Strategic Management Essay

788 WordsMay 3, 20154 Pages
Difference between Downsizing and Delayering Downsizing and delayering are common practise in organization whose aim is to restructure its firm. These are caused by economy downturn, change in government regulation, merger and acquisition, cutting cost, budget tightening etc. Management need to adopt a better strategic plan when downsizing or delayering as it could have a great impact to the organization. They have to determine ways to keep the survivors motivated and avoid being disengaged. According to Appelbaum (2001 cited by Mirabal and DeYoung, 2005, p39), downsizing is a business strategy with the aim of improving the financial condition of a firm by restructuring the workforce thereby improving operation. Child’s definition on delayering simply means reduction in the managerial hierarchy (2005, p73). These two strategies affect both subordinates and managers. The aim of these two types of restructuring is in order to optimize performance in an organization that operates globally. I will highlight the differences of downsizing and delayering in terms of the effect in has on restructuring performance in organization. Positive Effect: Financial Relief: The restructuring of an organization via downsizing is with the aim of having a financial relief from high cost. Companies like the technology I worked for opted outsourcing as a way to minimize labor cost and maximize profits. This means using a contractor or sub-contractor to avoid paying health and dental benefit for their permanent staffs, avoid training cost etc in order to grow competitively in the global market. In the case of delayering, changing functional activities and removing those task that do not add value to the organization increases revenue and reduces cost. In my company, the president was able to remove the two district manager positions in British Columbia (Kelowna and Victoria) by

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