Companies refer to the process by many names: "downsizing," "rightsizing," "cutting back," "trimming the fat," "working smarter" and "re-engineering" are just a few of the ways the process is described. Regardless of what companies call the process, the end result is that employees, sometimes hundreds or thousands, lose their jobs and incomes, and entire communities are sometimes plunged into chaos as a result. For some companies, reducing their labor force by such drastic measures is a necessity if any part of the company is to survive. These companies are in severe financial straits and may not survive even after severe labor cutbacks. For other companies, such measures are undertaken in order to improve their "bottom line" and increase their attractiveness to investors, some of whom are likely to be senior managers of the corporation. This research examines the process of downsizing in American corporations and considers the effects of downsizing on workers, employers, communities and other stakeholders.
Downsizing refers to the process of reducing costs within an organization by reducing the workforce. Re-engineering or restructuring might involve other processes, including cost cutting by changing the way in which people work, but downsizing almost always has a reduction in workforce component. Typically, executives in organizations which undergo downsizing programs emphasize the need to save money and to take the painful step of laying off workers in order to save the jobs of the remaining workers. In some cases, the companies provide outplacement or post-employment services, but in many cases, the laid off employees receive only a modest severance package before they are let go. When this happens to older workers, the personal financial setback can be severe since these workers often have difficulty in locating new employment at the salaries they were making previously.
In the mid-1990s, AT&T garnered national h...