Corporate Downsizing

- INTRODUCTION -

Downsizing, restructuring, rightsizing, even a term as obscure as census
readjustment has been used to describe the plague that has been affecting
corporate America for years and has left many of its hardest working employees
without work. In the 1980\'s, twenty-five percent of middle management was
eliminated in the United States (Greenberg/Baron 582). In the 1990\'s, one
million managers of American corporations with salaries over $40,000 also lost
their jobs (Greenberg/Baron 582). In total, Fortune 500 companies have
eliminated 4.4 million positions since 1979 (Greenberg/Baron 627). Although
this downsizing of companies can have many reasons behind it and cannot be
avoided at times, there are simple measures a company can take to make the
process easier on the laid-off employees and those who survive with the company.

- STAGES OF DOWNSIZING -

The downsizing process can generally be broken down into three distinct
stages. The first stage is called the diagnostic stage. In this stage,
management staff pulls together and determines the amount of costs and expenses
that need to be reduced, and how much can come out of layoffs (Moore 49). This
stage usually takes about two to three months to complete. During this time,
the upper management reviews all financial records in order to determine how
much is needed to be cut from salary expenditures (Moore 50). This stage is
concluded when the senior management has a detailed plan on who will be let go,
and who will remain with the company. During this stage, there is one common
mistake many companies make: lack of communication. The middle management is
usually left out of all downsizing plans. This is wrong and creates a big
mistake. Middle management should be looked upon as a valuable tool for giving
input where cuts should be made (Moore 51).
The next stage of downsizing is the implementation stage. During this
stage the employees are laid off. The time between an announcement and the
actual layoff should be as short as possible. This will almost insure that a
panic will be avoided, and give a clear view of the situation at hand without
causing mass-hysteria.
In a managerial position, it is difficult to explain to an employee that
he or she is being laid off, but Terrence Moore gives a guideline on how it
should be done. Small talk should be avoided. Management should clearly
explain that the employee is being laid off and be prepared to answer questions
directly; avoid beating around the bush. It is extremely important to detail
all employee benefits and severance pay, also the employee should be encouraged
to come back with any questions that he or she may have (Moore 52).
An important note is that the employee should not be given false hope.
It should be made clear, from the start, that the employee is being laid off and
doesn\'t have a chance of being rehired. Finally, you should not try to lie to
the employee and say you know how they may feel if you don\'t (Moore 52).
The final stage is the post-implementation stage. This is dealing with
the survivor syndrome and helping displaced employees find jobs throughout
placement sources. Sadly, management usually expects the remaining employees to
return to their jobs as if nothing had happened.
However, this is not usually the case. Survivors suffer with negative
feelings of resentment, frustration, irritability, fatigue and burnout. They
may also undergo feelings of insecurity with their company. A way to help
survivors deal with their problems is to offer personnel workshops (or programs)
that offer support to help cope with the anxiety that adjustment brings (Moore
53).

- REASONS FOR AND EFFECTS OF DOWNSIZING -

There are many reasons why a company might need to downsize. In today\'s
corporate America, it is a plain fact that far fewer employees are necessary to
maintain a successful operation. Many times, it is the case where a
technological advance or breakthrough makes it possible to replace a previously
human job. It is also an all-too-common scenario that outside influences such
as sudden shifts in the market or changed government policies force corporate
executives to make coinciding decisions regarding their staff and these external
changes.
Another one of the major problems in today\'s business world are the
salaries being paid to the workers. Since employers are not paying their
workers high wages, the workers have little to put back into the economy. This
causes the system to plummet and forces companies to downsize to keep from going
under.
The downsizing of a company can affect employees before, during and
after it occurs. Employees usually know of a