Managers have been inundated with advice on the dos and don’ts of laying off employees. But the truth is that there is no ‘one size fits all’ approach to downsizing.
The recent economic downturn has left many organizations in a quandary. Just several years ago, the
major issue was winning the so-called “war for talent”: how to attract, motivate and retain the best and
the brightest. But then the current recession turned that thinking upside down. Now, many organizations
are scrambling to figure out how best to restructure and cut costs without jeopardizing the valuable
human capital that they built during the prior period of growth.
To help such companies, the authors have developed a framework that integrates the seemingly paradoxical
practices of talent management and downsizing. The framework looks at two important dimensions.
The first is the type of downsizing, either reactive or proactive. The second dimension of the
framework is the approach to managing employees, either control-oriented or commitment-oriented.
Those two dimensions–type of downsizing and approach to talent management–can be combined
to form a two-by-two matrix consisting of four quadrants. Each quadrant represents a different
strategy, with a distinct philosophy, focus and key HR and downsizing best practices. The authors contend
that there is no “one size fits all” approach to downsizing and that managers need to devise the
approach that makes the best sense for their particular company, depending on its position in the
matrix’s quadrants.
2 Comments On: Which Way Should You Downsize in a Crisis?
Of course, downsizing is not a new phenomenon. In fact, over the past two decades it has become a widespread tool for cutting costs and achieving operating efficiencies. Yet past research has shown that downsizing does not guarantee any performance returns.1 Instead, layoffs often result in employees’ broken trust, increased burnout and decreased morale.2 Hence, companies need to understand how to manage the process of work force reduction to attain its benefits while avoiding its ancillary costs.
Certainly a touchy subject. It’s never easy to figure out what is best for both the bottom line and the people at the same time. It’s the ebb and flow of the human experience within the work place.