Business

 Downsizing is a strategy that is used by many organizations to improve their financial position by reducing the number of their workforce.  As Bronwyn Fryer wrote about layoff in his Harvard Business Review case about Robin Astrigo, who is nervous about dismissing his employees and talks   about layoffs as why isnt it taught as a subject at business school This business tactic today is used by many organizations around the globe. But today it is considered by managers as a tactic to improve its organizational performance, as for them it is seen as a solution to the organizational problems, when the organizations costs are rising, their sales are decreasing and there exists a lot of economic uncertainty. Managers feel rightsizing is downsizing and that an organization should have less people, because they believe by downsizing they are increasing the flexibility of the organization, it can respond to the new trends and needs quickly. Rightsizing    leads to outsourcing .i.e. to use the outside firms for providing necessary products and services.
Downsizing and Layoff   
    Many people differentiate downsizing from a layoff, where downsizing is seen as a permanent downscaling, layoff is seen as a temporary strategy to dismiss people and then rehire them again. The some of the techniques involved in downsizing, is to provide incentives to the employees in order to encourage early retirement, or transfer them to other subsidiary companies. But the simplest technique used by them is to dismiss a certain number of people. But the pervasiveness of downsizing has pushed them out of favour, to the back burner, and the risk is that they will be considered when it is too late, if at all. To carry out downsizing is itself a very difficult task for the managers. They may feel awkward and helpless when laying off people. Cost reduction is sometimes not the sole reason for downsizing, but sometimes management fail to provide an appropriate standardized answer for carrying out downsizing.
How to handle the two strategies
    Whether it is a layoff or downsizing, management has to carry out with respect and consideration, because the employees the organization is carrying out are their own employees who have committed themselves in serving the organization. There are some tips to minimize the negative impact of this strategy. They are as follows
Should follow a clear communication strategy (viewed as a process not an event) The management should consider a clear communication strategy when implementing the strategy. They should look at their employees, carry out a swot analysis. Undermine the people to be affected and then decided how they will communicate their message to them. Basically managers have to listen and talk to their employees before carrying out the strategy.
Treat employees with respect Downsizing will not just start by moving the persons belonging or terminating his employment contract or taking the office belonging from him. But it should be more like having a straight forward conversation with their employees and letting them know about it personally.
Importance of employee assistance program (EAP) sometimes when news of their dismissal is given to the employees, they may feel totally devasted and may get emotionally hurt. So it is the utmost priority of management to provide the employees with counseling through EAP programmes. And the after effects of downsizing are also very hard for the employees who survive it. They may have lost their friends and good coworkers, and may feel terrible without them. These employees should also get good counseling from Employee assistance programmes.
Who to lay off first
     Lay off is seen by many as the last resort for organization transition. Usually it is the incompetent employees or employees who are on contracts that are terminated in the first layoff. But before considering a layoff, business should look at both the sides of the coin, and then make its decision. According to some, last in first out is the best policy to follow when following a layoff strategy. But it is not good, because by doing this management is driving out new blood, energy, creativity and innovation from the organization.  Sometimes, employees lose their jobs at the expense of their gross misconduct. But before the manager fire the employee, he has to give him a 3-day suspension as you look into the claim. It is not that only his first misconduct should drive him out of the organization, but he should be given more chances before he is terminated. In some cases a proper exit interview should be conducted, and employees dignity should not be harmed.
Alternatives to downsizing and Layoff
       There are many alternatives to downsizing and layoff that can be considered by the organizations. As said by the authors of Organizational downsizing Constraining, cloning, learning downsizing is not a cost reduction strategy at all but, there is considerable evidence that downsizing does not reduce expenses but carrying out downsizing may increase the companys costs.  Many argue that, the extent to which the organization start cutting the jobs, the more their performance is affected negatively and deteriorated. Employees are valuable assets of a company they are the companys investment. A company has to take care of its long term investments,  and realize that in the past,   they have cope up  in the with the same employees and these employees will again help them in the dark times. In downsizing, the company is not just reducing the quantity of their employees but also the quality of their employees. By undergoing downsizing, the management creates an environment of uncertainty where the survivors will always think about the first layoff and how they lost their closed ones. Many will lose interest in their work and become de-motivated.
      The most immediate and effective alternative to layoff is restructuring. Restructuring involves include things such as closing of obsolete plants or branches, administrative overhauls, selling of non-core operations, or improving internal processes.  This may help the organization in managing its cost profile and look better. Besides restructuring, an organization can review its problems and try to fix it. The organization can introduce a new compensation plan, which may make it easier for them to share costs.  In the periods of downturn, all the employees of the organization can collectively take part in cutting of a little cost from their pay. Also when the employees are working overtime, they should not think about their overtime bonuses but feel more focus on increasing the productivity of the organization. Another approach that can be taken by the organization is, instead of outsourcing work they can carry out the specified tasks themselves. And then the products and services that they produce internally can be then sold to external customers. By this way the organization can increase their net income and also improve its productivity. Management can also start a rotation programme, and shift employees from one department from another. This way employees skills and competencies are improves, and by doing this the organization is indirectly training its employees.  Also another method an organization can use is to make use of employees sick leaves, sabbaticals and other leaves. They can send some of its employees on leaves for some time and after a certain period they can ask them to come back. The best way to control downsizing is to stop hiring new people and put a freezing on its hiring.