Temporary layoffs furloughs using furloughs with

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temporary layoffs (furloughs), using furloughs with incentives, cancellingbusiness trips and costlyperquisites, reducing or suspending matching contributions to company-sponsored savings plans,raise employee contributions to benefits plans, and postponing or eliminate bonuses etc.Recommendations1. Identify the business need for downsizing Identifying the business need for downsizing is notalways addressed explicitly, and the decision to downsize may be implemented too hastily withoutthe consideration of alternatives. Often the decision is made soon after financial problems areidentified. Labor costs are often a large proportion of the overhead of the company, so it is
appealing to make reductions in personnel immediately. However, research suggests thatdownsizing does not always lead to improvements in business effectiveness, cost savings, and long-term firm performance. Newspapers are filled with stories about decisions to cut personnel by agiven percentage, without noting what other factors were considered. This gives the impression thatonly personnel cuts are needed to turn the company around. For example, in 2000, a Denvernewspaper reported that executives of Qwest Communications had selected a number of jobs to cutin order to lower costs, but did not state any details on further consideration of the business need todownsize. The way it was reported may lead others to believe that the only necessary considerationwhen downsizing is the number of jobs to cut. Given some of the negative outcomes of downsizing,it has been suggested that downsizing should be considered as an action of last resort. Under certaincircumstances, however, there may be a business need for downsizing, and under suchcircumstances, downsizing may lead to improved organizational performance, in particular ifdownsizing is aligned with other strategic changes. If downsizing is chosen, the focus should be onattaining business goals, not staff reduction. The decision to downsize should be made based on thelong term health of the company, not short-term labor cost considerations.2. Communicate with employees throughout the downsizing process.

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Term
Fall
Professor
Bandy,K

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