Alternatives to downsizing

Published on June 2, 2014   19 min

Other Talks in the Series: Corporate Restructuring and Downsizing

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This talk is on alternatives to downsizing. My name is Wayne F. Cascio. I'm with the Business School at the University of Colorado Denver.
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This talk focuses on alternatives to downsizing. Slide two speaks to the issue of when downsizing is unavoidable. Sometimes it is. If an organization is overstaffed. For example, if you move from a deregulation and you used to be a monopoly, have a monopoly, for example, on telecommunications or something like that. If an organization is overstaffed, then rivals will come in and undercut your labor costs. Another firm may be able to make better use of some asset that's not performing well. If we think about many years ago, IBM spun off Lexmark printers, and HP spun off Agilent, which makes electronics test equipment. Both of those are thriving firms doing very well. They just didn't fit the long-term business strategy of the two parent firms. Obviously, when times are tough, cash flow is the lifeblood of any company, and you've got to do what it takes to preserve it or to enhance it. Unfortunately, for many organizations, they move directly to downsizing. Instead of thinking about, are there other actions that we might take? I'd like to emphasize that if you believe in your industry, that the changes are not short-term, that they are structural and long-term in nature, then downsizing may be unavoidable. On the other hand, if you believe that the downturn is short-term in nature, then there are many alternatives that an organization might pursue.