.. Of key people, but this material is rarely organized in a fashion that allows for its transmission to other. Employee turnover can negatively affect firm performance through loss of social capital. We expand this by taking into account the tacit knowledge that firms lose when employees leave" (p. 50). Although it is difficult to quantify the value of the tacit knowledge lost when downsizing takes place, it is reasonable to conclude that a company may be shooting itself in the foot by intentionally terminating qualified and knowledgeable employees who represent a potential asset rather than the liability reflected in the downsizing approach.
Conclusion
The research showed that the term "downsizing" as well as the more palatable term, "rightsizing," refers to the practice of companies terminating employees in an effort to become more streamlined and profitable. These terms can also refer to the elimination of redundant positions, temporary layoffs, allowing positions occupied by retiring employees or other departing employees to go unfilled, not renewing temporary work contracts and avoiding hiring workers to cover for employees who are absent for temporary periods of time. The research also showed that downsizing is not a personnel intervention to be taken lightly because the adverse impact on the company can be profound. Terminated employees are also affected in severe ways, of course, but even those who remain on the job are affected by such practices because they naturally wonder if they are next in line and may reasonably be expected to question the company's commitment to its loyal and hard-working employees. Finally, the research showed that...
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