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Downsizing to Solve Capital Problems

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Questions: How and why has corporate downsizing been effected in the last 18-months? Why have so many employees been laid off? What are some of the statistics of lay-off/corporate downsizing? How important of a role has the HR function played in recession-driven downsizing?

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Solution Summary

Corporate downsizing is an action taken by corporations to reduce workforce and restructure finances. This solution discusses how downsizing is a type of layoff used to terminate employees to reduce company costs. Four references are also included with this solution.

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According to Ecthompson (2010), since November 2008, America's 500 largest companies have laid off approximately 700,000 employees. Some of those companies include Pfizer, BFGoodrich, Continental Airlines, Human and Ford Motor Company and their reasons stem from competitive to economic crisis. For example, ABC Corporation laid-off its employees in order to keep up with the Cablevision network. Unfortunately, today corporations are still downsizing to preserve the organization's intellectual capital. It is a strategy used as a lifesaver for corporations, but termination for employees.

Although, most corporations were reluctant to use the downsizing strategy to cut costs, it became the only means to their survival of the economic crisis. For instance, General Motors Corporation was forced to downsize by eliminating 21,000 workers, 2,600 dealers, $44 billion in debt and four brands including Pontiac (Puzzanghera & Bensinger, 2009). However, after GM receiving $9.4 ...

Solution provided by:
Jennifer Agard, PhD
Education
  • MA, Capella University
  • BA, Empire State College, NY
  • MBA, Empire State College, NY.
  • PhD , Concordia University
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