My company has started a restructuring process. The managers argue the process will help to cut costs. However, they have not explained to staff if salaries will be reviewed as well. What do you think?
Some managers will argue that downsizing is the ultimate choice to manage costs, especially during tough economic times. Globally, many companies announce restructuring, which comes with laying off workers.
The approach works but not always. It could be that a new manager wants to step up control. Therefore, he or she can propose changes, which may not necessarily contribute to the general turnaround of the company.
This is synonymous with companies that are still experimenting policies; where everything new can be tried. Other managers recommend restructuring for economic reasons.
It should, however, be managed better as it has negative effects on employees and the company. Downsizing to maximise profits and improve cash flow is a ‘mute’ idea because companies that use this method end up paying heavily as employee morale dips.
The argument has always been that companies cut jobs to control payroll costs but they do not downsize workload. Studies indicate that after downsizing, surviving employees become dogmatic, self-absorbed and productivity drops.
Also, an organisation can suffer stagnation if it hires managers on a contract basis without a system to track performance, including innovations made. The manager will restructure and the cycle will continue when a new manager is hired at the expiry of the contract. To curtail the effects, a manager should plan and prepare for the transition by involving employees and communicating thoroughly with them.
HR Specialist & Journalist
Monitor Publications Limited