HR Glossary

HR terms frequently used by HR professionals.

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Downsizing 

What is downsizing?

Downsizing is the practice of making a company or an organization smaller by reducing the number of people working for it.

What are the common causes of downsizing?

Organizations often downsize for one or more reasons:

Improve efficiency by introducing new machinery
Reduce labor costs
Right-size resources relative to market demand
Take advantage of cost synergies after a merger
Increase profits by reducing overhead costs
Respond to a decline in demand for the company’s products or services

What steps should HR leaders take during downsizing?

HR leaders should take several critical steps during downsizing to maintain the organization’s reputation and keep employee morale from sinking to dangerous lows:

1) Evaluate the reasons for layoffs to ensure they are consistent with the employment program and contract requirements

2) Assist all managers with planning and managing complex layoffs

3) Determine a rehiring list for classified staff

4) Ensure that layoff notices are appropriately prepared and signed by the official with the delegated authority

5) Ensure signed layoff notices are delivered correctly to employees

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