An analysis of the strategic causes and objectives of downsizing

Since the counterpart of downsizing is outsourcing, the outsource partner now become a priority in lieu of the employees who have been terminated due to the downsizing. General Motors GMonce turned their parts supplier, called Delphi Automotive Systems Corporation, from the original GM subsidiary into a newly formed and independent firm.

Management can also notice a sudden change in cost behavior. It is quite natural for managers to want to minimize the disruptive effects of downsizing.

When the outsource partner does most of the task, management can then review, reinforce and reevaluate its strengths and weaknesses. Elaborate early retirement incentives are crafted, outplacement services are provided, and personal counseling is arranged.

Such information from a variety of internal and external sources is critical for fine-tuning a downsizing operation, especially in a large, diversified organization. While this may be possible, part of the strategic plan should be stringent outsource partner selection, real investment in the partnership, clear plans and goals with the outsource partner.

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In liquidation, the parts that generate no value are simply shut down, often at a tremendous financial loss. They observed that white-collar employees who remained with a downsized firm were likely to experience what they called "survivor guilt," characterized by increased anxiety about loss of job, decreased loyalty to the firm, and guilt feelings about lost coworkers.

Those who subscribe to this perspective are less likely to rush the downsizing process in hopes of minimizing its pain. The Essentials of Downsizing First, there was the agricultural economy.

The common underlying assumption is that neither subordinates nor outside stakeholders e. But corollary to all of these, there will also be a sudden change in priorities. In the strict sense, downsizing has to do with elimination of staff positions, making the business or organization smaller by elimination.

Strategic Management - Downsizing

Act Quickly—Don't Prolong the Agony of Downsizing According to this myth, uncertainty and anxiety are reduced and organizational life can return to normal if downsizing is done with dispatch. Business and organizations are held together by cost behavior. Thus, one requirement for gaining commitment to a potentially threatening course of action is open sharing of information, especially about the supporting "whys.

Third, many managers are unwilling to invest the time, or simply do not have the time, the necessary information, or the political good will, to defend what is seldom a cut-and-dried decision to administer cutbacks disproportionately. More time and effort must be devoted to crafting a selective retrenchment plan because it is more likely to be challenged as inequitable.

However, Cameron et al. Page Share Cite Suggested Citation: During periods of tranquility, purchased with the coin of steady growth, it is not difficult for managers to espouse a partnership philosophy.

Sometimes, divestment usually reverses a forward vertical integration strategy, such as in the case where Ford sold Hertz.

How Does Downsizing Impact the Role of Human Resource Management?

The outsource partner may not become loyal in the long haul and breaks off to outsource for your competitor. The quantum leap in the gathering, processing and sharing of information made the first and second economies practically obsolete in the area of wealth and success assessment.

The traditionally valued attributes of good employees—loyalty, hard work, and personal competence—no longer count in the firm because individuals who displayed those traits still lost their jobs.

This introduces myth 6. On the other hand, Cameron and his colleagues found the reverse phenomenon, "survivor envy. This is called diversification discount.This solution was based off a scenario, which provided Mr.

Wilson with three growth strategies, causes for company decline, and recoommendations for handling a downsizing.

Strategic Management

Causes, Implementation, and Processes of Downsizing (A literature Review of Corporate Downsizing: Part 2) the repercussions of strategic downsizing transcend financial and advanced analysis of the areas concerned (Cameron et al., ).

Third, the. Strategic downsizing: critical success factors strategic plan for the firm, but rather a Therefore, the objectives of this article are to review the literature pertaining. the failures in the realization of the anticipated strategic objectives, we introduce in the fifth chapter the ensemble of alternatives allowing companies to cut their costs and realize the same planed goals without any recourse to downsizing.

As noted in Chapter 1, between andthe hourly output of U.S.

Strategic Planning During Downsizing

workers grew only contrast, hourly output had grown at a rate of percent from to (Sawhill and Condon, ). This slowdown in productivity significantly affected the.

The _____ is a comprehensive and systematic analysis of a company's environment, objectives, strategies, and activities that is conducted by an outside and objective party. a. .

An analysis of the strategic causes and objectives of downsizing
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