Daniel
J. Stone
Ohio
Dominican University
Abstract.
It is debated that downsizing
is good or bad for today’s workforce. Positive
aspects of downsizing are a valuable managerial weapon since it reduces
organizational costs fast and effectively, businesses are allowed to reallocate
resources, and streamline productivity. On
the other hand, negative aspects of downsizing are psychological toll on those
that were eliminated and by those that survived, increase in stress, and a
sullied reputation in the eyes of those in labor and stock market.
In the early 1980s, the
American market became more competitive due to an increase of goods and
services being readily available from international competitors. Japanese auto manufacturers such as Toyota
and Honda, for example, began producing products for the American market within
the US around that time. In doing so, Americans
were exposed to products that were fashionable, could be relied upon, and were
durable. In comparing the “Big Three”
American automakers, to Japanese automakers, the American automakers have been
slow to bring new vehicles to the market, while the Japanese are also
considered the leader at producing smaller, fuel-efficient cars. All of this is being done with a
non-unionized workforce largely found in Ohio, Kentucky, Tennessee and Texas. As a result, the Japanese automakers continue
to enjoy a cost advantage over the Big Three (CBC News, 2009).
Downsizing has been the
legitimate and strategic solution to the increase in competition and complexity
of the global economy. When an
organization is in decline, costs need to be cut, performance needs to be
improved, and downsizing has been the legitimate and strategic solution to this
problem. Payroll is by far the biggest
cost to an employer and by reducing this cost with downsizing, a declining
organization and correct and align itself with the situation and those that
survive the layoff are put in a situation to produce and the highest level (Mellahi,
K. and Wilkinson, A. 2004).An organization that has been downsized takes on a persona of a new organization. Positions are merged, resources are more regarded and buy in to the organization’s plan is evaluated and reemerged with renowned spirit. Downsizing with a well conceived strategy ensures that resources are reallocated and productivity is streamlined. This could be done by the head of an organization also doubling as in another administrative position, multiple levels usually taught individually being taught together to keep hours to a minimum. Another example of this is to centralize equipment and machinery so that only supplies are being used when it is absolutely necessary (Street and Street, 2010).
On the other hand, downsizing takes a psychological toll on those that were eliminated and by those that survived. To have an employer break that trust can be psychologically overwhelming. After all, an employee spends more time at the workplace with co-workers than they do in their homes with their family. Staying committed to make their employer the best that it can be takes total buy-in and dedication (Street and Street, 2010).
Survivors of a reduced workforce experience an increase in stress. Positions were initially created with job descriptions to occupy a regular work week yet positions are merged with the expectation that goods and services will be produced and provided in the same way. Leaders of downsized organizations fail to realize that just because the workforce is reduced doesn’t mean that the work left with the eliminated workforce. Those that stay behind end up doing the work of two people and are expected to continue to put their best foot forward with one of their legs tied behind their back (Street and Street, 2010).
The traditional manufacturing state such as South Carolina has had an unemployment rate that has exceeded the national average since 2001. It was around that time that manufacturing plants operating in the state began to downsize operations by shipping jobs overseas, mainly to China (Wenger, 2008). The backlash throughout the US towards Chinese products sold in the US was intense and as a result, American manufacturers began labeling their products with “China-free” labels. Resentment from unemployed workers towards competitive products from China to be sullied as a result of downsizing (Douaud, 2007).
In conclusion, downsizing is a trend that is here to stay due to global competition, cost reduction and performance improvements, and providing a new start to an organization due to the conceived strategy ensures that resources are reallocated and productivity is streamlined. The downfall of downsizing is psychological repercussions, increased stress from those that survived a downsizing, and negative publicity from the labor and stock markets towards the corporation that has jettisoned a large number of employees. Downsizing is good in maximizing profits but bad in various humanitarian aspects such as psychological tolls, extra stress and anxiety.
In reflecting the consideration the ethical implications of downsizing I have been a casualty and a survivor of downsizing. As a casualty, my initial feeling was one of anger and betrayal. Furthermore, I was embarrassed because I then had my close group of family and friends worried how I was going to make ends meet. As a person who possesses intropunitive characteristics which is to blame myself too harshly when I fail, I found the decision to being downsized personal rather than strategic. For example, I questioned what I did to deserve a lay off, how I could have better protected myself, in comparison to one of my colleagues who survived. As time went on, I later found the layoff as a blessing as it gave me the chance to pursue what my calling and passion really is. Two years later, I was living in a different state leading an organization in a start up branch office. In this situation, I experienced the survivor side of downsizing since I was expected to do so much with so little manpower. Not being one to complain, I bought into the company’s philosophy and gave it my all. In doing so, my shortcomings which everybody has were exposed. On the other hand, other than the psychological issues that came with being baptized by fire by being thrown into the deep end and have found a way to carry on, my spirit was renewed as one of being totally committed to the cause. The issue is dealing with those that do not share the same commitment as I do and how I can process their lack of dedication in a way that doesn’t cause friction.
My personal belief of downsizing is that the trend of letting good people go is inevitable. I do not agree that downsizing is the way forward since more careful considerations need to be made when a job is created, a company expands their services, and adds extra branches. When given a person the work of two people, that person will manage to carry on for the short term but in the end, the person will feel cheated, and no longer put up with the situation and move on. Therefore, downsizing needs to be done away with and solid business practices that minimize the hard feelings, in particular the feeling of being cheated, where humanitarian aspects are the focal point are the norm. People are the most important part of an organization and when they are not treated well, companies that downsize may have to downsize all the way to the point of going out of business.
To substantiate my perspective with facts and research, Southwest Airlines has a positive reputation in the eyes of its employees. This is because Southwest Airlines hires someone based on their attitude and then trains them for the skills needed to do their job. Not only are they trained, they are also empowered. This combination of attitude, training, and empowerment is Southwest Airline’s blueprint to building a confident worker who makes the right decisions (Campbell, 2010).
This approach illustrates the unwritten psychological contract between employer and employee. In the aftermath of 9/11 Southwest Airlines emerged as the only American airline company that remained in the black every quarter and didn’t furlough a single employee. Because of Southwest Airline’s solid business practices there was no need to downsize when nearly all of the other American airline companies were laying off people in droves, filing for bankruptcy, or going out of business. Southwest Airlines has continued to carry on as a leader in domestic air travel in the markets that it serves (Serwer, 2004).
Campbell, S. (2010). How Southwest Airlines Became a Model for
Customer Loyalty.
Retrieved
from: http://www.tmcnet.com/channels/customer-support-software/articles/87080-how-southwest-airlines-became-model-customer-loyalty.htm
121.
Douaud,
C. (2007). ‘China Free’ Labels Stokes Import Debate. Retrieved from:
Mellahi, K. and Wilkinson, A. (2004)
Downsizing and Innovation Output: A Review of
Literature
and Research Propositions, BAM Paper 2004, British Academy of Management.
Richards, T. (2009). The used-to-be Big Three: U.S. automakers struggling with sliding
sales,
Serwer,
A. (2004). Southwest Airlines: The Hottest Thing in
the Sky Through change at the top, through 9/11, in a lousy industry, it keeps
winning Most Admired kudos. How? Retrieved from CNN. http://money.cnn.com/magazines/fortune/fortune_archive/2004/03/08/363700/index.htm
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