Organisation Downsizing/ retrenchment downsizing:
In any business organisation, there should be adequate staff as per the need. Excess employees or inadequate employees are undesirable as both situations are harmful. The term downsizing is used to indicate reduction of excess manpower by suitable measures. For reduction of excess manpower in an organisation, suitable downsizing plan will be necessary.
For reducing surplus employees, some other methods can also be used like:
(1) To retain all existing employees but to reduce the work hour for reduction in the total salary payment.
(2) To transfer or reassign employees in other parts of the organisation where there is no need of additional employees.
(3) To offer incentives for early retirement in the form of VRS.
(4) To declare lay-offs for dealing with surplus staff.
Such downsizing will be necessary when market demand reduces or when new technology is introduced. In India, recently downsizing was introduced in, nationalized banks and in organisations such as Fiat India, Motorola and Hyundai elect.
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