Redundancy Survivors

by Rus Slater

Downsizing and redundancies

Downsizing is the term coined for an intentional reduction in the size of a workforce at all staffing levels, to survive a downturn, improve efficiencies, or become a more attractive candidate for acquisition or merger. Downsizing is reducing the number of employees on the operating payroll; in other words, it entails redundancies.

Some users distinguish downsizing from a layoff, with downsizing intended to be a permanent reduction in headcount and a layoff intended to be a temporary reduction, with the understanding that employees may later be rehired.

Businesses use several techniques in downsizing, including providing incentives to take early retirement and transfer to subsidiary companies, but the most common technique is to simply terminate the employment of a certain number of people.

Research after the economic downturn of the 1990s found that survivors reported high levels of distrust and lower levels of motivation and engagement. Absenteeism went up and productivity went down.