RECRUITMENT AND SELECTION PRESENTATION ON

DOWNSIZING

What is Downsizing ?

• Downsizing can be said to be intentionally designed set of activities taken up to improve organisational efficiency and performance which affect the size of th eorganisation's workforce, costs and work processes.

• Downsizing means a reduction in the number of employees, levels of management and overall size of the company in order to increase profitability or reduce costs.

•a strategy which reduces the scale and scope of a business to improve its fiancial performance.

PHASE 1

• During the early 1990s, downsizing was undertaken by successful compnies as a purposeful strategy : not only the companies reduced their workforce, but also redesigned their organisations and implemented quality improvement programs.

• Focus on enhancing the value of the organisation as a whole.

• Companies taking up downsizing to :• reduce costs

• become more competetive• optimise resources

• improving decision making• increasing the speed and responsiveness

• improve productivity

GLOBAL SCENARIO

•People losing their jobs at very short or no notice.

•Others living in state of uncertainty for their jobs.

•Worldwide economic slowdown during late-1990s.

•Measures implemented to cut costs, optimize resources and survive the slump.

•Low morale of retained employees, loss of employee loyalty & expertise.

•Negative affect on the quality of work produced.

• Downsizing in all major industries like banking, automobiles, chemical, information technology, fabrics, FMCG, air transportation and petroleum.

•Downsizing practised in developing countries as well such as India, Indonesia, Thailand, Malayasia and South Korea.

• Downsizing being taken up more as a 'me-too' strategy of firms.

PHASE 2

Downsizing was on the rise in the early 21st Century due to :

1. Worldwide economic recession2. Increase in the global competetion

3. Dynamc changes in technology4.increase in the availability of temporary employee base

(lean manufacturing and outsourcing)1. wage reduction

ALTERNATIVES TO DOWNSIZING

ATTRITIONRefers to the gradual reduction of the size of workforce by not replacing the personnel lost through retirement or resignation.

GOLDEN HANDSHAKE it is a clause in an executive employment contract with a significant severance package (ay and benefits an employee recieves while leaving employment in a company) in case that executive loses his/her job through firing, restructuring or even retirement, can be in the form of cash, equity or other benefits.

VOLUNTARY TIME OFF Refers to a situation wherein employees have the option to take unpaid time away from work without employment status.

ALTERNATIVES TO DOWNSIZING :

TEMPORARY STAFFING it is an all paid short term (less than a fiscal year) based assignment, for which a talent is hired.

CONTINGENT EMPLOYMENTrefers to workers who do not have any explicit or implicit contract for long

term employment.

SHORTENED WORK WEEKSthe week of working days were shortened as the workers who were paid

daily or weekly would get less money than usual.

FURLOUGHTemporary leave of some employees due to special needs of a company

(economic condition of a specific employer or the whole economy)

ALTERNATIVES CONTD.

POSITIVE ASPECT OF DOWNSIZING.....

• Mutual Effect : This mutual downsizing effect allows the owner to create a balanced plan, so each department gets the proper resources to perform as required.

• Better Management : Downsizing gives an owner more control of the management team, of the individual projects and creates more opportunities for the owner to interact with employees at all levels.

• Cost Saving: The greatest benefit to downsizing is the financial benefit. Money is saved when there are less people to pay, less resources costing the company money and just less of everything overall.

• Less Duplication of work : All companies have some level of repetition, be it among different departments or the people within them. However, when a company has to downsize, repetition becomes less of an issue, as there are fewer people to do the jobs which could be similar to someone else's job.

NEGATIVE ASPECTS OF DOWNSIZING...

• Loss of skilled employees

• excess workload on survivors

• resistance to change from the survivors

•low employee morale

•reduced productivity and fall in the quality of work

• heavy expenses incurred on overtime pay

• massive cuts on executive remuneration

• negative corporate image

• employment of temporary and contract workers

LESSONS TO BE LEARNED.....

KEYS TO SUCCESSFUL DOWNSIZING:

• Planning, formulation and communication of a proper downsizing strategy.

•support of senior leaders and their active involvement

• incentive and compensation planning

• effective monitoring systems

• encourageing employee participation

• continuous motivation to boost employee morale

identification of skills needed by employees to take new responsibilities.

Balanced use of Formal & Informal Communication.

Consideration of employee inputs for betterment.

Efficient handling of Internal & External Sources of Information.

Formulating the ‘Shared Pain’ Approach

SOME MORE LESSONS .....

SOME RECENT EXAMPLES :

BARCLAYSWith cuts of 1,400 employees already in 2011, Barclays announced, it will

layoff a total of 3,000 staffers by the end of the year2012.

HSBC Since 2011, HSBC has already laid off 5,000 people, but announced thst plans are still in place to slash approximately 25,000 more in near future.

CITI BANK GROUPCiti has announced plans to trim its securities division as it focuses on its retail banking side. Recently, the bank said it was considering cutting head count by an additional 350 people.

PEPSI The company said layoffs would be spread over 30 countries, with the U.S. workforce likely 3 percent smaller by the end of the restructuring.

IBM Labor groups in Germany announced that the company was planning to cut as many as 8,000 employees this year. That came on top of reports that IBM had fired 3,000 U.S. and Canadian workers

Presented by :Sheryl MehraKritika GhaiPromita MajumdarAishwarya DesaiJatin Gupta