Organisational Downsizing Syndrome to be Handled Effectively for Efficient Business Conduct

Organisational Downsizing Syndrome to be Handled Effectively for Efficient Business Conduct

The term ‘downsizing’ was first coined in the mid 1970s by Charles Handy, a professor of managerial psychology in London. Downsizing is what almost all companies sort to cut all the expenses of the organization, by cutting all the expenses they tend to focus on prior things that are needed to be done. There includes reshuffling of job responsibilities as well the authority they possess. Where lies confusion of responsibility, confusion about priorities, workloads on rise, betrayal among managers, long term plans seem to be useless, less of risk taking, and no innovation, conflicts, lethargy, decrease in the service levels are some of the symptoms of downsizing to start in the organization. Employee’s lack of confidence in the process of the firm, employees feel if they continue their growth might get stunted hence they start looking for opportunities elsewhere wherein they can reach a higher level working and dedicating years towards firm.

Things that can be done to improve the situation is being proactive, because the immediate period after downsizing is very vital and if not handled properly ; downsizing can have devastating effects, here the manager plays a crucial role in maintain clear cut communication among the staff and telling him what is intended from them.

The extremely difficult decisions of who must be laid off, how much notice they will be given, the amount of severance pay, and how far the company will go to help the laid-off employee find another job are given less than adequate attention. During downsizing the decision to lay off employees and the criterion on which they are based is under consideration, removal on the seniority basis is also not good. The method of downsizing that is most clearly defensible in a court of law, for example is to lay off 10% of employees across all departments on a seniority-only basis.

Downsizing has many side effects for sure, because of which you can get disheartened or demotivated; but this situation shouldn’t arise, there are very few who can handle this downsizing exercise, concentrating on the more important tasks with fewer working on the same task is the expected situation.

The role of leaser here is important because the way he handles the situation and gets the desired result from the limited number of executives of the firm, it is said that downsizing is the actually the outcome of the corporate reorientation.

The immediate financial advantages of downsizing need to be considered in relation to increased occupational disability and the resulting extra costs to employers and society.

Desired Outcome Percent of Firms That Achieved Desired Results

Reduced Expenses 46%

Increased Profits 32%

Improved Cash Flow 24%

Increased Productivity 22%

Increased ROI 21%

Increased Competitive Advantage 19%

Reduced Bureaucracy 17%

Improved Decision Making 14%

Increased Customer Satisfaction 14%

Increased Sales 13%

Increased Market Share 12%

Improved Product Quality 9%

Technological Advances 9%

Increased Innovation 7%

Avoidance of a Takeover 6%

 

[Dhruv Bindhani]

This article, titled "Organisational Downsizing Syndrome to be Handled Effectively for Efficient Business Conduct," provides a critical examination of corporate downsizing, defining its origins, outlining its common negative symptoms, and offering brief insights into managing its aftermath. It also presents compelling data on the actual success rates of downsizing in achieving desired outcomes.

Defining Downsizing and Its Syndrome​

The article begins by attributing the coinage of "downsizing" to Charles Handy in the mid-1970s, defining it as a strategy for "cutting all the expenses of the organization" to focus on "prior things that are needed to be done." This sets the stage for a discussion that goes beyond mere cost-cutting to address the broader organizational impact.

The subsequent enumeration of symptoms paints a vivid picture of the "Organisational Downsizing Syndrome": "confusion of responsibility, confusion about priorities, workloads on rise, betrayal among managers, long term plans seem to be useless, less of risk taking, and no innovation, conflicts, lethargy, decrease in the service levels." This comprehensive list effectively highlights the systemic negative consequences, including a pervasive "Employee's lack of confidence" leading to attrition. This diagnostic approach helps readers understand the multifaceted challenges triggered by downsizing.

Managing the Aftermath and Legal Considerations​

The author emphasizes the criticality of the "immediate period after downsizing," stressing that it must be "handled properly" to avoid "devastating effects." Proactivity is presented as key, with the manager playing a "crucial role in maintain[ing] clear cut communication among the staff and telling him what is intended from them." This highlights the importance of transparent leadership and clear expectations to mitigate uncertainty and anxiety.

The article briefly touches upon the sensitive and legally complex decisions surrounding layoffs ("who must be laid off, how much notice they will be given, the amount of severance pay, and how far the company will go to help the laid-off employee find another job"). It notes that these are often given "less than adequate attention" and discusses the legal defensibility of "laying off 10% of employees across all departments on a seniority-only basis." While offering a specific example of a legally sound approach, it implicitly suggests that human factors often complicate these purely statistical methods.

Leader's Role and The True Outcomes of Downsizing​

Despite the "many side effects" that can "dishearten or demotivate" individuals, the article encourages focus on "more important tasks with fewer working on the same task." The "role of leader here is important because the way he handles the situation and gets the desired result from the limited number of executives of the firm." It also posits that downsizing is "actually the outcome of the corporate reorientation," suggesting it's a consequence of larger strategic shifts.

A crucial point is made regarding the trade-off: "The immediate financial advantages of downsizing need to be considered in relation to increased occupational disability and the resulting extra costs to employers and society." This adds a critical ethical and long-term cost perspective, moving beyond short-term financial gains to consider broader societal and human impacts.

The article concludes with a powerful data table titled "Desired Outcome Percent of Firms That Achieved Desired Results." This data critically evaluates the actual success of downsizing efforts:

• Reduced Expenses: 46%
• Increased Profits: 32%
• Improved Cash Flow: 24%
• Increased Productivity: 22%
• Increased ROI: 21%
• Increased Competitive Advantage: 19%
• Reduced Bureaucracy: 17%
• Improved Decision Making: 14%
• Increased Customer Satisfaction: 14%
• Increased Sales: 13%
• Increased Market Share: 12%
• Improved Product Quality: 9%
• Technological Advances: 9%
• Increased Innovation: 7%
• Avoidance of a Takeover: 6%

This data is profoundly insightful, revealing that even the most common desired outcome (reduced expenses) is achieved by less than half of firms, and strategic goals like innovation and competitive advantage are met by a very small minority. This quantitative analysis serves as a stark warning about the often-overstated benefits and under-recognized costs of downsizing, reinforcing the article's central message about the need for effective handling.

In summary, this article provides a valuable, albeit brief, critique of organizational downsizing. It effectively defines the syndrome, highlights the critical role of leadership and communication in its management, and, most importantly, uses data to challenge conventional wisdom about its effectiveness, urging a more nuanced and cautious approach to this common corporate strategy.