According to a 1997 survey by the American Management Association (AMA), the most often claimed reasons for downsizing are “organizational restructuring,” “business downturn,” and “reengineering of business processes.” Downsizing has adversely affected 43 million jobs since 1980. Many organizations are realizing that downsizing may not be the best solution for reducing costs. The time and money it takes to train employees often make downsizing a wasteful procedure. By changing their business strategy, companies can find ways to maintain their workforce. Many organizations are now looking for alternatives to downsizing that allow them to save their employees, which are now seen as large assets.
Downsizing of staff is often undertaken when an organization needs to quickly improve its profits. A company under siege (or claiming to be) takes a look at its largest expense typically payroll and benefits and starts slashing. Many accounts exist that depict the sad consequences of worker displacement: the breakup of families, the loss of homes, and the blow to self-esteem from which the downsized never recover. Some researchers go so far as to describe the downsized worker as clinically traumatized, comparing the experience of downsizing as “similar to that of other trauma: death, combat, abuse, violence, natural catastrophe, crime, chemical dependence…disease and terrorism” (Bumbaugh 30). The most well-known of these is a seven-part series published by The New York Times entitled “The Downsizing of America.” This series of articles (since enlarged and published as a book with the same title) was the largest set of related articles printed by the paper since it covered the Watergate scandal. Some proponents of downsizing claim that the media has distorted the statistics on the number of people downsized, their fate and the impact on their former workplaces. The New York Times series has especially been attacked for too freely extrapolating statistics. There is no doubt that downsizing reeks havoc in the lives of those who lose their jobs, but critics claim that downsized workers find employment fairly quickly, and point to the statistics that show that jobs have been created at record numbers throughout the 1990’s\'’. Record numbers of jobs have been created, but U.S. Labor Department figures “show that now only about 35% of laid-off full-time workers end up in equally remunerative or better paid jobs” (Uchitelle 3).
Downsizing does indeed increase profits for the organization that undertakes it, but these profits are short-lived. A survey by Wyatt Associates of Canadian downsized businesses found “40% reported that downsizing did not result in reduced expenses and more than 60% did not experience higher profits after cutting staff” (Estok 28). These and other studies show that at least half of all eliminated positions are refilled within a year after a major downsizing effort.
One of our group members was the victim of downsizing, or what the company called a “re-structuring” effort. Being a single mother of a pre-school child, this was very difficult to handle. The fate of her child’s life was left unknown. Fortunately, the company announced this downsizing effort six months in advance, giving her the opportunity to search for another position. At the time she lacked higher education and could not find a job that would pay as well as her previous one. Looking for an answer, she made the conscious decision to better her and her daughter’s lives by continuing her education. Looking back on it now, she is thankful that she was given the opportunity to go back to college. Unfortunately, many people don’t have this opportunity and must take whatever job they can find.
The negative effects of the remaining employees can be almost as serious as that of the victims. Many of these employees, still holding a position within a downsized company, have a constant fear of losing their job next. The morale will tend to tail off and an “I don’t care” attitude will often set in. Remaining employees may have a hard time concentrating on their work because of emotional distress. This can cause a lower performance, which may threaten productivity.
Successful planning and innovating for the future require staff that is well-trained, willing to take risks, physically healthy, and committed to an organization. Downsizing, time after time, leads to exactly the opposite result. Organizations that think of and treat their employees as