Downsizing and Organizational Restructuring

Question: Discuss about theDownsizing and Organizational Restructuring. Answer: Introduction Organizations are formed to provide goods and services in order to make profit. With this as the case profit maximization has been the number one goal for organizations (K?osowski, 2012). Basically, with the significant rise in competition levels in almost every industry, organizations will do anything to maintain their profit margins. Sometimes organizations operation costs can exceed its revenues, a situation which can lead to losses. An organization can incur losses irrespective of its size or market share. Even the biggest organizations in the world have incurred losses at one time or another .A number of factors can make an organization to incur losses including economic changes in a country, inefficient operation processes that lead to high levels of wastage and over employment in an organization, which occurs when the number of employees exceed the amount of work available. This is likely to hike the wage bill for the organization beyond manageable levels. It can also be as a result of unnecessary spending on employees motivation packages (Williams, 2011). There are number of strategies that such organizations can result to, inorder to reverse this trend. Downsizing and restructuring are among these strategies. Downsizing refers to the process by which organizations reduce the number of employees working for them on permanent basis. This can be done through a number of ways such as forced early retirement, or termination of contracts of employment for a number of employees in the organization in order to lower the wage bill to manageable levels. On the other hand restructuring refers to the act of bringing changes to an organization such as changing the internal structures, introducing new and more efficient processes, merging of departments among other changes in order to make an organization more efficient and reduce its operational costs (Appelo, 2011). Research and Analysis The need for organizations to cut down on expenses sometimes might be a matter between life and death. Although there are a number of strategies that organizations can use to achieve this, most organizations prefer downsizing and restructuring as methods of improving efficiency, competitiveness and productivity levels (Ross and Murdick, 2011). A research conducted in the 1990s by Cameron and Sarah on Auto Industry Firms in United States of America established that deterioration in the firms competitive levels lead to massive employee lay-offs across the country. An approximate number of 1000 firms had implemented the processes while a great deal of others indicated that they would result to downsizing in future. This was followed by layoff of more than three times this number of employees in the subsequent years. It has been found out that these two processes have significant impact on employees motivation and engagement as analyzed below. Absenteeism Employee absenteeism from work has been very common in the recent years .It has been associated with unsatisfactory working conditions including employee benefits and remuneration packages. Absenteeism occurs when an employee chooses not to come to work for a single day or a number of days. Increased instances of absenteeism can have significant impact on the performance levels of an organization as well as its reputation (Balogun, 2007)Organizational restructuring can lead to a change in employees roles and responsibilities, transfer from one department to another as well as change in working hours for an employee. To a large extent this can affect an employees degree of commitment to their organization. Organizational restructuring can also lead to elimination of other benefits enjoyed by employees and which might have been a motivating factor. This can lead to rise in levels of absenteeism among employees (Williams, 2011). Drop in Productivity Levels Every organization has its way of analyzing and measuring its employees productivity levels. Productivity is the measure of employee efficiency in their assigned tasks. High productivity refers to productivity that is above the acceptable levels. On the contrary low productivity refers to productivity that is below the acceptable levels. Organizational restructuring and downsizing have been found to be catalysts for low productivity among employees. If an employee is not satisfied with their assigned duties and responsibilities especially after restructuring their productivity levels are likely to drop (Cascio, 2012). Any news about an organizations intention to downsize and restructure can lead to a lot of fear and psychological disturbance on employees. This can lower their productivity. Change in roles and transfer from one department to another as a result of restructuring can also affect them psychologically leading to a drop in productivity. Reduced Employee Engagement Employers usually expect employees to be fully engaged in all matters that are related to their duties and responsibilities as well as their organization. They also expect them to show high levels of commitment to the organization. Employee engagement has been defined as the relationship existing between employees and their employer or their organization. It means the extent to which employees are committed to their organization and willing to protect its public image and interests. Employee engagement is very important for an organization. In the event that there is an intended or actual restructuring and downsizing in an organization, employee engagement is likely going to be affected. Their commitment to the organization will also be reduced. Additionally their willingness to protect the interests of their organization will drop significantly (sconce and McKinley, 2007). Lack of Involvement in their Work This refers to the physical and emotional involvement of employees in what they are doing. Lack of involvement can be displayed in form of reduced productivity and not adhering to work place rules and regulations as well as employees lack of passion (Burke Cooper, 2009). Downsizing and restructuring can lead to this. Conclusion Sometimes it can be hard to entirely prevent an organization from running into losses. This is because sometimes losses can be as a result of factors beyond the control of an organization. Making losses for repeated periods can ruin the reputation of an organization to a large extent. It can also make it unable to catch up with competitors. Such organizations can restructure or downsize so that they can save themselves from more losses. However, these two strategies are not the best solutions for cutting expenses especially because of the negative impact they have on employees. Recommendations Although there may be a positive outcome for on organization after downsizing and restructuring, the effect can be detrimental especially on the employees who are forced out of employment. Because of this organizations should result to using other strategies that do not have much impact on employees. Instead of downsizing an organization can chose to offer employee on part time basis without necessarily having to make them suffer for a problem that is not theirs. They can also recommend such employees to other organizations that might be having vacancies or reprieve them of their duties temporarily until when their organization improves financially. References Appelo, J. (2011).Management 3.0: leading Agile developers, developing Agile leaders. Upper Saddle River, NJ, Addison-Wesley Balogun, J. (2007). The Practice of Organizational Restructuring:.European Management Journal, 25(2), pp.81-91. Burke, R. J., Cooper, C. L. (2009). The organization in crisis: downsizing, restructuring, and privatization. Malden, Blackwell Publishers Cascio, W. F. (2012). Responsible restructuring: creative and profitable alternatives to layoffs. San Francisco, CA, Berrett-Koehler. https://www.books24x7.com/marc.asp?bookid=4604. K?osowski, S. (2012).The application of organizational restructuring in enterprise strategic management process.Management, 16(2). Ross, J. and Murdick, R. (2011). What are the Principles of "Principles of Management"?.The Academy of Management Review, 2(1), p.143. Sronce, R. and McKinley, W. (2007).Perceptions of Organizational Downsizing.Journal of Leadership amp; Organizational Studies, 12(4), pp.89-108. Williams, C. (2011).Management. Mason, OH, South-Western Cengage Learning.