HRM Assignment 5: HR Downsizing

{ Posted on 12:18 PM by Ariel Serenado }

For this assignment we are tasked to visit a company website that has undergone HR downsizing.

Human resource downsizing for me implies massive employee’s left to fend for themselves. It is a systematic reduction of a workforce by an employer, usually as a result of financial losses, cash flow difficulties, and loss of government contracts, technological changes, or international competition. Companies downsize by terminating or transferring employees, offering early retirements, or imposing hiring freezes, to name a few approaches. Even though unemployment rates have been dropped in recent years, companies still are dealing with the scenario of human resource downsizing. When a certain company is on the scenario of downsizing of course it is never a good thing for the employees for each and every employee has its initiative to protect the job he/she is holding. The least that these employees can do is to seek another position vacancy for them to cover up the lost job. First of all an employee may hurt and angry after being downsized. Remember that there are some companies who have its resiliency plan to offer some assistance in helping the employee move on.

For this entire scenario I think that the most common advantage that one should acquire is job security. HR downsizing is never an option to the employees but in recent cases many companies are choosing the option of downsizing its employees these days. Everywhere you look big companies are letting go of hundreds of people. In my own opinion I think that amidst the scenario there’s a bit intervention of the innovation of technology why there is downsizing of human resources. Consider this example; years ago you had experience people answer some telephone calls asking your significant queries, now all you get is an answering machine, an automated computer prompting voice in the other end. This is just an instance or maybe one of a million reasons why there appear to have Human Resource downsizing.

However as I review over the internet, I have come to browsed some companies who had undergone massive human resource downsizing. Also, articles discussing the downsizing of the companies.

General Motors (GM)
Website link:

Some experts predicted that the company might choose to restructure and eliminate nine factories with 30,000 employees over three years.

Just this April 2009 General Motors has laid off close to 3,400 salaried employee, moving individual employees from their desks and out of the door in a half-hour’s time. May 1 marked the soft deadline for accomplishing the first round of layoffs. It also marked the beginning of a pay cut 3 to 10 percent, depending on a person’s rank for many of the remaining 26,250 salaried workers in the U.S. GM also noted in their statement that it is expected to add manpower reductions among its salaried workforce. The company also said it would trim its hourly workforce by 7,000 more than it had outlined in its first restructuring plan submitted in February 17. These layoffs are being done as part of the cost cutting exercise. In some reports, that the latest reports that GM needs to eliminate about 31,500 hourly and salaried employee as part of the restructuring.

Telecommunication and high technology companies are also facing downsizing these days. Three companies, the Newark Telecommunications and Entertainment Company (IDT), British cable giant NTL Incorporated and AOL one after another, they shutdown their call centers and laid off thousands of employees. The main reason was to cut and move call center jobs to sites in South Africa and India.

MCI Incorporated
Website link:

MCI, Inc. is an American telecommunications subsidiary of Verizon Communications that is headquartered in Ashburn, Virginia. The corporation was originally formed as a result of the merger of WorldCom (formerly known as LDDS followed by LDDS WorldCom). In the year 2004 MCI announced it is cutting 4,000 jobs—cutting pressures and fallout from the national Do-Not-Call registry. The company had announced in January 2004 that it was expecting to reduce overall costs by 15 to 20 percent, but did not mention specifically that jobs would be cut. Company officials said increased use of cell phones; industry competition and effects from the national Do-Not-Call legislation have all contributed to the decline.

Nokia Siemens Networks
Website link:

20 November 2008, Telecommunications solution provider Nokia Siemens Networks said it will slash around 1,800 jobs as part of its restructuring efforts. The company is a 50:50 joint venture of Finish cell phone maker Nokia and German firm Siemens. Nokia Siemens plans to cut about 750 jobs in Finland. It will also close its site in Munich, Germany which will affect nearly 750 jobs in Finland. In addition, the company has planned reduction of headcount by about 50 in Egypt and by 20 in the United States.

The Volvo group
Website link:

20 November 2008, Swedish truck and bus maker Volvo AB has said it will lay off 1,000 staff at its power train unit in Sweden and the United States as the global financial crisis continues to affect the demand for heavy vehicles. The Volvo group has previously announced layoffs of 2,000 workers at their truck plants in Belgium and Sweden and 1,350 workers at its subsidiaries Renault Trucks, Mack Trucks and Nissan Diesel.

