Staffing Organizations

Posted: October 17th, 2013

Staffing Organizations

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Staffing Organizations

When a company is in need of increasing the profit margin, there are several avenues at hand, which the management of the company can choose to take. However, each of the avenues comes with its own positive and adverse impacts on the company. Downsizing is one of the avenues at hand for the management to choose in order to reduce the labor costs in particular and indirectly increase the profit margin. The avenue is however plagued by its own positive and negative impacts (Herbert, Heneman, Judge, & Kammeyer-Mueller, 2011).

Downsizing mainly means to cut down on employees or laying off. This process has the immediate effect of reducing the labor costs. However, it is prudent to analyze the effects involved in downsizing and thereby consider alternative courses of action. When a company implements an intense layoff, the company is bound to suffer from serious understaffing. This may end up rendering the company unable to function properly and thereby facing imminent closure. The overall effect is that the few staff left is overwhelmed by the increased duties and responsibilities rendering them demoralized, unmotivated and inefficient in performance. This state is sometimes referred to as “corporate anorexia” in relation to the body lacking the necessary nutrients to execute its functions.

Downsizing results in the loss of knowledge, skills, abilities and experience. When a company downsizes staff who had worked for the company for a considerable amount of time, the company ends up losing invaluable experience gained by the members of staff. This is further compounded when the laid off staff find employment in a competing company. When this happens, the staff ends up using the knowledge they have to compete against their former employer under corporate terms. The company could therefore experience possible losses in terms of market share and subsequent losses in sales.

In the end, it is evident downsizing is not a prudent option when considered as the first response in cutting down on labor costs. Many companies that have employed downsizing as an option have realized failure in achieving the goals and aims of the organizations. This has led them to rehire some of the staff that had previously been laid off (Heneman, 2008).

References

Herbert, H., Heneman, Judge, T., Kammeyer-Mueller, J. (2011). Staffing Organizations. Houston, TX: McGraw-Hill Companies, Inc.

Heneman, H. (2008). Staffing Organizations. Houston, TX: McGraw-Hill Ryerson, Limited.
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