HUMAN RESOURCE MANAGEMENT

Human Resource Management

Human Resource Management

Introduction

The need to downsize has become an all too familiar aspect of business today, as businesses are increasingly divesting their workforce, that had dramatically increased in the 1980s. There are many reasons for this need to downsize, ranging from business downturn owing to market recession, poor management, inadequate planning or increased foreign competition as well as takeovers, mergers and divestments. (Kiedel 2004:12-30)

Large companies have tended to undergo a greater reduction in workforce, particularly if they have been relatively insulated from market forces owing to high profitability or being part of the public sector. This is also true for larger organizations as they move towards concepts such as “High Performance Work Systems” with fewer layers of management and the devolving of decision making and empowerment of employees at all levels. In smaller companies the change process is often more severe in terms of the workforce affected and may lead more rapidly to closure. (Harris 2006:5-30) This paper discusses the issues to be considered when making a downsizing decision.

Discussion

B&Q is the largest home improvement retailer in UK, at the moment experiencing a sales decline within the domestic market. The current weakness showing in negative results is general to the retail market although the domestic competitors have not been affected likewise. The negative development is balanced by the increasing growth in foreign markets such as the Asian market experiencing a rapid growth to continue. The DIY concept former essential to the retail industry has been replaced with a new concept being 'home improvement' targeting a new customer group being the women. The women are representing a buying power only to develop further in the future. (Kirkpatrick 2009:48-60.)Although the purpose of downsizing is to improve competitive advantage by reducing the cost base, it can often backfire and actually reduce an organization's ability to compete. This is particularly true when the methodology is perceived to be unfair or the selection criteria inadequately thought through or the organization is taken beyond the minimum level of competence it requires to function. This has been found to be true in large organizations that have targeted employees, often solely on the basis of age, and are then surprised to find that the experience base of the business has been removed.

The effect of downsizing on employees extends far beyond those that are actually losing their jobs, in many cases having a significant negative effect on the remaining workforce. This can often create a devastating “siege mentality” where creative thought and action dries up and people do their jobs and nothing else. Redundancies are also considered by the marketplace as a sign of failure of the management team, as well as having a significant impact on local communities. The decision to downsize is one of the most extreme actions that any management team will face and should be conducted as humanely, quickly and as efficiently as possible. Many organizations also do not adequately think through their vision and take several attempts to reduce numbers, ...