Deutsche Post
Website link:

Deutsche Post, Germany’s only universal provider of postal services is part of Deutsche Post DHL, the world’s leading mail and logistics Group. This german logistic giant announced it would slash 9,500 jobs at its DHL US Express business and shut all service centres following the economic downturn. DHL US Express will also close all ground hubs and reduce the number of stations from 412 to 103, said a company statement.

Some other companies in the technology and communication sector also experience the same scenario as experienced by General Motors, MCI Incorporated, Nokia Siemens, The Volvo group and Deutsche Post. Some of these giants in communication sector that undergone workforce reduction includes the following:

1. Lucent
2. Nortel
3. Motorola
4. Xerox
5. Compaq
6. Cisco
7. Dell.

In addition, other companies outside of the high-tech industry that have recently announced their workforce cutbacks, such as the following:

1. Ford
2. Air
3. Canada
4. Bombardier

In times of this economic slowdown and uncertainty, many companies are quick to respond by scaling their operations. Workforce reduction can have both negative and positive consequences for an organization and the economy in general. As noticed in the companies mentioned above, the common thing that serves as the reason why these companies resort to downsizing is that the RESTRUCTURING of the whole business model that associates internet facilities to make transactions faster and easily be managed under less supervision.

There are two circumstances why there appear to have downsizing. 1.) when a company need to increase its profits by generating the same revenue with a smaller number of employees and 2.) when the company faces a situation where workers cannot produce goods profitable at current markets prices. The result of downsizing is the vast loss of intellectual capital that was built for many years, intellectual capital brought by the constant lending of hands by the employees and the supervision of the heads. When layoffs are repeated without a thoughtful and strategic approach it may destroy the company’s effectiveness in holding the job security. News of frequent HR downsizing is much alarming for it will rally destroy the motivation and harm the productivity as employees who are much effected of the downsizing. What makes it alarming also is that when there are massive downsizing it’s not the company that is affected but also the community and the economic status of the country as well. Especially here in the Philippines which unemployment rate is very high the more layoffs would occur the more the economy fails to cover up. Moreover, the scenario is also bad for the organizational structure of the company. After downsizing, the surviving employees will talk about what was happened and furthermore, it will dramatically increase mistrust of management for they know for the fact they will experience same thing as experienced with the laid off workers.

Above all this negative things brought by HR downsizing there is still economic impact on having workforce reduction. Today, regardless of the economic slowdown, consumer spending remains high, indicating that consumers continue to be optimistic.

In terms of the process, dealing with problem on downsizing is the right way to manage your workforce during a recession. One of the key factors to your success will be how you handle the people who work for you- especially if you are considering laying off staff. Here are some of the processes how to handle the scenario of downsizing:

1. Increase communication. Share both what you know and what you don’t know about the economy is affecting your business.
2. Invest in training. Continuing to plan for the future, take advantage of the opportunities. Encourage employees to join trade sessions.
3. Involve your employees in decision-making. Involve your employees in major decisions like layoffs or salary cuts.
4. Staying positive. A good attitude is infectious. Try to maintain a positive outlook and remember to share good news widely.
5. Try to keep the little things. When budgets get tight, the first impulse is to cut everything that seems non-essential.

As mentioned above, that some of the causes of downsizing are as follows:

1. financial losses
2. cash flow difficulties, and;
3. loss of government contracts

As a result of these major causes, massive workforce reduction or downsizing is experienced.

In conducting layoffs it should be planned well to make sure that laying off of employees is in a manner that reflects well on the planner and the company. It comes down into four basic principles:

1. Plan layoffs carefully. Take the time to ensure your layoff plan and your business plans are in synchronized manner.
2. Be prepared. You will make things easier to both for yourself and the people you are laying off if you are well prepared.
3. Know the law. There are also certain rules that apply when laying off groups of individuals, but again, the laws are different depending on the province.
4. Treat people with dignity and respect. Be kind and compassionate. Losing ones job can be humiliating experience, so give people the respect.

References: sharing/index.shtml with downsizing/ 11 01 archive.html

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