Overview of Corporate DownsOverview of Corporate Downsizing.
Corporate downsizing has been the forerunner to the loss of millions of jobs. While corporate downsizing is an indication of recession, employers are laying off more and more in spite of the fact that overall unemployment is at an historical low. Although downsizing is typically the last sought alternative for companies, it can occur for several reasons. Research illustrates that downsizing commonly transpires because of mergers, acquisitions, corporate restructuring, lack of strategic planning, and a decline in economic growth. The cut back in job occupancy produces adverse reactions for employees being terminated; in addition, it can be the foundation of an unfavorable change in employee morale for the employees who are sustained. Restructuring a company entails many complications: legal considerations, the cost of separation, and the lingering doubt of whether it is really effective or the best alternative. Each of these factors plays a role in the process of cutting back employment. In the case that downsizing is not the greatest decision companies may take into account that there are substitutions for reducing employment that are not as undesirable.
Reasons for Corporate Downsizing.
Mergers, acquisitions, and corporate restructuring are key motives for declines in employment for companies. Mergers take place when dual workforce and management teams combine and their efforts are redirected toward a common objective. Unification of businesses usually produces a redundancy in the workforce. Therefore, it becomes necessary for the venture to layoff employees. Acquisitions, on the other hand, take place when one business takes over or acquires another business. During a merger/acquisition the employees being downsized are generally forewarned once the merger/acquisition takes place. Subordinates are sometimes given the opportunity to remain at their job for up to ninety days, after which if no other employment is found a letter of recommendation is made available.