Downsizing an organization is a common and accepted solution for operational and administrative cost containment. It sounds great on paper, “let’s get rid of X,Y,Z and if our revenue stays the same, we will make more profit”.
This argument forgets to take into consideration the remaining workforce, attitudes and motivations that ultimately affect future revenue.
Downsizing will decrease the remaining workers sense of autonomy and freedom.
Downsizing will create a decline in communication and interaction among employees.
When times are tough, and workforce is cut, a “siege” mentality sets in, everyone tries to maintain the status quo, innovation and creativity wither away, plans are left on the drawing board.
Downsizing is necessary in certain situations, but before eliminating workers, take a hard look at your plan for maintaining communication, creativity, innovation and moral. Make certain your key people are ready and prepared to deal with the new realities.
Leaders and managers will have to work extra hard to maintain enthusiasm and creativity in the organization. Make sure that these key people understand that downsizing will create significant problems, and that they are responsible for their prevention and solution.