LEIDY JOHANNA ANGEL HERRERA. Updated 26 October Transcript. BENCHMARKING,DOWNSIZING Y RIGHTSIZING. Right-sizing, downsizing and improving the employee and employer In my experience, the following four considerations will set you and your. Downsizing, Rightsizing or Dumbsizing?: Quality and Human “American mana gement adopted quality concepts in order to cut costs and regain. international.
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Hammer, Michael, and James Champy. It is not uncommon for a company’s stock value to rise following a downsizing announcement. Consequently, downsizing is a controversial corporate practice that receives support and even praise from executives, shareholders, and some economists, and criticism from employees, unions, and community activists. In the twenty-first century, downsizing continued after a sharp decline in the stock market early in the century and followed by continued pressure on corporate earnings in the aftermath of the September 11,terrorist attacks.
Only a small percentage of this cost difference could be attributed to labor costs, however, but labor costs were among the first to be cut despite other costs associated with the general structure of the auto companies and their oversupply of middle managers and engineers. Eliminating non-core aspects of a business may also include the reduction of bureaucracy and the number of corporate layers.
For example, governments must sometimes enact programs to help displaced workers obtain training and receive job placement assistance. Since dense bureaucracy frequently causes delays in communication and decision-making, the reduction of bureaucracy may help bring about a more efficient and responsive corporate structure that can implement new ideas more quickly.
Downsizing appears to be an ongoing practice for the foreseeable future. Laying workers off to improve competitiveness often fails to produce the intended results because downsizing can lead to the following unforeseen problems and difficulties:.
Since companies frequently lose a significant amount of employees when downsizing, they usually must reallocate tasks and responsibilities.
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As a major trend among U. In addition, downsizing may stem from restructuring efforts to maximize efficiency, to cut corporate bureaucracy and hierarchy and thereby reduce costs, to focus on core business functions and outsource non-core functions, and to use part-time and temporary workers to complete tasks previously performed by full-time workers in order to trim payroll costs.
In contrast, announcements of downsizing are well received in the stock markets. The following sections discuss trends in downsizing, the growth of downsizing, downsizing and restructuring, criticisms of downsizing, support for downsizing, and downsizing and management.
Consequently, downsizing often accompanies corporate calls for concentration on “core capabilities” or “core businesses,” which refers to the interest in focusing on the primary revenue-generating aspects of a business.
In addition, managers should encourage employee initiative and communication and provide employees with rewards for excellent work. The Lull Will Linger. A Manifesto for Business Revolution. The jobs and responsibilities that are not considered part of the primary revenue-generating functions are the ones that are frequently downsized.
Hence, these efforts frequently have mixed results. Downsizing refers to the permanent reduction of a company’s workforce and is generally righstizing with corporate reorganization, or creating a “leaner, meaner” company.
DOWNSIZING AND RIGHTSIZING
Therefore, some executives and economists see riightsizing as a necessary albeit painful task, and one that ultimately saves the larger number of jobs that would be lost if a company went out business. In other words, despite the admitted discomfort and difficulties that downsizing has on displaced workers, some workers are able to locate new jobs and companies are able to achieve greater efficiency, competitiveness, and profitability.
Moreover, downsizing can lead to additional problems, rigghtsizing as poor customer service, low employee morale, and bad employee attitudes. Furthermore, some analysts suggest that companies can improve their efficiency, productivity, and competitiveness through quality initiatives such as Six Sigma, empowering employees through progressive human resource strategies that encourage employee loyalty and stability, and other such techniques.
Occupations with the Largest Job Decline, Revised by Scott B. Unemployed Workers by Month Adapted from: For example, the database developer Oracle Corporation reduced its number of employees by 5, after acquiring rival PeopleSoft.
Companies may lay off a percentage of their employees in response to these changes: Regardless of whether downsizing is good or bad for the national economy, companies continue to downsize and the trend shows few signs of slowing down.
Because of the possible negative effects that occur after downsizing, managers may have to implement measures to counteract employee apathy, improve customer service, and restore employee trust. Regardless of the label applied, however, downsizing essentially refers to layoffs that may or may not be accompanied by systematic restructuring programs, such as staff reductions, departmental consolidations, plant or office closings, or other forms of reducing payroll expenses.
Type the code shown: Finding the balance between these outcomes is the primary challenge downsizng these managers. Failure to downsize may result in inefficiencies, while downsizing clearly has a number of potentially negative effects on individuals and communities.
Department of Labor, Bureau of Labor Statistics. In addition, advocates of downsizing contend that staff-reduction efforts help move workers from mature, moribund, and obsolete industries to emerging and growing industries, where they are needed.
Comment about this article, ask questions, or add new information about this topic: Unemployed Persons by Reason of Unemployment.
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Downsizings such as these are also commonly called reorganizing, reengineering, restructuring, or rightsizing. Since downsizing often brings about a flatter righfsizing structure, the flow of information and communication no longer requires the effort needed prior to restructuring.
Karl Heil Revised by Scott B. However, economists remain optimistic about downsizing and the effects of downsizing on the economy when the rate of overall job growth outpaces the rate of job elimination.
This process also enables companies with growing competitive advantages to maintain their positions in the market in the face of greater domestic and global competition, and it is the difficult but necessary result of the transition toward a global economy. This includes taking the time to allow dismissed employees to air their thoughts, instead of laying them off quickly and impersonally, and providing assistance in finding new jobs.
Advocates of downsizing also argue that job creation from technological advances offsets job declines from downsizing.