Question

Discuss the types of downsizing over the past decades, including the reasoning behind why they occur, and the impact to the business. Include in your discussion the role that HR plays in hese type of management strategies.

Answer 1

Answer:

Following are the types of downsizing, reasons behind downsizing, impact of business and the role that HR are expected to play:

1. Hiring freeze where the company stops the hiring process and makes no new selection and employment engagement with any of the outside candidates. The reasons behind choosing this strategy is that the company may not need the new candidates as an employee if it has sufficient number of human resources to carry out its working or when the company is running short of funds and it does not have the capability to pay more number of employees. hiring freeze may have certain impact on the business such that the business would save the cost of hiring and paying the new employees; however the burden of the existing work would be increased over the present employees. Business would be able to get higher productivity through the available number of employees. HR’s role in this type of management strategy is that they are responsible to get the work done from the present population of employees in the company even when the work is getting overloaded on the employees.

2. Mandatory vacation: When company faces the shortfall in the revenues and when there are less demand for products and services, company sends their employees on mandatory vacation such that these vacations are nonpaid. This strategy saves the cost to the company that it would be required to pay in the situation when the company cannot generate any new revenue from the production of the product and their sales. The role of HR manager in this situation is to actually determine the exact number of employees that are required to remain in the company and the number of employees that are required to be sent on vacation by taking in to consideration their expertise and experience. HR Manager should also determine the time period for which the employees would be required to be sent on vacation.

3. Salary reduction and cut in overtime: This strategy is followed by the business in the situation of reduction in the revenues and sales of the products of the company. This situation occurs when the customers of the company start moving to the product of the competitor and when the company is required to stop the production process or shut down some of the operations or when the company manufactures seasonal products. This strategy helps business in saving some cost of running the business. Role of HR in this strategy is to determine how much salary and overtime is required to be cut so that it does not affect the productivity of the employees.