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Causes and Effects of Downsizing Staff (or Headcount Reduction)BY: Deena David | Category: Business and Finance | Post Date: 2009-11-20
When the world's economy is booming, there are many jobs that are created because the various companies need more people to work in their companies to increase the production and cause an increase in the sales. This brings in more profits. The demand from the consumer is also more when the world's economy is booming because the person is able to earn more and also spend more. When the world is facing a recession or a depression, all this changes and the whole world becomes upside down. This is because there is a lot of loss that the companies make and as the companies make a loss, the production decreases. This is also because of the demand from the consumer decreases. When all these things happen, the companies decrease the number of staff employed in their company. This helps them to decrease the losses by decreasing the expenditure that would be incurred by paying salary to the employees. Downsizing actually means decreasing the number of employees working in the organization. Various levels of staff may be asked to leave depending on their performance level. Usually, in a downsizing activity of a company, the people with very less performance record will be the first ones to be asked to leave. There are various other causes for downsizing too. They are: 1. Loss in companies: When any company goes at a loss, then there is a lot of chance that there will be a downsizing in that company. This is because reducing the employee cost is one of the easiest and first method that is resorted to by many managements to decrease the loss in the company. 2. Decreased sales leading to decreased production: Another important reason for many companies to start downsizing is the decreased sales in a recession. When the company is producing a lot more than the demand, the company has to reduce the price to increase the sales. This can lead to a loss. The other thing that can be done is decrease the production of the company to make sure that the sales of all the products is possible. This means that the number of employees is I excess of the need. This leads to a decrease in the number of employees and this is the downsizing that is present. The various effects that occur due to the downsizing are: 1. Decrease in growth: When many companies start downsizing, the economy of the country and even the whole world can shrink because decreased jobs will cause decreased earning by the people and this will lead to decreased spending. Decreased spending will lead to decreased demand and so the production of various companies also suffers and the profits decrease further. 2. Health care: When there is a job loss, there are lots of psychological problems that are faced by the person and this can lead to various health related problems in the families of those affected by the downsizing. These are the various causes of downsizing and their effects. Article Source: http://www.saching.com About Author / Additional Info: I have completed my Masters Degree in Paediatric Nursing. I am a writer with a passion for writing. I have been writing for some blogs and other sites. Comments are welcome at the following e mail address: deenaanddavid@gmail.com Additional Articles: * Important health benefits of Kiwi Fruit that everyone should know * How to keep your Relationship Alive | Let your Relationships Breathe * Red Carpet Dresses Are Very High Profile * Is secondary Science appropriate in School Education? (Debate) * Enjoy Motherhood - By Nishu Does this article violate or infringe on your copyright ? It is a violation of our terms for authors to submit content which they did not write and claim it as their own. If this article infringes on your copyrights, then use our Contact us form with the detailed proof of infringement along with the offending article's title, URL and writer name. If you do not hear back from us then contact us again in another 10 days. Thank you. Comments on this article: (0 comments so far) * Additional comments are now closed for this article *
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