Definition In a business enterprise, downsizing is reducing the number of employees on the operating payroll. Some users distinguish downsizing from a layoff, with downsizing intended to be a permanent downscaling and a layoff intended to be a temporary downscaling in which employees may later be rehired.
Whether it is called downsizing, rightsizing, delayering, reduction in force, redundancy elimination, or any of a host of other terms, the expectation of lifelong employment with one employer has now become the exception rather than the rule. Both in the government and the private sector, the loss of that sense of security--combined with the familiar scenario in which the number of employees is reduced but the amount of work remains unchanged--can have devastating effects on the remaining employees, otherwise known as the "survivors." .
Providing improved service with fewer workers is the hallmark of a successful downsizing. The basic GOAL for a successful downsizing is "work better and cost less". To help achieve this goal, it is important to review and learn from the experiences of organizations that have downsized--and recognize that downsizing does not always achieve the intended results. .
The fundamental reasons for downsizing in the government, and also among state and local governments, are different from those cited by organizations in the private sector. Private sector entities must reduce costs to remain competitive in an increasingly global economy and to maximize the returns of their shareholders. Public sector downsizing are primarily driven by budget reductions and technology improvements that allow fewer workers to do the same amount of work. Despite these different motivations for downsizing, the reactions and needs of the workers are the same across both public and private sectors. For this reason, much can be learned from the experiences of private--and public--organizations that have downsized in recent years.