Employee Downsizing

The Second Phase Contd...

Shortly after this raise, AOL downsized 2,400 employees in January 2001. Following the demand that the executive officers should also share in the 'sacrifice' associated with downsizing, some companies voluntarily announced that they would cut down on the remuneration and bonuses of their top executives in case of massive layoffs. Ford was one of the first companies to announce such an initiative.

It announced that over 6,000 of its top executives, including its CEO, would forgo their bonus in 2001. Other major companies that announced that their top executives would forgo cash compensations when a large number of workers were laid off were AMR Corp., Delta, Continental and Southwest Airlines. In addition to the above, companies adopted many strategies to deal with the criticisms they were facing because of downsizing.

Tackling the Evils of Downsizing

During the early 21^st century, many companies began offering flexible work arrangements to their employees in an attempt to avoid the negative impact of downsizing.

Such an arrangement was reported to be beneficial for both employees as well as the organization.

A flexible working arrangement resulted in increased morale and productivity; decreased absenteeism and employee turnover, reduced stress on employees; increased ability to recruit and retain superior quality employees improved service to clients in various time zones; and better use of office equipment and space.

This type of arrangement also gave more time to pursue their education, hobbies, and professional development, and handle personal responsibilities. The concept of contingent employment also became highly popular and the number of organizations adopting this concept increased substantially during the early 21^st century.

According to the Bureau of Labor Statistics (BLS), US, contingent employees were those who had no explicit or implicit contract and expected their jobs to last no more than one year. They were hired directly by the company or through an external agency on a contract basis for a specific work for a limited period of time.

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Case Details

Case Code : HROB016
Themes: HR concepts and issues
Case Length : 09 Pages
Period : 1990-2001
Organization : Varied
Pub Date : 2001
Teaching Note : Available
Countries : USA, India, etc...
Industry : Varied

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