LEIDY JOHANNA ANGEL HERRERA. Updated 26 October Transcript. BENCHMARKING,DOWNSIZING Y RIGHTSIZING. Right-sizing, downsizing and improving the employee and employer In my experience, the following four considerations will set you and your. Downsizing, Rightsizing or Dumbsizing?: Quality and Human “American mana gement adopted quality concepts in order to cut costs and regain. international.

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This process also enables companies with growing competitive advantages to maintain their positions in the market in the face of greater domestic and global competition, and it is the difficult but necessary result of the transition toward downeizing global economy. As a major trend among U. In other words, managers must strive to maintain or increase productivity and quality levels despite having a smaller workforce.

Unemployed Workers by Month Adapted from: Since downsizing often brings about a flatter corporate structure, the flow of information and communication no longer requires the effort needed prior to restructuring. The following sections discuss trends in downsizing, the growth of downsizing, downsizing and restructuring, criticisms of downsizing, support for downsizing, and downsizing and management. Downsizing affects most sectors of the labor market, including rightsiznig, industrial, managerial, and office jobs, impacting workers in a wide range of income levels.

While downsiziny frequently implement downsizing plans to increase profitability and productivity, downsizing does not always yield these results.


Downsizings such as these are also commonly called reorganizing, reengineering, restructuring, or rightsizing. Downsizing refers to the permanent reduction of a company’s workforce and is generally associated with corporate reorganization, or creating a “leaner, meaner” company. Only a small percentage of this cost difference could be attributed to labor costs, however, but labor costs were among the first to be cut despite other costs associated with the general structure of the auto companies righgsizing their oversupply of middle managers and engineers.

Hammer, Michael, and James Champy. They reason that without downsizing, companies would not remain profitable and hence would go bankrupt when there is fierce competition and slow growth. In contrast to their major competitors—Japanese manufacturers—U.

For example, the database developer Oracle Corporation reduced its number of employees by 5, after acquiring rival PeopleSoft. Eliminating non-core aspects of a business may also include the reduction of bureaucracy and the number of corporate layers. rigytsizing


To remedy these problems, U. Downskzing to downsize may result in inefficiencies, while downsizing clearly has a number of potentially negative effects on individuals and communities.

While layoffs are a customary measure for companies to help compensate for the effects of recessions, downsizing also occurs during periods of economic prosperity, even when companies themselves are doing well. Auto workers were among the first to be laid off during the initial wave of downsizing. Economists argue that this process strengthens the economy and helps it grow. Nevertheless, some companies began simply to cut their workforce without determining whether or not it was necessary and without any kind of accompanying strategy.

In other words, despite the admitted discomfort and difficulties that downsizing has on displaced workers, some workers are able to locate new tightsizing and companies are able to achieve greater efficiency, competitiveness, and profitability. The aftermath righhtsizing downsizing also places greater demands on managers to make do with less.

Regardless of whether downsizing is good or bad for the national economy, downsiizing continue to downsize and the trend shows few signs of slowing down.

In addition, downsizing may stem from restructuring efforts to maximize efficiency, to cut corporate bureaucracy and hierarchy and thereby reduce costs, to focus on core business functions and outsource non-core functions, and to use part-time and temporary workers to complete tasks previously performed by full-time workers in order to trim payroll costs.

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Managers should confer with employees regularly dowbsizing discuss performance and strategies for meeting the goals. For example, the introduction of the personal computer into the office has facilitated instantaneous communication and has thus reduced the need for office support positions, such as secretaries. Finding the balance between these outcomes is eownsizing primary challenge facing these managers.

Therefore, some executives and economists see downsizing as a necessary albeit painful task, and one that ultimately saves the larger number of jobs that would be lost if a company went out business. A trend toward outsourcing jobs overseas to countries with lower labor costs is downdizing form of downsizing that affects some U.

These jobs might then be outsourced or handled by outside consultants and workers on a contract basis. The jobs and responsibilities that are not considered part of the primary revenue-generating functions are the ones that are frequently downsized. The seminal work on restructuring or reengineering, Reinventing the Corporation, by Michael Hammer and James Champy, characterizes the process as the “fundamental rethinking and radical redesign of business processes to achieve dramatic improvements rightizing critical, contemporary measures of performance such as cost, quality, service, and speed.


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Companies may lay off a percentage of their employees rightxizing response to these changes: Labor groups have reacted to the frequency and magnitude of downsizing, and unions have taken tougher stances in negotiations because of it.

Table 1 Number of U.

Some economists, however, suggest that the overall net effect of such outsourced jobs will actually be an increase in U. Advocates of downsizing counter critics’ claims by arguing that, through downsizing, the United States has maintained its position as one of the world’s leading economies.

Downsizing is certainly not limited to the U. Instead of laying employees off, critics recommend that companies eliminate jobs only as a last resort; not as a quick fix when profits fail to meet quarterly projections. Thus, when companies decide that downsizing is the best course of action, managers should do so in a way that does the least harm to employees and their families.

Because of the possible negative effects that occur after downsizing, managers may have to implement measures to counteract employee apathy, improve customer service, and restore employee trust.

The corporate downsizing trend grew out of the economic conditions of the late s, when direct international competition began to increase.

Unemployed Persons by Reason of Unemployment.

This includes taking the time to allow dismissed employees to air their thoughts, instead of laying them off quickly and impersonally, and providing assistance in finding new jobs. Since dense bureaucracy frequently causes delays in communication and decision-making, the reduction of bureaucracy may help bring about a more efficient and responsive corporate structure that can implement new ideas more quickly.

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