ASSIGNMENT 5 (HRM)

Visit and identify a company website that has undergone HR downsizing. Identify the cause of downsizing and describe its processes.

So first let's just give some meaning to those words that I am not familiar.(hehehe)

WHAT IS DOWNSIZING?

MEANING:

Downsizing is the ‘conscious use of permanent personnel reductions in an attempt to improve efficiency and/or effectiveness’ (Budros 1999, p. 70). Since the 1980s, downsizing has gained strategic legitimacy. Indeed, recent research on downsizing in the US (Baumol et al. 2003, see also the American Management Association annual surveys since 1990), UK (Sahdev et al. 1999; Chorely 2002; Mason 2002; Rogers 2002), and Japan (Mroczkowski and Hanaoka 1997; Ahmakjian and Robinson 2001) suggests that downsizing is being regarded by management as one of the preferred routes to turning around declining organisations, cutting cost and improving organisational performance (Mellahi and Wilkinson 2004 )most often as a cost-cutting measure.

resources: http://en.wikipedia.org/wiki/Layoff

Overview: This overview focuses both on downsizing in the narrow sense (workforce reduction) and on related, generally broader or more fundamental strategies such as rightsizing and rethinking. The document defines key terms, discusses why downsizing is important, highlights implementation approaches, tools, and results and lessons, and suggests next generation issues. It includes a selected, annotated bibliography; examples of experts and resources in downsizing; and illustrative examples of the various approaches (e.g, downsizing, rightsizing, rethinking). Because most lessons of experience suggest that workforce reductions are rarely effective undertaken in isolation (i.e., downsizing for the sake of downsizing is increasingly regarded as a highly ineffective strategy), the overview attempts to weave together themes pertinent to downsizing, to rightsizing, and to some extent to rethinking.

resources: http://jobfunctions.bnet.com/abstract.aspx?docid=60772&tag=content;col1

WHY DO FIRM DOWNSIZE?

*Reduce Costs
*Reduce layers of management to increase decision making speed and get closer to the customer.
*Sharpen focuses on more competencies of the firm and outsource peripheral activities.
*Generate positive reactions from shareholders in order to improve valuation of stock price.
*Increase Productivity.

Effects to downsize: Overall

*Mixed effects on firms performance; some cause short savings, but long term profitability and valuation not strongly affected.
*Firm's reputation as good employers suffers.
Ex. Apple computer reputation as good employer declined after several layoffs in 1990's.
*Downsizing rethinking of employment strategy. Lifelong policies not credible after downsizing.
Ex. IBM abandoned lifelo9ng policy after several layoffs in early 1990's.

Effects to downsize: Employees Morale

*Employee motivation disrupted: increase in political behaviors,anger, fear - which is likely to negatively impact quality of customer service.
*Violation of psychological contract,leads to cynicism, lowered work commitment, fewer random acts of good will.
*survivors experience more stress due to longer work hours with the re-deisgn jobs, and increased uncertainely regarding future downsizing.

Effects to downsize: Workforce Quality

*Many senior employees leave due to application of early retirement incentives: result is loss of institutional memory.
*The use of the voluntary workforce reductions (buyouts) results in the most marketable employees leaving (stars)-- difficult to control since all the employees must be legally eligible to qualify.
*Early retirements & voluntary reduction often result in too many people quitting and some are hired back as consultants at higher cost to firm.

Downsizing Effects

Downsizing works best when:

*Changes in strategy,Organization structure and culture accompany job cuts of downsizing.
*Weak business units and plant closures are used as basis of reductions, rather than across the board cuts affecting all the units (including healthy one).

Downsizing

Critical Thinking Questions:

1. Which is better criteria to use as the basis for downsizing employees: seniority or performance?

- for me, it is the performance. Because dealing with a company is not a joke business it is very real and there are lots sacrifices of what you have. In order to run a company it should deal with the "performance."

2. Should employers give future notice to downsized employees, or to tell them on the they they are expected to leave the firm ?

- o,yes!It should be so that the employee can get ready to search for another jobs.

3.Separation pay is voluntary. What benefits do firms gets when they give separation pay to employees in downsizing?

- ***

4. Is there a set of best practices to let an employee know he/she been downsized?

- If there, well i think it's a challenge to him/her to work better.

5. Under what circumstances might company's managers prefer to use layoffs instead of early retirements or voluntary severance plans as the way to downsized the workforce?

