Downsizing

The Effects of Downsizing

A noted scholar recently assessed downsizing as "probably the most pervasive yet understudied phenomenon in the business world" (Cameron, 1994). While we have become numbed by the near daily accounts of new layoffs, a New York Times national survey finding is perhaps more telling: since 1980, a family member in one-third of all U.S. households has been laid off (New York Times, 1996). By some measures, downsizing has failed abjectly as a tool to achieve the main raison d'etre, reduced costs. According to a Wyatt Company survey covering the period between 1985 and 1990, 89% of organizations, which engaged in downsizing, reported expense reduction as their primary goal, while only 42% actually reduced expenses. Downsizing for the sake of cost reduction alone has been castigated intellectually as shortsighted and neglectful of what resources will be needed to increase the revenue stream of the future (Hamel...
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