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Corporate Downsizing - Corporate Downsizing INTRODUCTION...

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Corporate Downsizing - INTRODUCTION - Downsizing, restructuring, rightsizing, even a term as obscure as census readjustment has been used to describe the plague that has been affecting corporate America for years and has left many of its hardest working employees without work. In the 1980's, twenty-five percent of middle management was eliminated in the United States (Greenberg/Baron 582). In the 1990's, one million managers of American corporations with salaries over $40,000 also lost their jobs (Greenberg/Baron 582). In total, Fortune 500 companies have eliminated 4.4 million positions since 1979 (Greenberg/Baron 627). Although this downsizing of companies can have many reasons behind it and cannot be avoided at times, there are simple measures a company can take to make the process easier on the laid-off employees and those who survive with the company. - STAGES OF DOWNSIZING - The downsizing process can generally be broken down into three distinct stages. The first stage is called the diagnostic stage. In this stage, management staff pulls together and determines the amount of costs and expenses that need to be reduced, and how much can come out of layoffs (Moore 49). This stage usually takes about two to three months to complete. During this time, the upper management reviews all financial records in order to determine how much is needed to be cut from salary expenditures (Moore 50). This stage is concluded when the senior management has a detailed plan on who will be let go, and who will remain with the company. During this stage, there is one common mistake many companies make: lack of communication. The middle management is usually left out of all downsizing plans. This is wrong and creates a big mistake. Middle management should be looked upon as a valuable tool for giving input where cuts should be made (Moore 51). The next stage of downsizing is the implementation stage. During this stage the employees are laid off. The time between an announcement and the
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actual layoff should be as short as possible. This will almost insure that a panic will be avoided, and give a clear view of the situation at hand without causing mass-hysteria.
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