Restructuring and Redundancy: When is Downsizing not the right strategy?
March 7, 2009 by Di
Filed under Downsizing, Redundancies, Redundancy, change, 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.
Beware the pitfalls of downsizing, restructuring and employee redundancy
January 31, 2009 by Di
Filed under Downsizing, Redundancies, change, change leadership, change management, leadership, organisational restructuring, recession-proof
The last economic downturn to affect Australia saw a widespread cut back in apprentice training. While the effects weren’t experienced immediately, the absence of new talent entering the workforce on such a large scale meant that it was nearly 10 years before Australia returned to the same level of technical skill it enjoyed prior to the downturn. Arguably, the detrimental impact of the “solution” turned out to be far more serious to the country than the initial problem. This is just one example of the potentially harmful downstream consequences of downsizing and cutbacks that business is pursuing in the current economic climate.
Being mindful of the pitfalls of large scale downsizing and employee redundancy was the clear message that Heather Ridout, Chairman of the Australian Industry Group gave to business in a recent 7.30 Report Interview. Heather is not a lone voice in the wilderness on this topic. In the wake of weekly announcements that big business is shedding staff in mammoth proportions, other business and political leaders are joining a growing voice around the world warning of the consequences of these knee-jerk reactions to sustain short-term business viability.
My name is Di Worrall, and I'm an author, corporate change specialist and executive coach. I wrote the new release book - A Climate for Change - How to ride the wave of change into the 21st Century and create a more sustainable and prosperous future for you and your business. You might be a business leader or you might be in the business of coaching, consulting or training business leaders. I created this blog as a companion to the book and to help you and your clients navigate the current climate of change and uncertainty, and lay the foundations for a more sustainable future.
