Downsizing in Organizational Change

Essay by Nicole715University, Master'sA+, February 2007

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Executive Summary

All organizations face an environment of continuous change. An increasing response to this change is some form of downsizing. Many of these actions reach into the ranks of white collar and middle management positions; in the past, layoffs were generally limited to low-level, unskilled, or blue collar labor.

Downsizing is defined as a systematic reduction of a workforce by an employer which can take a variety of forms. Techniques used include hiring freezes, early retirement, transfers, and layoffs (Appelbaum, Simpson & Shapiro, 1987). Key attributes of downsizing are that: (1) downsizing is intentional; (2) downsizing usually involves, although is not limited to, reductions in personnel; (3) downsizing is focused on improving efficiency of the organization; and (4) downsizing affects work processes knowingly or unknowingly (Huber & Glick, 1993). Possible negative outcomes are overload, inefficiency, conflict, and low moral. Possible positive outcomes are increased profitability and productivity.

This paper will examine some of the causes, and outcomes of corporate downsizing.

Special attention will be placed on the individual and organization levels of downsizing. Additionally, recommendations for effective downsizing strategies will be presented.


Downsizing can be approached from two different perspectives: an individual level, and an organization or strategy level (Cameron, 1994). From an individual point of view, discussions of downsizing focus on individual stress associated with job loss, psychological coping strategies, and the attitudinal effects of downsizing. Organization or strategy issues in downsizing relate mainly to whether and how to implement downsizing and what the effects of downsizing are on the organization's performance (Cameron, 1994).

There are various strategic reasons for organizations to downsize. They include: acquisitions and mergers, to avoid bankruptcy, and to reduce costs to remain competitive (Labib & Appelbaum 1994).

Acquisitions and Mergers

Downsizing usually results following an acquisition or merger. Duplicate and redundant functions...