The term downsizing means lowering down of size of an object. If You Think Downsizing Might Save Your Company, Think Again, https://pixabay.com/illustrations/termination-employee-workers-110299/, Zorn, Michelle L., Patricia Norman, Frank C. Butler, and Manjot Bhussar. Citigroup, an American financial company, axed 52,000 jobs globally, and its Indian arm, Citi India, laid off 37 employees, including senior executives. Direct interaction of top level management – As downsizing is a way to reduce all round costs, the top management that did not involve in day to day activities would do so hereafter. It forces an organization to re-evaluate its business processes and rewrite its business plan accurately according to the current business status. A downsizing business may be viewed negatively in the public eye if the business owner is not vocal about the downsizing. This has forced the Indian firms to be efficient and cost effective. Reasons 4. The Balance Careers, June 25, 2019. In India, the policy of ‘hire and fire’ is not admired. Downsizing is the process of terminating multiple employees at the same time. Whatever be the strategy of dealing with the problem of surplus staff, the organization must make its downsizing plan known to the employees. Suspension or termination of employment (with or without notice) by the employer or management.Layoffs are not caused by any fault of the employees but by reasons such as lack of work, cash, or material. Managers are loathe to be the ones to carry out the process and typically leave this unwelcome duty to human resources professionals. It helps the business to serve customers efficiently as the situation is manageable. This would create loyalty, motivation and empowers them directly impacting on productivity. If a company is well staffed for a particular product or service that is then discontinued, they may need to downsize since there is no longer a need for such a large staff. As the Society of Human Resource Management (SHRM) puts it: “Mergers and acquisitions (M&As) are tools businesses use to achieve organizational objectives—tools that have profound impacts on the employees of the organizations at every level as two organizations attempt to integrate into one. The unnecessary activities that were redundant would be done away with. Some companies also layoff a percentage of low performers every year to maintain a competitive and efficient work force. Content Guidelines 2. They can damage the company’s public reputation and that can lead to a drop in revenue. It is also referred as layoff. However, sometimes the process can be the saving grace for a company which is on the brink of closing its door. First, when an organization has to outplace a large number of employees, it becomes difficult for the organization to do so. Downsizing as a strategy has been adopted throughout the world to achieve operational economies and increase efficiency to be able to survive and grow in the wake of uncertain environment and cut-throat competition. HUMAN RESOURCE MANAGEMENT ( H R M ) Definition 1 – Integration “HRM is a series of integrated decisions that form the employment relationships; their quality contributes to the ability of the organizations and the employees to achieve their objectives.” Definition 2 – Influencing “HRM is concerned with the people dimensions in management. Contemporary organizations use separation as one of the means of implementing their downsizing strategy related to human resource management. Downsizing is when a company terminates a number of employees at the same time. When the situation is manageable the profit is good. Strengthen relations – Through the process of downsizing, the company can take measures of reducing the working hours. In such a situation, effecting outplacement becomes a problem out of proportion. The Industrial Disputes Act, 1947 (Section 25), makes it mandatory on the part of the employer to pay compensation to the employee for all the days of the lay-off. HR needs to identify the problems that workforce reductions are expected to solve, develop reliable selection criteria, and consider how the layoffs will impact the company as a whole in the long run. What is Downsizing ? 4. Rather than telling people that mass redundancies are going to take place, saying that it is now time for rightsizing sounds le… With the liberalization and globalization of economy, resulting change in the way business is done, downsizing strategy has become a buzz term in management, both in the context of strategic management as well as human resource management. Employees usually understand this approach better than other methods of downsizing. Organizations resort to downsiz­ing to solve the problem of surplus staff and thereby improve their financial position, work efficiency, and competitiveness. In India, downsizing strategy is implemented through voluntary retirement scheme (VRS) in which compensation is paid to the employees opting for VRS. What Is the Meaning of Attrition Used in HR?. Such a service goes a long way in winning the confidence of displaced employees and will also not severely dent the reputation of the organization. 5. Downsizing is the permanent reduction of a company's labor force through the elimination of unproductive workers or divisions. Downsizing occurs for a number of reasons, most often to save money. The basic objective of downsizing strategy is to achieve rightsizing that is, having employees in accordance with organization’s needs. These reasons can range from poor performance by the employees, the poor performance of the organizations in economic downturns that necessitates laying off employees to save costs, and for disciplinary reasons.