Downsizing, Anatheme Or Panacea? Essay

3837 words - 15 pages

Lots of Good Material & References A little weak on MLA documentation methodsDownsizing; Anathema or Downsizing; Anathema or PanaceaOver 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 ForceAT&T 128,000 30IBM 122,000 35General Motors 99,400 29Boeing 61,000 37Sears Roebuck 50,000 16Digital Equipment 29,800 26Lockheed Martin 29,100 17BellSouth 21,200 23McDonnell 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, and business finds itself accused of putting corporate greed ahead of the nations economic interests. There is, however, a growing body of evidence that perhaps layoffs are not necessarily the quick cure-all for sagging profits that corporations and economists thought they were.The question now being asked is, did these decisions [to layoff workers] reflect genuine strategic thinking or were they simply knee-jerk reactions to falling market share and profits? A survey by the American Management Association in 1992 of 547 companies that had downsized in the previous six years found that only 43.5% improved their operating profits. In addition to the disappointing financial performance, downsized corporation also experienced higher incidents of absenteeism, resignations, and turnover in their workforces. They also predicted that these companies would downsize again within a few years to try to shore up further market share losses and profit declines ('Unthinking Shrinking' The Economist September 1995). In a recent study, Mitchell and Co., a US consultant firm, found that most firms that restructured (downsized) recognized a short term...

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