Strategies for successful organizational downsizing

TLDR

The study aimed to identify common downsizing strategies, assess their effects on organizational performance, and distinguish best practices of successful versus unsuccessful firms. The authors described three main downsizing strategies, detailed managerial actions to mitigate negative effects, and outlined best practices of firms that effectively downsize. The analysis of 30 organizations over four years revealed the outcomes of these downsizing approaches.

Abstract

Abstract This article reports the results of a study of 30 organizations that engaged in downsizing over a four‐year period. Three questions were investigated: (1) What general strategies are used by organizations to downsize? (2) What are the effects of downsizing on organizational performance? (3) What are downsizing's “best practices?” or, What are the differences between organizations that effectively downsize and those that do not? Three main strategies for downsizing are explained, the managerial actions to overcome the negative effects of downsizing are enumerated, and the best practices of successful downsizing firms are presented.