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Downsizing of staff consists of these elements it is intentional it leads to reductions in personnel it attempts to increase the efficiency of the organization and it affects work processes Atwood p1 citing a 1993 study by Huber Glick Downsizing of staff is often undertaken when an organization needs to quickly improve its profits a company under siege or claiming to be takes a look at its largest expense typically payroll and benefits and starts slashing According to a 1997 survey by the American Management Association AMA the most often claimed reasons for downsizing are organizational restructuring business downturn and reengineering of business processes Also according to that survey downsizing is a decreasing trend 19 of the 1200 companies surveyed actually downsized staff in 19961997 a number that is down from 27 the previous 12 months and down from a high of 432 in 19901991 Proponents of staff downsizing claim that the process increases company profits without sacrifising productivity that it makes lean machines out of bloated organizations Downsizing is sometimes justified as a necessary measure to protect an organization from bankruptcy The very things that make capitalism seem so harsh and even unfair are also what make it so vital It may not feel that way when youre in a downsizing company but that is historys lesson says one proponent Nocera p71 Downsizing does indeed increase profits for the organization that undertakes it -- but these profits are short-lived A survey by Wyatt Associates of Canadian downsized businesses found that 40 percent reported that downsizing did not result in reduced expenses and more than 60 percent did not experience higher profits after cutting staff Estok p 28 These and other studies show that at least half of all eliminated positions are refilled within a year after a major downsizing effort The AMA study also indicates that data show no correlation between lower operating expenses and higher profits and companies that decrease their costs
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