by Kenneth R. Cohen, PhD
Published in Society for Human Resource Management, 1996
Over the past several years, companies across every industry have sought ways to improve profitability and service while decreasing costs. As labor expenses usually account for the single largest segment of the company’s budget, downsizings are one of the first options that senior executives consider when trying to cut costs.
Although reducing headcount does produce immediate budgetary savings, it is reported that these downsizing initiatives seldom achieve their desired, long-term goals of increased profitability and greater efficiency and productivity. Research also suggests that downsizing’s current popularity is not because it is the most effective method over the long term, but because it is the easiest to do administratively.
In this drive to cut costs, companies often lay off employees without giving sufficient attention to the human talents, which their organizations will need in order to survive. Unfortunately, statistics reveal that…
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