The Definition of Downsizing

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Downsizing is the act of terminating multiple employees at one go in order to save money. Downsizing isn’t similar to terminating an employee based on cause or conduct. It is done so in order for the firm or business to focus on immediate key areas where it is struggling in order to get back on track.

So, what is Downsizing?

The process of reducing headcount by reducing costs is called downsizing. This is when jobs are eliminated voluntarily when the company offers its employees via a buyout or through a layoff involuntarily.

Let’s Consider a Few Reasons Behind a Company Forcing Downsizing.

  1. When there is a Recession – When the economic condition of a country worsens, the entire nation goes into recession. Recession affects businesses along with the lives of the people. In order to maintain profitability during the recession period, companies use downsizing.
  2. When there is a Decline in Industry – During the event of a company facing a technological or other crisis, it can reduce the cost with the help of downsizing.
  3. Where is there is Merger – When 2 companies are going through a merger or one company buying another, then downsizing is experienced quite often.
  4. When there is Competition – If your rival company reduces workforce via downsizing in order to stay competitive, then your company may also be tempted to do the same.
  5. When there is Streamlining – Companies increase their profit and maximize efficiency when it wants to streamline via corporate restructuring.

These are some of the reasons for a company that faces downsizing. Consider outplacement services in Brisbane.