Visit and identify a company website that has undergone HR downsizing. Identify the cause of downsizing and describe its processes.
In this assignment, we are tasked to visit a company website that has undergone HR downsizing.
• What is Downsizing?
• To reduce in number or size
• To dismiss or lay off from work
• To make in a smaller size
Downsizing is a commonly used euphemism which refers to reducing the overall size and operating costs of a company, most directly through a reduction in the total number of employees. When the market is tight, downsizing is extremely common, as companies fight to survive in a hostile climate while competing with other companies in the same sector. For employees, downsizing can be very unnerving and upsetting.
There are several reasons to engage in downsizing. The primary reason is to make the daily operations of a business more efficient. For example, a company may be able to replace assembly line employees with machines which will be quicker and less prone to error. In addition, downsizing increases profits by reducing the overall overhead of a business. In other instances, a company may decide to shut down an entire division; a car company, for example, might decide to stop making sedans altogether, thus cutting an entire department.
In some cases, it becomes apparent that a business has too many employees. This may be because there has been a decline in demand for the company's services, or because a company is running more smoothly and efficiently than it once was. Many offices are heavily bloated with support staff and redundant departments, and these businesses may refer to downsizing as “trimming the fat.”
Numerous terms accompany downsizing. Employees may be terminated, fired, laid off, made redundant, or released. A business may be optimized, rightsized, or experiencing a reduction in workforce. Some of these terms have different legal meanings depending on where one is in the world; a layoff, for example, may refer to a mass temporary release of employees who will brought back in once business picks up, while a redundant employee is one who is asked to leave permanently.
Numerous consulting firms offer assistance with downsizing, often with the use of specialists who visit a business to evaluate it. Since profit is an important bottom line for companies, downsizing measures should be expected by employees, especially when they observe a troubled market or they are working for a struggling company.
For employees, the process can be stressful, because they may feel uncertain about whether or not they will continue to employed. Sometimes, downsizing is very abrupt, with a huge batch of employees being released from employment on the same day, while in other cases it may be a more drawn out and nervewracking process in which employees are slowly let go. Employers should remember that downsizing is very upsetting and stressful, and they should take steps to make it run smoothly while assuring valued employees that their jobs are secure.
In a business enterprise, downsizing is reducing the number of employees on the operating payroll. Some users distinguish downsizing from a layoff , with downsizing intended to be a permanent downscaling and a layoff intended to be a temporary downscaling in which employees may later be rehired. Businesses use several techniques in downsizing, including providing incentives to take early retirement and transfer to subsidiary companies, but the most common technique is to simply terminate the employment of a certain number of people.
Downsizing is a cutback in a company's operations and usually implies a reduction in its employee headcount as well. Downsizing results from many factors, including increased global competition, new technologies, and weaker labor unions; it takes various forms and has various outcomes. Some firms use downsizing as part of a long-term effort to transform their businesses; others turn to downsizing simply to slash costs and boost earnings. Sometimes downsizing boosts employee morale by giving the remaining workforce new responsibilities and opportunities; in other cases, downsizing leaves a demoralized staff that is undermanned when economic conditions improve. Some firms carry out downsizing relatively gently by offering workers strong incentives to retire; for other companies, downsizing means chopping heads as quickly and cheaply as possible. Whether downsizing generally helps or hurts a company's long-term profitability remains controversial. Evidence can be presented on both sides, but most would agree that the answer greatly depends on how the downsizing is executed.
Many companies today are under intense economic pressure. Reorganizations, takeovers, mergers, downsizings, joint ventures, and other major changes are extremely common, as companies try to grow and survive.
• Philippine Airlines
Formerly one of the largest Asian airlines, PAL was severely affected by the 1997 Asian Financial Crisis. In what was believed to be one of the Philippines' biggest corporate failures, PAL was forced to downsize its international operations by completely cutting operations to Europe and eventually Southwest Asia, cutting virtually all domestic services excluding routes operated from Manila, reducing the size of its fleet and terminating the jobs of thousands of employees. The airline was placed under receivership in 1998, gradually restoring operations to many of the destinations it formerly serviced. PAL exited receivership in 2007 with ambitious plans to further restore services to its previously-serviced destinations, as well as diversify its fleet.
Causes of Downsizing
• Changing market conditions
Ultimately, it is the small business owner who must accept responsibility for downsizing his company. There are just so many factors that an owner can control, but changing market conditions isn’t one of them. The market determines the lifecycle of a business, and the small business owner must stay in touch with changing market conditions in order to keep up the pace of growth. But this doesn’t always happen. Market shifts and the introduction of new technology can make a business become obsolete almost overnight. To restructure to meet changing market needs isn’t always possible. No amount of funding will breathe life into a dead horse. There comes a time when you have to let go.
• Disaster
A natural disaster can occur swiftly so that there can be little to do but batten down the hatches and wait it out. But a natural disaster on the scale of the hurricanes Katrina and Rita that destroyed thousands of small businesses along the Gulf Coast, can decimate a business and literally wipe it from the face of the earth. Natural disasters occur everywhere, from floods in the Midwest, tornadoes in the central belt, earthquakes in California, to volcanic eruptions in the Pacific Northwest. No area of the country is immune. Insurance can’t cover all the expenses of rebuilding, so a business owner has a choice of rebuilding with less, or letting go and shutting down for good.
