Downsizing topics

Question 1

Perspectives on downsizing

Answer 1

• Thornhill and Saunders definition
• Shaw and Barret-Power definition (focus on the need for a process of adaptation and coping)
• Mellahi and Wilkinson positive view

Question 2

Purpose of downsizing

Answer 2

• Not only used in declining times (contrasts Mellahi and Wilkinson) organisations can downsize without declining (Thornhill and Saunders)
• Cost cutting, improved organisational performance, improved communication
• Carve away layers of corporate fat (Hamel and Prahalad)

Question 3

Downsizing strategies

Answer 3

• Redundancy, natural attrition, early retirement, voluntary redundancy, recruitment freezes (T and S)
• Relationship between chosen method and the consequences
• Strategy of responsible restructuring (Cascio)
• job sharing, wage reductions, overtime reduction (rarely used)

Question 4

Unintended organisational effects

Answer 4

• Datta- differing findings on the profitability and performance improvement that can be achieved
• Loss of knowledge and therefore competitive advantage (Schmidt)
• Damage to reputation
• Inefficiencies during adaptation

Question 5

Unintended individual effects

Answer 5

• Success depends on the ability of survivors to cope (T and S)
• Survivor syndrome
• Violation of the psychological contract
• Stress, anger, anxiety, job insecurity

Question 6

Societal effects

Answer 6

Destroyed lives, homes and communities in the name of efficiency and productivity (hamel and Prahalad)

Question 7

Managing the consequences

Answer 7

-Needs to be a perceived level of fairness
-Level of prior notification
-Selection criteria
-Support for leavers
-Effective communication
-Perceived unfairness will create stress
(Thornhill and Saunders)

Question 8

The stress of downsizing

Answer 8

• Increased job insecurity which puts stress on the individual and organisation (Sparks)
• Stress most likely to come from work (Kinnman)
• Stress linked to the changing nature of work (Kinnman/Chandola)
• Unemployment, unstable labour markers, job insecurity (Chandola)
• Some have a positive view of stress (Kinnman)

Question 9

Examples

Answer 9

• Boeing (leading manufacturer in aircrafts) forced to downsize 55,000 between 1997-2002. But they worked with governments to develop reemployment centres and assist their specialised workforce in finding alternative forms of employment (responsible restructuring)
• Jaguar Landrover cut 4,500 jobs to make a cost saving of £2.5 billion but resulted in loss (loss of efficieny and other factors)
• HSBC- thinking of cutting 10,000 jobs but still remain a reputable company despite this controvsersal decision
• Tesco propose to cut 4,500 jobs to make stores more efficient 2019 (purpose of downsizing ) but still maintain a positive reputation