Downsizing Decisions
Decision Making in the Face of Downsizing and Acquisitions
In the period of financial instability that has defined the last decade, labor realities have been unpredictable at best and downright cruel at worst. Downsizing and Acquisitions have become two of the watchwords for employee insecurity, signaling the often shifting needs of corporations either struggling for survival or seizing growth opportunities. For those with the unenviable task of decision-making in the face of these realities, an array of data, factors and approaches will enter into the ultimate process of laying off employees and bolstering the morale of those who will be retained. The discussion hereafter considers many of the conditions that drive this decision-making process and that shape its consequences.
Supporting Information:
It should universally be the case that financial imperatives provide the information from which decisions will be made. Downsizing is rarely engaged without an economic pressure or opportunity at hand. According to Pablo et al. (1996), the best way to optimize personnel and productivity is to provide clear financial rationale both for the positions to be eliminated and the procedure that will produce this elimination. Here, the risk and return of downsizing or acquisition will be measured by financial analysts either internal to the company or, as the discussion will show hereafter, more frequently from outside consulting firms. According to Pablo et al., "finance and strategic management scholars have conducted most of the prior work that has addressed risk in relation to acquisitions. The central focus in most of these empirical studies has been on the risk/return relationship in which risk, operationalized as variation in post-acquisition performance, has been linked to acquisition type." (p. 1)
Decision-Making Factors:
The major factors which drive decision-making will often be a combination of external and internal conditions. Whether a company is engaged in downsizing, acquisition or some combination of the two, the impact on personnel will be based on factors such as the fiscal performance of the company, redundancies in positions occupied, corporate mergers, broader economic recession and patterns of globalization which...
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