Facing the threat of job loss and seeing others lose their jobs can be a traumatic and bitter experience. This is one reason why many excellent companies do everything possible to avoid layoffs. However, even the most employee-friendly companies may deal with difficult economic conditions by reducing their workforce. Companies therefore have to ensure that they develop appropriate and well thought-out plans before implementing the downsizing and layoff process.
Downsizing
Layoffs, frequently called downsizing, describe the process in which companies remove temporarily or indefinitely a number of employees from their payroll , and have become significant characteristic of working life in developed countries. The general purpose of this practice is to reduce the organization's burden of excess labor costs when human resources cannot be used effectively.
It's a puzzle companies of all sizes face in the current economy: Lay off a portion of the staff to save the majority of jobs, or keep everyone and lose money.
Why downsize?
The reasons why the company downsizes are related to dramatic changes occurring in the environment and are very varied.
? The threat that the company lose a market share in its industry or respond to fierce competition from its rivals resulting in the need for the company to cut costs through altering its size to fit its market and customer base.
? Reducing layers of management to increase decision making speed and get closer to the customer.
? Sharpening focus on core competencies of the firm, and outsource nonessential activities.
? Generating positive reactions from shareholders in o ...