Volume 13, Number 3 Article by Leena Chatterjee / Sanghamitra Bhattacharyya September 2001
Implementation of Downsizing: Issues and Consequences :
In the present environment, downsizing has come to be regarded as a popular strategy to improve organisational effectiveness through rationalisation of manpower. Since the early 80s, downsizing has been gaining in popularity among corporates the world over, as companies struggle to survive in an increasingly volatile and competitive marketplace. The US and Europe were the forerunners in this activity but from the early 90s onwards, a large number of Indian organisations have taken recourse to similar actions. Based on existing literature, Leena Chatterjee and Sanghamitra Bhattacharyya highlight some of the causes, consequences and issues relating to the implementation of downsizing. Further, they discuss the findings from a study on downsizing done in an Indian subsidiary of a reputed MNC. The study highlights the importance of proper implementation of the downsizing process through the use of various strategies such as choice of ‘suitable implementers’, the necessity for clarity of communication at every stage, and the need for maintaining trust of employees. Above all, the study emphasises the importance of taking a ‘humane’ approach towards all affected employees, by providing training, counselling and support so as to make the process as painless as possible. While existing literature has focussed extensively on the effects of downsizing on survivors and victims, the implementers have not received too much attention. The present study highlights the psychological effects on implementers themselves, and stresses the importance of providing proper organisational support to them, to ensure the success of a downsizing process. The unpleasant truth that needs to be accepted is that downsizing is here to stay. Hence, it might be beneficial if companies concentrated on devising employee-friendly strategies to implement such a course of action and deal with its attendant issues in a manner calculated to cause the least negative fallouts. Decision-making with respect to downsizing should not be merely an institutional response to competition, but the outcome of elaborate thought and planning, keeping in mind not only the short term benefits of the company but also the long-term effects on the organisation as a whole.
Reprint No 01302
