Corporate Downsizing In America Essay Research Paper

Corporate Downsizing In America Essay, Research Paper

- 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 possible downsizing (care of the almighty grapevine) months before it is supposed to happen. Thus, employees may become paranoid and self-absorbed, and their top priority is their own career rather than the bottom line of their employer. This causes them to be unfocused and prevents them from performing their jobs efficiently. Many workers would also be perfectly willing to stab their peer(s) in the back in hopes of keeping their job.

Usually when a downsizing is complete, the company is at an all-time low. This is due to the fact that in almost every merger, acquisition or downsize, employees are faced with uncertainty about t