Esasay on Downsizing Phenomenon in an Economic Industry

Category: Economy



Franco Gandolfi and Craig Littler are scholars who have gained immense respect in the area of management, particularly when it comes to publications and other contribution in their areas of specialization. In their article, Downsizing is Dead; Long Live the Downsizing Phenomenon: Conceptualizing the Phases of Cost-cutting, the scholars comprehensively discuss the idea of downsizing and how it can be of importance when it gets to cost saving. The article gives a chronological survey of the phases of cost-cutting in as far as production efficiency is concerned. The authors take a look at the level of discourse when downsizing was not relatively popular in most organizations (Gandolfi & Craig, 2012). They also touch on the level of strategizing, which occurred in the late 1980-s when downsizing was slowly gaining acceptance purely being used as a quick response to economic hardships. The authors give a great conclusion to their article by analyzing the initial and final phases. In other words, the article builds from a past scenario to the present age of the aspect of downsizing and by extension the cost-cutting.


Downsizing as a method of reducing the workforce has frequently been used as a way of increasing profitability, productivity, efficiency, as well as the competitive edge of an organization. Downsizing is a strategy that has been adopted by many organizations all over the world due to its far-reaching financial, social and organizational consequences. Despite a lot of research having been conducted on downsizing, there is no evidence about the effectiveness of downsizing and whether it brings the anticipated benefits (Gandolfi & Craig, 2012). Downsizing of employees has been in use for more than three decades, and many organizations have adopted this strategy as one of the change strategies. This paper reviews the three phases of downsizing and the arguments concerning downsizing as presented in the article titled Conceptualizing the Phases of Cost-cutting by Franco Gandolfi and Craig Littler. 

According to this article, the first phase in the process of cost-cutting involves making short-term cost adjustments as a countermeasure to a decline in the company’s earnings. In most cases, the company or the business starts with adopting small or at times medium cost-cutting measures. These initial adjustments are aimed at helping the business to overcome this short period of low business without necessarily resulting in layoffs of some of the workers. The business should be able to return to normalcy within the time period of between four to six months. This stage is caused either by a decline in the forecasted sales or a decline in the sales volume. This phase is characterized by the adjustment of expenditures in the short term. It is necessary to avoid a possible downturn of the business at this stage. 

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These two scholars, as well as Satterlee (2009) consider the second stage of cost-cutting measures is aimed at responding to a business downfall that exceeds six months. It involves taking medium-term cost reduction measures This phase is characterized by a continuous projection of declining sales in the business. If this phase is adequately executed, the business will be able to adopt a medium range cost-cutting measures and, therefore, to prevent the possibility of the business resulting into downsizing.

According to the article by Franco Gandolfi and Craig Littler (2012), this third phase involves coming up with the long-term cost-cutting measures. This happens when the business registers a downfall for a period exceeding one year. According to this article, this phase is characterized by an increased decline in both the projected and current demands by the customers. This phase requires long-term adjustments in expenditures if the firm is to survive this volatile business conditions. It is in this phase that downsizing at times becomes inevitable. According to the article, the company must try to avoid mass layoffs by all measures. In case a company engages in massive layoffs, then it must adopt strategies that will instill commitment and loyalty of the remaining workforce.