Downsizing

Downsizing may be described as reducing the scope or scale of a certain company or an organization. The very known way to downsize is deducting the workforce or simply called human resource.This is to improve its performance and profitability as well as to reduce its financial costs.

AT&T Corp. is a based telecommunications giant which had undergone downsizing.The steps they have taken in consideration to be able to reduce their scope:

• Workforce Planning

This plan is a system, in which employees are graded or evaluated by their managers. Employees are ranked accordingly with regards to their performance. This is done so that when downsizing comes, the employees would be able to have perceptions or would be able to know the possibility of them being laid off. This way, employees would give their best to stay on the job.

Employees are given chance to move out of the bottom bracket. Each employee will have a grade of A, B or C. Grade A workers are carefully handled and can possibly be promoted so that when downsizing happens they do not jump ship, as the top talent in other companies often do. Grade B workers, however, are counseled on what they need to do to keep up with those A's or better be one of them. Grade C workers needs to improve, then make a move to be better. HR monitors the ranking and grading system to make sure that employees are evaluated fairly and consistently. HR also checks that managers are keeping the A players challenged and satisfied.

• Training and Skills Assessment

This process lets the company know what other things can their employee do. This training program can develop an employee's skill. Retraining and outplacement assistance programs are an effective way for HR to risk itself into the planning of a downsizing effort. A good skills-training program may even open opportunities within the company to downsized workers. Human resource managers can reassess workers' skills so they will not lose hard working and/or motivated employees in this type of situation. But this doesn't mean that workers who are not doing their job well will be unqualified to do other jobs.

Another benefit of having training and skills assessment program is the increase of participation, thus, considering extended access to the programs until well after workers are laid off, will be given time to recover from the emotional blow of being laid off. This way a company would be able to gain back the trust of both survivors and non-survivors.

• Open Communication

Communication is defined as the process of transferring information from one entity to another. A from what we all know, it is very important to keep the good relation ship between two or more entities.

Communication is the key when it comes to downsizing. Employees tend to look and find signs that the management is hiding information from them. Workers worry less when management is open, honest and generous.

• The Future

Thinking of the future, with regards to the question, "Will downsizing happen again?"

An honest answer to this question would be a help to the company as long as it is stressed that every workers or employees should work for the companies goals.

Straightforward answers or responses is a big help to prepare employees for the possibility of future workforce cuts or lay offs.

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Downsize can be caused by one or all of the following:

• Reduce costs

To reduce cost may talk of financial issues of a certain organization. In which, the said company couldn't sustain or it does not have the power to pay for its people and liabilities. In shortest term bankruptcy.

• Decision making

Organizations tend to reduce the level or layers of management, in order to speed up its decision making. Instead of having too much numbers of manager,a company will choose to have lesser number of them. So, an organization would be able to speed up and less time would be used in decision making.

• Focus

This means that the company would be able to put their whole time on developing the products or services they are good at.

Let us take for example, the Philippines, it is a tropical country, thus, producing tropical fruits such as bananas is the best way to increase its profit with regards to exporting. Since, Philippines can have full profit in producing bananas, why would it risk on trying to produce non-tropical fruits like apple or strawberries.

• Positive response

Since the company is already focused on producing products or providing services their good at, stock holders would give their full trust on the said company, thus, ensuring them that their investment would not just slip away like the wind.

• Better Productivity

Increasing a company's productivity may var from the costs that's been decreased and controlled. Another view would be, when an organization had already identified where the focus should be and stock holders have given their trust then the company would be able to start the business or increase the productivity thus, increasing its profit.

Now, that we have discussed about the cause or causes of downsizing. Let us talk about its effect. Effects can either be bad or good, but it is expected to be good on the company all in all. The effects are divided into two:

1. Employee Morale

• Reputation

The organizations reputation as good employer will suffer. This is because of having to reduce employees, that may be or may not be a good employee. When a company have already undergone downsizing and is starting to grow again, of course they would need new employees. Since, they have already fired employees before, applicants would fear that downsizing would happen again then they would have to leave the job.

• Policies

Change in policies will of course occur, due to change of scope or scale. Those policies that can only be applied to large scopes are omitted and new policies will be implemented for those employee who have survived and keep their jobs.

• Motivation

Motivation will be disrupted. This effect can apply for those who were able to keep their job or simply called survivors. This disruption may range from political behaviors such as anger and fear, in which may lead to poor quality of customer service.

• Psychological Contract

Laying off of employees will violate the psychological contract between employers and employees. Psychological contract is described as mutual beliefs of the employer and employees obligations, it is not a formal contract therefore it is not a violation of a certain country bill. But it still is a bad effect, because the trust of a certain employee will be destroyed.

• Stress

Due to adjustment in longer working hours, the re-designed jobs and the uneasiness of thinking and fear of future downsizing, survivors will tend to experience stress.

1. Workforce Quality

• Lost of skilled employees

Because of voluntary resign or early retirement, chances are, good employees, which is usually marketable employees, tend to leave or give up the job. Even worse is, the organization would have to hire them back, which may lead to a much higher cost.

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