• Change in management
The change in the top brass of a company can also result in downsizing. The working methods and procedures vary with the management. Therefore, a significant change in the management roles may drastically affect the employee size to suit a particular style of working.
• Economic crisis
This is the single biggest cause of downsizing. Often, it consists of huge lay-offs by a number of organizations across various domains. The recent economic recession facing the world, has triggered a number of lay-offs in many reputed and popular firms in the world. According to a survey conducted by the US Bureau of the Census, organizations consisting of higher percentage of managerial staff downsize more than the ones with higher percentage of production process employees.
One of the more common reasons for corporate downsizing is a decrease in the demand for a company’s goods and services. This decrease may be due to competitors gaining a larger share of the available consumer market, or economic downturns that cause consumers to focus more on necessities and less on any luxury items. In both situations, the lack of demand means that the corporation can no longer continue to operate with the same level of expenses and remain solvent. Thus, the company is likely to limit or shut down some portion of the manufacturing facilities in order to adjust to market demands. This usually means that hourly employees and managers will be laid off for an undetermined amount of time or let go completely.
When corporate downsizing is due to corporate mergers, there is usually the need to streamline the operations of the company in order to prevent duplication of effort. Often, a merger will mean that at least some of the executives are likely to be laid off or let go as various upper level operations are combined. A merger can also often lead to closing some physical plants and other facilities where both entities formerly operated. In turn, this means a reduction on the number of line employees, shift managers, and plant directors as two or more operations are restructured to operate out of one facility.
While corporate downsizing is usually viewed as a negative situation, that is not always the case. Severance packages sometimes take some of the sting of a layoff out of the picture. Many companies who go through a downsizing process make efforts to fund job retraining programs for their former employees, while others actively seek to identify other employers who would be interested in hiring some of the laid-off work force. People who have been laid off due to corporate downsizing sometimes use the event as a springboard into an entirely new career or line of work, one that ultimately proves to be more personally fulfilling as well as more lucrative.
Sources:
http://www.wisegeek.com/what-is-downsizing.htm
http://whatis.techtarget.com/definition/0,,sid9_gci759501,00.html
http://www.investorglossary.com/downsizing.htm
http://en.wikipedia.org/wiki/Philippine_Airlines
http://www.buzzle.com/articles/reasons-for-downsizing.html
In this assignment, we are tasked to visit a company website that has undergone HR downsizing.
• What is Downsizing?
• To reduce in number or size
• To dismiss or lay off from work
• To make in a smaller size
Downsizing is a commonly used euphemism which refers to reducing the overall size and operating costs of a company, most directly through a reduction in the total number of employees. When the market is tight, downsizing is extremely common, as companies fight to survive in a hostile climate while competing with other companies in the same sector. For employees, downsizing can be very unnerving and upsetting.
There are several reasons to engage in downsizing. The primary reason is to make the daily operations of a business more efficient. For example, a company may be able to replace assembly line employees with machines which will be quicker and less prone to error. In addition, downsizing increases profits by reducing the overall overhead of a business. In other instances, a company may decide to shut down an entire division; a car company, for example, might decide to stop making sedans altogether, thus cutting an entire department.
In some cases, it becomes apparent that a business has too many employees. This may be because there has been a decline in demand for the company's services, or because a company is running more smoothly and efficiently than it once was. Many offices are heavily bloated with support staff and redundant departments, and these businesses may refer to downsizing as “trimming the fat.”
Numerous terms accompany downsizing. Employees may be terminated, fired, laid off, made redundant, or released. A business may be optimized, rightsized, or experiencing a reduction in workforce. Some of these terms have different legal meanings depending on where one is in the world; a layoff, for example, may refer to a mass temporary release of employees who will brought back in once business picks up, while a redundant employee is one who is asked to leave permanently.
Numerous consulting firms offer assistance with downsizing, often with the use of specialists who visit a business to evaluate it. Since profit is an important bottom line for companies, downsizing measures should be expected by employees, especially when they observe a troubled market or they are working for a struggling company.
For employees, the process can be stressful, because they may feel uncertain about whether or not they will continue to employed. Sometimes, downsizing is very abrupt, with a huge batch of employees being released from employment on the same day, while in other cases it may be a more drawn out and nervewracking process in which employees are slowly let go. Employers should remember that downsizing is very upsetting and stressful, and they should take steps to make it run smoothly while assuring valued employees that their jobs are secure.
In a business enterprise, downsizing is reducing the number of employees on the operating payroll. Some users distinguish downsizing from a layoff , with downsizing intended to be a permanent downscaling and a layoff intended to be a temporary downscaling in which employees may later be rehired. Businesses use several techniques in downsizing, including providing incentives to take early retirement and transfer to subsidiary companies, but the most common technique is to simply terminate the employment of a certain number of people.
