TITLE:
Layoffs and Downsizing Implications for the Leadership Role of Human Resources
AUTHORS:
Bahaudin G. Mujtaba, Tipakorn Senathip
KEYWORDS:
Layoffs, Reduction-In-Force, Downsizing, Role of HR, Rightsizing, Ethical Implications
JOURNAL NAME:
Journal of Service Science and Management,
Vol.13 No.2,
March
31,
2020
ABSTRACT: Downsizing or laying off employees is usually the strategically planned elimination of large numbers of personnel or workforce to enhance organizational effectiveness and economic outlook. Downsizing has some temporary or immediate advantages such as boosting profits, avoiding bankruptcy, creating new relationships, re-organization, and getting rid of “deadwood” or disengaged employees. The disadvantages of layoffs or downsizing in an organization can include reduced skilled workers and low morale, as the employees experience mixed emotions, dismay, stress, guilt, or even envy. In addition, layoffs can reduce existing employees’ satisfaction and commitment to the organization, which can result into lower performance. Human resources (HR) professionals and managers must effectively manage the impact of layoffs on people. The immediate financial hardship of a layoff could affect both the physical and psychological well-being of an individual worker, while also causing bankruptcy, depression, and more severe illnesses. Layoffs could result into long-term impacts since unemployment can last up to six months or longer. There might also be experiences of hopelessness when laid off employees are having difficulty finding new employment. This article provides an overview of layoffs as well as their impact on employees. In addition, the paper explains the role of HR personnel throughout layoffs, which are to ensure that the organization is able to enhance its overall effectiveness. In their role as project managers who are leading the layoff process, human resources professionals must focus on the legal, ethical, and socially responsible implementation of transitioning people and the organizational culture. Furthermore, managers can introduce new technologies or robots to reduce the need for large numbers of employees in the future, and they might consider changing location of the business or organization to be closer to the relevant material resources while better serving customers.