Downsizing Case

Downsizing refers to the permanent reduction of a company's workforce and is generally associated with corporate reorganization, corporate downsizing results from both poor economic conditions and company decisions to eliminate jobs in order to cut costs and maintain or achieve specific levels of profitability. Companies may lay off a percentage of their employees in response to these changes” (Heil, n.d.). Downsizing affects not only the organization, but it has a profound effect on the employees of the organization who are at risk of losing their jobs.

A. Downsizing (rightsizing) implications on employees

1. Being laid off

“Downsizing is very common in corporate business in the United States. In fact, there are fifty percent (50%) more victims of downsizing in the United States every year than there are victims of violent crime. Corporate downsizing is not a new phenomenon, except perhaps in whom it targets today. A study conducted by the American Management Association in 1994 found that two-thirds of all workers who were laid off were college-educated, salaried employees. Downsizing in the 1990s has greater effects in the manufacturing sector, while in the 1980s the greatest effects were felt in white-collar and service industries. Corporate downsizing is based on the assumption that the failures of corporations (e.g., low or no profits) result from inadequacies of employees and their managers” (Robinson & del Carmen, n.d.).

Downsizing today with the recession being at its peak is something that was and still is

very common. People have to go to work every day and never know if they are going to be

laid off that day. I have been laid off one time in my life and that was in 2008, and I was

laid off due to seniority not because of the fact that the company needed to let someone go. I

was laid off because the person that they wanted to let go was on family medical leave of

absence and was protected by law until she was released by her provider to come back to work.

I did find another job within the same company less than a month later, but the fact still that I

was laid off is now on my resume of myself of time that I was out of work.

2. Benefits

When an employee is laid off they also lose their benefits or at least will have to pay

a higher premium for them if they decide to carry their insurance for a longer period of time.

This type if insurance is called COBRA. Most families cannot afford