Downsizing is a cutback in a company's operations and usually implies a reduction in its employee headcount as well. Downsizing results from many factors, including increased global competition, new technologies, and weaker labor unions; it takes various forms and has various outcomes. Some firms use downsizing as part of a long-term effort to transform their businesses; others turn to downsizing simply to slash costs and boost earnings. Sometimes downsizing boosts employee morale by giving the remaining workforce new responsibilities and opportunities; in other cases, downsizing leaves a demoralized staff that is undermanned when economic conditions improve. Some firms carry out downsizing relatively gently by offering workers strong incentives to retire; for other companies, downsizing means chopping heads as quickly and cheaply as possible. Whether downsizing generally helps or hurts a company's long-term profitability remains controversial. Evidence can be presented on both sides, but most would agree that the answer greatly depends on how the downsizing is executed.
Many companies today are under intense economic pressure. Reorganizations, takeovers, mergers, downsizings, joint ventures, and other major changes are extremely common, as companies try to grow and survive.
• Philippine Airlines
Formerly one of the largest Asian airlines, PAL was severely affected by the 1997 Asian Financial Crisis. In what was believed to be one of the Philippines' biggest corporate failures, PAL was forced to downsize its international operations by completely cutting operations to Europe and eventually Southwest Asia, cutting virtually all domestic services excluding routes operated from Manila, reducing the size of its fleet and terminating the jobs of thousands of employees. The airline was placed under receivership in 1998, gradually restoring operations to many of the destinations it formerly serviced. PAL exited receivership in 2007 with ambitious plans to further restore services to its previously-serviced destinations, as well as diversify its fleet.
Causes of Downsizing
• Changing market conditions
Ultimately, it is the small business owner who must accept responsibility for downsizing his company. There are just so many factors that an owner can control, but changing market conditions isn’t one of them. The market determines the lifecycle of a business, and the small business owner must stay in touch with changing market conditions in order to keep up the pace of growth. But this doesn’t always happen. Market shifts and the introduction of new technology can make a business become obsolete almost overnight. To restructure to meet changing market needs isn’t always possible. No amount of funding will breathe life into a dead horse. There comes a time when you have to let go.
• Disaster
A natural disaster can occur swiftly so that there can be little to do but batten down the hatches and wait it out. But a natural disaster on the scale of the hurricanes Katrina and Rita that destroyed thousands of small businesses along the Gulf Coast, can decimate a business and literally wipe it from the face of the earth. Natural disasters occur everywhere, from floods in the Midwest, tornadoes in the central belt, earthquakes in California, to volcanic eruptions in the Pacific Northwest. No area of the country is immune. Insurance can’t cover all the expenses of rebuilding, so a business owner has a choice of rebuilding with less, or letting go and shutting down for good.
• Change in management
The change in the top brass of a company can also result in downsizing. The working methods and procedures vary with the management. Therefore, a significant change in the management roles may drastically affect the employee size to suit a particular style of working.
• Economic crisis
This is the single biggest cause of downsizing. Often, it consists of huge lay-offs by a number of organizations across various domains. The recent economic recession facing the world, has triggered a number of lay-offs in many reputed and popular firms in the world. According to a survey conducted by the US Bureau of the Census, organizations consisting of higher percentage of managerial staff downsize more than the ones with higher percentage of production process employees.
One of the more common reasons for corporate downsizing is a decrease in the demand for a company’s goods and services. This decrease may be due to competitors gaining a larger share of the available consumer market, or economic downturns that cause consumers to focus more on necessities and less on any luxury items. In both situations, the lack of demand means that the corporation can no longer continue to operate with the same level of expenses and remain solvent. Thus, the company is likely to limit or shut down some portion of the manufacturing facilities in order to adjust to market demands. This usually means that hourly employees and managers will be laid off for an undetermined amount of time or let go completely.
When corporate downsizing is due to corporate mergers, there is usually the need to streamline the operations of the company in order to prevent duplication of effort. Often, a merger will mean that at least some of the executives are likely to be laid off or let go as various upper level operations are combined. A merger can also often lead to closing some physical plants and other facilities where both entities formerly operated. In turn, this means a reduction on the number of line employees, shift managers, and plant directors as two or more operations are restructured to operate out of one facility.
While corporate downsizing is usually viewed as a negative situation, that is not always the case. Severance packages sometimes take some of the sting of a layoff out of the picture. Many companies who go through a downsizing process make efforts to fund job retraining programs for their former employees, while others actively seek to identify other employers who would be interested in hiring some of the laid-off work force. People who have been laid off due to corporate downsizing sometimes use the event as a springboard into an entirely new career or line of work, one that ultimately proves to be more personally fulfilling as well as more lucrative.
Sources:
http://www.wisegeek.com/what-is-downsizing.htm
http://whatis.techtarget.com/definition/0,,sid9_gci759501,00.html
http://www.investorglossary.com/downsizing.htm
http://en.wikipedia.org/wiki/Philippine_Airlines
http://www.buzzle.com/articles/reasons-for-downsizing.html
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