Down Sizing

Down sizing is the process whereby a corporation makes itself smaller in response to changed market circumstances. Although Down sizing implies a reduction in assets, it is not (as its critics often maintain) merely a reduction in human assets.

The layoff of staff is a toxic solution. Used sparingly and with planning Down sizing can be an organizational lifesaver, but when layoffs are used repeatedly without a thoughtful strategy, Down sizing can destroy an organization's effectiveness. How you treat people really matters - to the people who leave and the people who remain.

One outcome of Down sizing must be to preserve the organization's intellectual capital.
How downsized employees are treated directly affects the morale and retention of valued, high-performing employees who are not downsized.
sizing down should never be used as a communication to financial centres or investors of the new management's tough-minded, no-nonsense style of management the cost of Down sizing far outweighs any benefits thus gained.

Down sizing is extremely difficult. It taxes all of a management team's resources, including both business acumen and humanity. No one looks forward to Down sizing. Perhaps this is why so many otherwise first-rate executives downsize so poorly. They ignore all the signs pointing to a layoff until it's too late to plan adequately; then action must be taken immediately to reduce the financial drain of excess staff.

The extremely difficult decisions of who must be laid off, how much notice they will be given, the amount of severance pay, and how far the company will go to help the laid-off employee find another job are given less than adequate attention. These are critical decisions that have as much to do with the future of the organization as they do with the future of the laid-off employees.

So what happens? These decisions are handed to the legal department, whose primary objective is to reduce the risk of litigation, not to protect the morale and intellectual capital of the organization. Consequently Down sizing is often executed with a brisk, compassionless efficiency that leaves laid-off employees angry and surviving employees feeling helpless and de-motivated.

Helplessness is the enemy of high achievement. It produces a work environment of withdrawal, risk-averse decisions, severely impaired morale, and excessive blaming. All of these put a stranglehold upon an organization that now desperately needs to excel.