- ***

resources: http://www.authorstream.com/presentation/edwinlee-111819-downsizing-hr-business-finance-ppt-powerpoint/

Example of company undergone hr downsizing:

History Progress

1890s–1937-Early Ambitions

A merger of three 19th-century companies—the Tabulating Machine Company, the International Time Recording Company and the Computing Scale Company of America—creates the Computing-Tabulating-Recording Company (CTR) on June 16, 1911. CTR is the precursor to IBM. Thomas J. Watson Sr. joins CTR in 1914 and over the next two decades transforms it into a growing leader of innovation and technology and a prototype for the newly emergent multinational corporation. This shift is signaled in 1924, when the company’s name changes to International Business Machines Corporation (IBM). From the beginning, IBM defines itself not by strategies or products—which range from commercial scales to punch card tabulators—but by forward-thinking culture and management practices grounded in core values. By adhering to its vision and values throughout the Depression—providing continued employment, even adding engineers and other staff in order to sustain its production output—IBM is able to play a pivotal role in enabling the U.S. government’s Social Security Act of 1935, “the biggest accounting operation of all time.”

1938–1951-Growing Influence

Although international commerce is brought to a halt by the Second World War, IBM expands its manufacturing capacity to meet wartime demands—adding to its Endicott, New York plant, and opening new facilities in Poughkeepsie, New York, Washington, D.C., and San Jose, California. Following the war, the company accelerates its international growth, and in 1949, it forms the World Trade Corporation to manage its foreign operations. In the span of two decades, the new organization will generate more than half of IBM’s bottom line. Business innovation works hand in hand with social innovation during this period, as IBM promotes diversity and corporate philanthropy in its policies. The company begins to focus on opportunities for women, minorities and the disabled—years before such considerations would become the norm.

1952–1963-Foundations of Modern Computing

The ascension of Thomas J. Watson Jr. to IBM’s presidency in 1952 marks the beginning of the company’s transition to a modern corporation. During the first decade of his tenure, Watson Jr.—later labeled by Fortune as the “most successful capitalist who ever lived”—begins to transform IBM from a leading industry player into a business behemoth that spans the globe. He refocuses IBM toward the development and commercialization of electronic computer technologies, creates and institutionalizes professional corporate management practices, and codifies unwritten IBM philosophy and behaviors into formal policies and programs. These technological, business and social innovations propel IBM into the 1960s as the world’s leading high-technology firm.

1964–1970-The 360 Revolution

In the early 1960s, IBM sees its marketplace lead threatened by a series of worthy challengers. In a bold business move—Thomas J. Watson Jr.’s legendary “bet the company” decision—IBM develops the revolutionary System/360™ family of mainframe computers. Sparked in part by the triumph of the System/360, IBM experiences a nearly fivefold increase in revenues and earnings over the course of the decade. The organization wears its mantle of success well, adopting a host of progressive new employee and social programs that make it one of the world’s most admired companies. If IBM ended the 1950s as a technology leader, it ends the 1960s as a global business icon.

1971–1992-Computing Gets Personal

Building on its success in the 1960s, IBM solidifies its position as the IT industry’s—and the business world’s—most profitable, admired and iconic corporation, and continues to develop innovative new products throughout the 1970s. From the magnetic-stripe technology used on credit cards, to floppy disks, to the Consumer Transaction Facility (an early form of today’s ATM), IBM’s ingenuity is felt everywhere. As a new era of computing begins to take hold in the 1980s, the company creates standards that legitimize the PC, turning it from a hobbyist device into an indispensable tool of modern life—in homes, businesses and schools around the world. The company also continues to push the boundaries of scientific discovery, with five IBM researchers sharing three Nobel Prizes in Physics. However, despite its depth and breadth of innovation, by the late 1980s IBM finds itself thrown into turmoil by the very revolutions it helped launch—initiating a downturn and period of unrest for the company that will persist into the following decade.

1993–2002-The Birth of e-business

Entering the 1990s, IBM confronts its most significant strategic challenges since the Depression and successfully undertakes one of the great turnarounds in business history. It moves into major new growth businesses, principally services and software, and embraces open standards for computing. The company also fundamentally reshapes its culture to refocus on clients and to be more agile, responsive and collaborative. This transformation coincides with the advent of the Internet, and IBM is a pioneer in helping clients capitalize on the new possibilities of global networked computing and business—what it dubs “e-business.” As the 20th century comes to a close, IBM stands, once again, at the forefront of global technology and business.

resources: http://www-03.ibm.com/ibm/history/interactive/index.html