Downsizing, Anatheme or Panacea?

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Downsizing; Anathema or Downsizing; Anathema or Panacea

Over the past decade, corporations around the world have been preoccupied with their staff numbers and with implementing strategies to reduce them. The objective has been to create lean organizations, trimmed of bureaucratic fat and bristling with competitive muscle. In the United States alone, some 3.5 million workers have lost their jobs to these programs since 1987. In the first quarter of 1994, there were 192,572 layoffs, averaging over 3,106 jobs a day. (Downs 19). By 1992, more than 85% of the Fortune 500 companies had downsized during the last five years, and 100% of them were planning to do so in the next five years (Cameron, 1994). The 'scorecard' below illustrates the magnitude of some of the layoffs in the last four years:

Company Jobs Cut % of Work Force

AT&T 128,000 30

IBM 122,000 35

General Motors 99,400 29

Boeing 61,000 37

Sears Roebuck 50,000 16

Digital Equipment 29,800 26

Lockheed Martin 29,100 17

BellSouth 21,200 23

McDonnell Douglas 21,000 20

'Downsizing', 'rightsizing' and 'restructuring' have been the popular buzzwords used to describe the process of shedding staff.

These words give a respectable image of strategic foresight to what would otherwise be regarded simply as wholesale layoffs or firings. Some have defended the trend toward layoffs, pointing out that the mission of a corporation is to make a profit and to provide a return for the investors. In this narrow scope of definition, the layoffs seem to be working. With the Dow Jones industrial average above 5500 and corporate profits at a 25 year high, corporate America may have fulfilled Wall Streets highest expectations. But higher profits and productivity have failed to deliver higher wages and job security,