HRM Assignment 5

Visit and identify a company website that has undergone HR downsizing. Identify the cause of downsizing and describe its processes.

Downsizing is an extremely relevant issue to organizations today in that it has become the most prevalent dilemma in recent years. The current tendency of organizations to restructure and ultimately to downsize has a major negative impact on the organizations themselves, on their surviving and terminated employees, on the government, and on society as a whole. In fact, it is everyone's problem, and it seems to have become more the rule than the exception that it used to be in the not too distant past. The current adverse economic climate has been persistent and long-lasting. As a result, many organizations that were operating inefficiently have been driven out of business, and most of those that have survived were forced to restructure in order to streamline their operations and achieve operating cost savings that would ensure their continued competitiveness both on the local and global markets.

There are many reasons why an organization may need to lay off employees in the current business environment that includes mergers and acquisitions, outsourcing key operations, and eliminating less-than-optimal business lines are just a few. However, at the heart of any layoff decision is the need to remain financially viable and competitive both now and in the future. It can therefore be tempting to continue the cost-saving measures as you select an outplacement services provider for your downsized employees. However, the choices you make can seriously impact your company’s reputation and profitability in the future.

One company that has undergone HR downsizing was Motorola Inc.
Motorola Inc. is laying off 2,600 employees across the company, resultingin a pretax charge of $104 million for the first quarter, the Schaumburg-basedtelecommunications equipment-maker disclosed in a regulatory filing Thursday.

In a separate statement, Motorola said the layoffs are part of a previouslyannounced plan to cut costs by $500 million this year. Executives haddisclosed the cost-reducing program at the beginning of 2008 and warned thatit could mean job losses. Motorola’s employee head count totaled 66,000 at theend of 2007, according to the annual report it filed in February.
The company reports second-quarter earnings on April 24 and is expecting afurther decline in sales and global market share for its cell phone unit.Motorola previously announced that it also is planning to split the handsetdivision into an independent, publicly traded company with a new chiefexecutive who has yet to be hired.
A sizable portion of the 2,600 lost jobs will come from Singapore, where the company is planning to halt cell phone manufacturing by the end of thisyear. The shuttering of those operations will result in the loss of 700 jobs.Motorola said in its 2007 annual report that Singapore, along with China andBrazil, are the company’s largest cell phone manufacturing facilities, and thelion’s share of its handsets are made in Asia.

Other major reductions are to take place in Plantation, Fla., where Motorola will let go of 354 employees, and in a Birmingham, England, facilitythat will lose 120 jobs.

Motorola said the reductions were made across all three of its business units, as well as on the corporate level. Since becoming chief executive in January, Greg Brown has seen significant turnover in senior executives. In February he took direct control of the cell phone unit from Stu Reed, who subsequently left Motorola, and later hired new heads of finance and human resources. Brown also restructured marketing operations, with the chief marketing officer leaving the company.

Crisis of any kind is always an opportunity for change. Anytime ever are people more willing to accept new solutions than when they become necessary. Beyond the spectrum of this crisis, solutions streamline the costs of personnel are always much needed. Processes related to these solutions are delicate and requires attention: for example the right sizing of staff can not do than without a systematic analysis of staffing needs for a longer time span.

When:
• The company goes through a period of crisis (financial, etc) more difficult than usual;
• It is necessary to reorganize and streamline the current activity, for optimal use of available resources;
• It is necessary to restructure the company by the waiver of certain activities or by reducing a significant
amount of their share in total activities;
• There are conflicts between employees and management that has to be resolved;
• Downsizing is necessary.


Methodology

Downsizing can be effective if implemented appropriately. Companies must be careful to avoid sending the wrong messages to employees, shareholders and the media. Successful downsizing requires managers to:

• Evaluate the overall impact of downsizing. The total cost of downsizing-including both financial and non-financial costs-must be taken into account. Managers must calculate the present value of all costs and benefits associated with the cuts, including severance packages, lower employee productivity due to disorder or talent loss, eventual rehiring expenses, future rightsizing costs and the lost opportunity costs associated with not having the appropriate manpower to accelerate out of the downturn. Investing in areas customers care about-while competitors are cutting back-helps position the company to take or sustain the lead once conditions improve. The value created from downsizing should exceed the cost of lower employee morale and potential damage to the company's reputation;
• Develop a smooth downsizing process. It is crucial that managers invest aggressively in upfront planning for the job cuts. A company typically forms a committee to determine the appropriate level of downsizing and creates a process that takes into account the best interests of the company and the shareholders. Other important activities are training managers to conduct layoffs and assisting former employees in their job searches.


Companies use downsizing to:
• Reduce costs;
• Rightsize resources relative to market demand;
• Signal that the company is taking proactive steps to adjust to changing business needs;
• Take advantage of cost synergies after a merger;
• Release the least-productive resources.

References:
http://archives.chicagotribune.com/2008/apr/04/business/chi-fri-motorola-8k-jobcuts-motapr04
http://en.allexperts.com/q/Human-Resources-2866/Downsizing.htm