Downsizing, restructuring, rightsizing, even a term as obscure as census readjustment has been used to describe the plague that has been affecting corporate America for years and has left many of its hardest working employees without work. In the year 2001 we had nearly 1. 8 million jub cuts, thats almost three times as much as the year 2000(Matthew Benz). In the 1990’s, one million managers of American corporations with salaries over $40,000 also lost their jobs. In total, Fortune 500 companies have eliminated 4. 4 million positions since 1979 including the 65,000 positions cut in February of 2002 (Ellen Florian).
Although this downsizing of companies can have many reasons behind it and cannot be avoided at times, there are simple measures a company can take to make the process easier on the laid-off employees and those who survive with the company. There are many reasons why a company might need to downsize. In today’s corporate America, it is a plain fact that far fewer employees are necessary to maintain a successful operation. Many times, it is the case where a technological advance or breakthrough makes it possible to replace a previously human job.
It is also an all-too-common scenario that outside influences such as sudden shifts in the market or changed government policies force corporate executives to make coinciding decisions regarding their staff and these external changes. The fall in interest rates and energy prices have helped companies control spending in the economic recession, but controlling these costs has taken some of the focus away from there employees and satisfying there wants and needs (Economist Vol. 362). Yet another problem facing the employment of our citizens.
Another one of the major problems in today’s business world are the salaries being paid to the workers. Since employers are not paying their workers high wages, the workers have little to put back into the economy. Some cities have decided to make mandated pay raises for employees who have been with firms for so many years. It would also guarantee that employees make well above poverty levels to insure that more money is being put back into the economy (Eric Roston). This causes the system to plummet and forces companies to downsize to keep from going under.
Wall Street firms cut positions in order to bring the Dow Jones Security Broker Index up. Because of September 11th many firms on Wall Street have followed this trend, laying off some 30,000 people (David Stires). The downsizing of a company can affect employees before, during and after it occurs. Employees usually know of a possible downsizing, care of the almighty grapevine, months before it is supposed to happen. Thus, employees may become paranoid and self-absorbed, and their top priority is their own career rather than the bottom line of their employer.
This causes them to be unfocused and prevents them from performing their jobs efficiently. Many workers would also be perfectly willing to stab their peers in the back in hopes of keeping their job. Usually when a downsizing is complete, the company is at an all-time low. This is due to the fact that in almost every merger, acquisition or downsize, employees are faced with uncertainty about their jobs before and after the restructure. After a large percentage of downsizes, ten percent of the remaining workforce will easily adapt to the change, while another ten percent will never adapt.
Workers who survive the downsize often have feelings of anger, fear or distrust. Further internal problems result from employees who survive with the company, but cannot adapt to their new settings and expectations, and eventually quit their job. Many steps can be taken to ease the transition of the employees after downsizing occurs. For the employees who were let go from the company, reasonable severance packages should be offered to help the person until a new job is found (Roger & ME, Micheal Moore). Downsizing not only affects workers that have been terminated, but also affects the survivors.
This is commonly referred to as the survivor syndrome( Floyd Griffin). Many people who survive as a result of downsizing often live with the fear that they too will be terminated. They are often shell shocked and distrustful. They are mentally scared survivors of an economic restructuring that they have never seen before. In this constant climate of economic insecurity, their jobs are constantly being redefined. They are forced to meet new levels of production criteria requiring them to do more work in less time and the notion of job security is obsolete.
As for the remaining employees, simple means of communication can be very important. One of the major reasons for employee problems after a downsizing is the mistrust in the management and lack of knowledge regarding their own job status. If the employees are informed of what is transpiring within their company, they might not be fearful of losing their job, or so quick to stab a fellow employee in the back. This problem has affected millions of families in America and has forced good, decent workers to settle for lower wages and little or no benefits in exchange for supposed higher job security.
I also have some personal experience with this subject. My father worked for Nortel Communications and was very successful and high in rank. After the company started loosing profits they began to downsize. Unfortunately, he was one of the thousands that were let loose. I talked to him about this topic and he gave me much information that is not released to the internet. His personal experience helped me understand the employment problems in the United States and increased my knowledge of the inner workings of corporations.
However, he is not the only person feeling the effects of this corporate downsizing. EMI, a company in the music industry, merged with Warner Music Group and cut 1,789 jobs in order to maximize profits (Richard Beam). Families of these employees and the providers of the household are feeling the effects of these problems as far as income is concerned as well. Compensation for men in the middle third class decreased 3% since 1996 and those in the bottom 8%. This doesnt apply to those in two-parent families however; whose compensation has increased 31% (Horst Brand).
Is this fair to those men younger than 45, especially those 18-34 who are feeling the effects the hardest? I think not. It is much harder for the employed single parent to bring in income and provide for a household, than it is for those households that have two providers. This is also a concern of the public. Although downsizing can have devastating effects on those people on the negative side, the remaining employees can have tremendous opportunities for growth and skill development.
After a restructure, there are many ways an employee can grow vertically and horizontally within their company. Since so many positions are eliminated in such a process, the remaining employees sometimes need to learn new skills and adapt to handling greater amounts of work than ever before. While this may be an inconvenience at first, these skills and abilities can assist these people in future job searches. The downsizing process is a fact of life. It affects all people from managers to laid off employees and their families as well as those who remain with the company.
It is something that will continue to occur with no end in sight. As long as our world market continues to grow, so too will the concept of downsizing grow. This process can lead to psychological problems, and creates anxiety and frustration for those of both ends of it. This is a problem that most likely will not have an easy solution, or at least not any time soon. It is something that we all must deal with in one way or another, and as for the victims of downsizing, the only thing they can do is try to piece their lives back together and hope for the best.
