The Impact of Downsizing on Human Resource Management

Topics: Human resource management, Human resources, Termination of employment Pages: 5 (1880 words) Published: March 9, 2013
The Impact of Downsizing on Human Resource Management

The workplace is constantly changing each day and the job of the Human Resource Manager is constantly changing to keep up with these changes. It is important for the Human Resource Manager to stay attuned to the various changes and make sure the corporation is productive during the changes as this can affect the profits and profitability of the company. One of the major problems in the workforce today is downsizing and the impact that downsizing has on Human Resource Managers and the programs they must implement and communicate to the employees of the corporation and follow any legal requirements that are in place at the time of the downsizing. The Human Resource Manager must make hard decisions that not only affect the employee but also the corporation and the reputation of the corporation. Downsizing has risen dramatically since the early 1980’s because of many extenuating factors such as innovation, technology, the weather, the economy, and globalization. These factors have increased the amount of individuals that the company either no longer needs or can no longer afford to pay. Downsizing for a company can be an extension of the strategy that they developed to maintain competitive advantage in the workplace. They are replacing workers that no longer have the skill sets that the job needed in prior years for workers who have the skill sets needed in today’s technological and advanced markets. This makes sense in the end but the employee who lost their job through elimination suffers from the loss of their job and can cause adverse reactions within the company. Human Resource Managers have the tough job of determining who will be the individuals, departments, or divisions and the jobs that they are eliminating. This is a tough decision and handling these decisions should center on the employees, employers, and the laws governing layoffs from corporations. The Human Resource Manager has to take into consideration the effect that eliminating jobs will have on the workforce of the company whether it is the employee that is leaving the company or the employee that is staying on with the company. Layoffs influence both sets of workers and not only do this affect employee morale, but also are a major concern of the Human Resources Manager. The Human Resource Manager has to come up with a strategy that will minimally affect the employee and the corporation because this is the best plan for both employees and employers. Human Resources Managers can utilize several strategies when it comes to downsizing within the company. The first step is to determine if downsizing will be an effective means to cut costs to the company. If downsizing is the only alternative for cost cutting advantages, the Human Resource Manager must decide what steps they will take to eliminate the jobs of the employees. The most popular downsizing program is attrition. This is the simplest means of cutting jobs because it focuses on not filling jobs that employees have left open by posting for a promotion or quitting the company to further their career in a new company or personal reasons. This affects the profitability of the company because they do not have to pay a new employee in this position. The only drawback is that it affects the employees because they cannot promote into the position that the company eliminated. Another form of downsizing is offering the employee early retirement or buy-out which is called voluntary termination. When a company offers buy-out to the employee, they essentially offer the employee a severance package to leave the company voluntarily instead of laying off the employee with no benefits. The company may offer early retirement to some employees that are near retirement age. Of these options may not be the best plan for a company cutting costs due to loss of revenue because this can cost the company more money because most of the...

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