Strategic downsizing: critical success factors

Abstract

Aims to review the literature pertaining to downsizing with an emphasis on the organization level, and establish the critical success factors of downsizing, that is, guidelines to the successful implementation of downsizing activities. Addresses these objectives by examining first, how downsizing is defined in the literature reviewed, then discusses the different ways in which or measures by which organizations carry out downsizing activities and the reasons that prompt companies to downsize. Addresses the rationale utilized by firms to downsize, the expected outcomes in terms of economic and human consequences, the approaches to downsizing (reorientation and convergence) and specific strategies such as workforce reduction, work redesign and systemic strategy. Also downsizing tactics, human resources as assets vs costs, planning, participation, leadership, communications, and support to victims/survivors are examined. Both laboratory experiments and empirical research concerning survivors’ reactions are explored. The role of trust as well as the human resource professional in the process are included. Conclusions and recommendations complete the article.