactions?
- Negative attitudes and behaviours
- Reduced performance
- Lower organizational productivity
- Emotions such as anger, anxiety, resentment, hope
What are 3 perceptions of Justice?
- Procedural justice - procedures or rules used to determine which employees will be down-sized
- Interactional justice - the interpersonal treatment employees receive during the implementation of the downsizing decision
- Distributive justice - the fairness of the downsizing decision
What are 6 best practices of downsizing?
- Downsizing should be initiated from the top
- Workforce reduction must be selective in application and long-term in emphasis
- Special attention should be paid to both those who lose their jobs and to the survivors who remain in the organization
- Decision-makers should identify where inefficiencies and costs exist
- Should result in the formation of small, autonomous organizations within the broader organization
- Must be proactive strategy focused on increasing performance.
