Restructuring and Redundancy: When is Downsizing not the right strategy?
March 7, 2009 by Di
Filed under change management, redundancy, organisational restructuring
At first glance, corporate downsizing could appear to be a logical pathway to improved profitability during poor economic conditions. Dr Wayne Casio in his 2002 book, “Responsible Restructuring” cites research which offers some surprising results to the contrary. Drawn from an 18-year study of leading companies, this research indicates that the most profitable companies were those where employee turnover remained less than 5% in any particular year and those which were on a path of growth. In stark contrast, organisations that were downsizing appeared at the bottom of the profitability bucket. So, downsizing as a strategy in isolation may not yield the profitability outcomes businesses may hope for.
Downsizing may not be the right strategy if, on balance, the negative consequences of employee redundancy outweigh the short term benefits as the following examples illustrate: Read more
Welcome to this on-line forum for leaders of change. My name is Di Worrall, and I help business leaders with the skills and confidence to make change happen for themselves, their career and their business. As an author, organisational change specialist and executive coach, I work with leaders to create a clear path through change and uncertainty; build their leadership skills and confidence; and create systems for lasting change and a more prosperous and sustainable future. For regular updates on our best leadership and change articles, you can subscribe to our fortnightly ezine below.
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