Chapter 10-Downsizing and Restructuring

Chapter 10-Downsizing and Restructuring - Chapter 10...

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Chapter 10: Downsizing and Restructuring The Downsizing Phenomenon Downsizing became popular in the 1990s It resurfaced aggressively with the global financial crisis in 2008 Historic growth strategies and talent wars increased the size of the workforce Today, expensive human capital is being eliminated again with downsizing The Downsizing Strategy Strategies to improve an organization’s efficiency by reducing the workforce, redesigning the work, or changing the systems of the organization 3 types of downsizing strategies: 1. Workforce Reduction Strategy Ø Workforce reduction: A short-term strategy to cut the number of employees through attrition, early retirement or voluntary severance packages, and layoffs or terminations 2. Work Redesign Strategy Ø Work redesign: A medium-term strategy in which organizations focus on work processes and assess whether specific functions, products, and/or services should be changed or eliminated Ø Other used with workforce reduction strategy Ø Elimination of function, groups or division Ø Reduction of bureaucracy Ø Redesign of the tasks employees perform 3. Systematic Change Strategy Ø Systematic change: A long-term strategy that changes the organization’s culture, attitudes, and employees’ values with the goals of reducing costs and enhancing quality Types of Restructuring Portfolio Restructuring Involves changes to the organization’s business portfolio This means changes in the mix or percentage makeup of the organization’s businesses, divestitures, and acquisitions Financial Restructuring Includes the financial changes to an organization, like reducing cash flows or increasing debt levels Organizational Restructuring Any major reconfiguration of internal administrative structure that is associated with an intentional management change program
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  • Winter '13
  • MelanieChaparian
  • Termination of employment, global financial crisis, Severance package

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