Downsizing During Economic Downturns: Effective?

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Downsizing During Economic Downturns: Effective?
Anneke Zwart, Student (University), Netherlands, Moderator
As we have seen in recent global economic crises, many organizations use downsizing (DS) as an approach to survive economic downturns. They consider DS as a useful instrument to survive difficult times. DS is used by organizations in both high developed and emerging countries.

But Luan et al. (2013) argue that downsizing is not always efficient when dealing with economic downturns. Indeed it might even negatively affect an organization! In their interesting article they discuss 3 forms of downsizing during economic downturns and their effects:

1. Layoffs: Layoffs can lead to the reduction of short term cost, but do not ensure improved performance; rather, wrong-sizing is often the result. Other consequences of layoffs mentioned are the loss of talented employees, the loss of trust and severance pay.
2. Decreasing organizational slack: Normally, by providing a ...

Effect of Downsizing During Crises
Musonda Ernest Kabwe, Zambia, Member
I think the best way of surviving the economic downturns in an organization is to encourage an open book management style rather than using dow...

Effect of Downsizing during Downturn
Mohankrishna, Manager, India, Member
During downturn organizations should cut the costs by classifying the expenditures with respect to their necessity.
Instead of lay offs th...

Is our Current Organization Efficient?
Roberto Sauma, Consultant, Costa Rica, Member
The question is not whether we downsize or not, the question ought to be: is our current organization efficient? With the people and resources ...

Effect of Downsizing in Downturn
Samuel Diaz Florian, Consultant, Colombia, Member
The organizational Structure depends on the key Processes that efficiently manage the Resources (human, financial, logistic, technological, etc.) in o...

Prepare for Downturn in Good Times
Jay Shah, Manager, Australia, Member
The best way to deal with this situation is to prepare for any future downturn in business when the business is going well. By setting aside so...

DS is a Short-term by its Nature
Moses Mutethia Muriungi, Strategy Consultant, Kenya, Member
Thank you all for your contributions.
Firstly, DS by its nature is done to address issues on a short-term basis, its more of a reactive strategy ...

Downsizing During Economic Downturns
Khalil Rajati, industrial enginer, Iran, Member
@Mohankrishna: I agree the expenses must be classified before any action is taken. First we have to analyze their eff...

Downsizing During Economic Downturns
Ralph Kolle , HR Consultant, Cameroon, Member
Downsizing happens to be one among many possible solutions in maintaining the strength/survival of an organization during economic downturns:

What to Do in Times of an Economic Downturn
Mr. J. van Delft, Director, Netherlands, Member
The list of possibilities is too short according to my opinion and experience. Of course organizational slack needs to be removed (that is a daily nec...

DS in Times of Downturn
Marcel Wiedenbrugge, Consultant, Netherlands, Member
@Mr. J. Van Delft: I like your answer.
Create financial reserves during good times, innovate in a timely...

HOW to Go About Downsizing if this Strategy is Chosen
Sabine Pitcher, Manager, United Kingdom, Member
In most western countries, staff costs are high, pay cuts aren't easy to implement, and therefore an organisation should always review their staffing ...

Organizing for Downsizing During Downturns
Ellis, Manager, United Kingdom, Member
It is a fact of life that companies will go through economic roller coasters, either through external influences or internal issues.
One company ...

Cost Reduction Exercise During Economic Downturns
Friday O. Ngbodi, Student (MBA), Nigeria, Member
The whole essence is to reduce cost, and there are many ways to do so without jeopardizing the life and time of the organization.
The cost cuttin...

Sizing = Efficient Organizing
De Monte, Canada, Member
If a management team is planning effectively, then organizing an entity is a matter of corporate intelligence (data/information/ knowledge) collected,...

Downsizing During Economic Downturn
bright lomotey, Student (MBA), Ghana, Member
Firms have to survive - no matter if the shocks originate from within or from the outside. I agree with @Jay Shah tha...

The Way to Survive an Economic Downturn is to Cut Cost
Friday O. Ngbodi, Student (MBA), Nigeria, Member
Downsizing during economic down turn could be avoided if the organization has units of companies offering different products. However, if this not the...

Efficient Employees
Bibi Mussarat, Student (University), Afghanistan, Member
Downsizing during an economic downturn is a necessity, but should be based upon an analysis of the departments and its members on how efficient they a...


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