Best Practice in White-Collar Downsizing

Best Practice in White-Collar Downsizing - Academy of...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
) Academy of Management Executive, 1991 Vol. 5 No, 3 Best practices in white-collar downsizing: managing contradictions Kim S, Cameron, University of Michigan Sarah J, Freeman, University of Michigan Aneil K, Mishra, University of Michigan Executive Overview It is no secret that U.S. industry, once the most productive in the world, is now lagging behind its global competitors. What is not well known is that blue-collar productivity is not necessarily the problem. Between 1978 and 1986, for example, the number of production workers declilned by six percent while real output rose 15 percent. White-collar productivity decreased six percent while the number of workers increased by twenty-one percent. Downsizing, which involves reducing the workforce, but also eliminates functions and redesigns systems and poiicies to contain costs, is becoming more common in U.S. companies. Despite its pervasiveness, however, downsizing has rarely been investigated by organization and management researchers. This article seeks to identify the processes used in effective downsizing as well as the consequences that result. The authors studied organizational downsizing and redesign for four years in thirty organizations in the automobile industry. Six general strategies are presented that highlight the best practices of these firms that are downsizing effectively. Article Once the most productive nation in the world, the U.S, now lags most of its global competitors in productivity growth,' For example, private sector productivity growth slowed from 3,3 percent per year between 1948 and 1965 to 0,1 percent today for the entire economy. Worse still, productivity for nonfarm businesses declined 0,3 percent,^ A good share of the blame for this decline rests squarely on white-collar employees and management. To illustrate, consider that between 1978 and 1986 the number of production workers in the U,S. declined by six percent while real output rose fifteen percent. That represents a 21 percent gain in blue-coUar productivity, or a 2,4 percent annual growth rate. During the same period, however, U.S. manufacturing firms expanded the number of white-collar, nonproduction workers by twenty-one percent, representing a six percent decrease in productivity. The trend toward a disproportionate expansion in the number of white-collar workers is also illustrated by the fact that in 1950, twenty-three percent of U,S, manufacturing industry employees were nonproduction workers. By 1988 that figure had risen to forty-seven percent. At the same time that production worker employment was decreasing in the 1980s, nonproduction worker employment was increasing dramatically in the manufacturing sector. The good news is that approximately seventy percent of the increase in America's GNP in the 1980s was accounted for by an expansion in the number of jobs. The bad news is that this growth often occurred in non-productive areas. In contrast, a majority of the GNP growth of our major global competitors was accounted for by increases in
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 19

Best Practice in White-Collar Downsizing - Academy of...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online