Downsizing as а Strategic Tool for Organizational Change

The term “downsizing” is used broadly as a radical reorganization aimed at improving organizational efficiency, productivity and competitiveness, and narrowly as measures to reduce the number of management levels of the organization and the number of staff. Reactive and proactive downsizing strategies are highlighted and characterized in the article. The first is used as a quick response to the sharply deteriorating working conditions of the organization (crisis). The second is used when staff reductions and other activities are carried out as planned, which leads to changes in the business processes, business models and strategy of the organization. The driving forces or factors of downsizing can be grouped into three groups: sanitation, cloning, and organizational learning. Three strategies for downsizing are distinguished and characterized: a strategy for reducing the workforce, a strategy for reorganizing the structure and culture (redesign), and a systemic strategy. The latter involves the most profound and radical changes in the field of not only business processes and structure, but also the culture of the organization. Depending on the speed and depth of changes, a convergent strategy is distinguished (changes affect part of the organization or its individual business processes) and a reorientation strategy that affects the organization more broadly and involves a significant redefinition of its mission, strategy, and structure. The financial, organizational, and human consequences of using these strategies are considered. The likelihood of human consequences is the main obstacle to making decisions about downsizing.

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