The position of HR in organizational downsizing

Introduction

The Organizations are currently actively using a variety of downsizing strategies, including hiring freezes and layoffs, to proactively cut their workforce in anticipation of an impending economic downturn. The crucial task of successfully managing the downsizing process then falls to the human resources department. This involves reducing any potential legal, moral, and social risks associated with layoffs, such as by assisting impacted workers in better managing the stress that follows and giving remaining staff members the tools, they need to continue producing. Not much is done to relieve stress so that the surviving employees of the firm may more effectively handle their new conditions, even if the majority of corporations concentrate only on carrying on with business operations following layoffs and minimizing legal and public relations concerns

Figure 1/one way of organizational downsizing (Sources: https://www.hrinasia.com/branding/dos-and-donts-for-hr-managers-to-follow-when-downsizing/)

The concept of organizational downsizing

Organization downsizing is described as a strategy adopted by a company to reduce the scale of its business operations in an effort to. improve financial performance (Gómez-Mejia etal., 2016). Large payrolls in the past were seen as a sign of a company's strength and success. Payroll is described as the overall cost of maintaining a workforce, such as employee salaries and wages, taxes and benefits (Saez, E.,, et al., 2019).

What is downsizing

Downsizing often refers to the process of minimizing the size of workforce by removing the employment of employees. It is also often referred as a layoff. Downsizing is most common in a recessionary situation where downsizing helps companies to cut costs.

Reasons for downsizing organizations

01.Reducing costs- Payroll may be thought of as a liability on the balance sheet, therefore the only way for the business to reduce expenses is to continue managing payroll payments. It's not just about the money. However, there are benefits as well.

02. Increase productivity: It may also be advantageous when taking cost-cutting into account. To boost efficiency, advanced equipment can occasionally take the role of human workers.

03.Increase value: Investors and shareholders are made aware in some ways by this process that improvements are required to boost profitability. This may also assist investors in acquiring more shares, which would raise their value.

04.Sharpen focus: Businesses occasionally express interest in outsourcing part of their time-consuming tasks so they can concentrate on other areas. Its cost is so indirectly decreased.

Human resource department’s role in downsizing

The role of an HR department is highly critical within organizations for different purposes. An organization’s major purpose is to create value to all its stakeholders in different capacities and develop a long-term sustainable framework (Oduyemi, et al., 2020), and the HR has the responsibility to implement this same value to employees, and also ensure that adequate workforce is readily accessible for a business (Patrick, Parul & Mazhar, Shabana, 2021)

Figure 2/Reaction of employees for downsizing.

The first responsibility of the HR department is to review the downsizing decision and consider how this decision will impact the organization in the near future.

The second responsibility is to explore all of the available alternatives, such as pay cuts or a reduction in employee benefits and hours, and present these alternatives to the decision-makers. Next, the department has the responsibility of planning the downsizing by deciding on layoff criteria alongside executives and departmental managers.

Finally, the department has the responsibility of supervising the downsizing process, restructuring, and managing the effects of the layoffs on affected and surviving employees (Mujtaba, & Senathip, 2020).

Survivor management

While few organizations provide programs to help the employees who have been affected by the downsizing decision, it then becomes the HR department’s responsibility to develop an innovative communication plan to best address survivor questions and concerns (Dirani, et al., 2020).

Staffing management

one of the most critical duties of the HR department that must be performed with a high level of effectiveness and efficiency. During layoffs, reshuffling surviving employees' job duties could significantly disrupt the entire existing employment relationship.

Training and development

After layoffs are completed and surviving employees have been reallocated job responsibilities, it is the HR department’s responsibility to prepare the survivors for their new realities.

Responsibility to affected employees

Once the decision to downsize has been made, the HR department is responsible for reviewing union regulations, collective bargaining agreements, and other local legislation, as necessary, to ascertain all financial obligations due to affected employees (Mujtaba, & Senathip, 2020).

Conclusion

Downsizing is an organizational change initiative that is difficult to experience, the role of the HR department in managing the organizational downsizing change process. it is the responsibility of HR departments to develop effective layoff management strategies for both affected and surviving employees. The implementation of outplacement strategies, the department can mitigate the risks of negative publicity caused by the layoffs, improve affected employees’ transition into the labor market; and demonstrate to affected employees that their contributions to the organization were not unappreciated.

References

Dirani, R. C., Gunasekara, Ibrahim, G., & Majzun, Z., 2020. Leadership competencies and the essential role of human resource development in times of crisis a response to Covid-19 pandemic. Human Resource Development International.

Mujtaba, & Senathip, 2020. Layoffs and downsizing implications for the leadership role of human resources. Journal of Service Science and Management,.

Oduyemi, O., Abudu, & Adenekan, I., 2020. Towards a comprehensive life cycle costing model for sustainable facilities.. Iconic Research and Engineering Journals,.

Patrick, Parul & Mazhar, Shabana, 2021. Core Functions of Human Resource Management and its Effectiveness on Organization. A Study.International Journal of Social Economics.

Saez, E.,, Schoefer & Seim,D, 2019. Payroll taxes, firm behavior, and rent sharing evidence from a young workers' tax cut in Sweden. American Economic Review,.