T, the company's 75 percent share of the long-distance telephone service market might drop to as low as 30 percent ("AT&T's Three-Way Split," 1995).
AT&T management opted for downsizing as one of the company's major strategies to deal with the problems the company faced in the market. The question addressed in this research is as follows; "Does downsizing create a more efficient company within the context of overall performance?"
Statement of Propositions & Literature Review
Downsizing is the planned elimination of positions or jobs within an organization (Kets de Vries & Balazs, 1997). While relatively recent in origin, downsizing has become a pervasive business practice among large, troubled corporations. Starting with factory closures in "sunset industries during the recession of the early-1980s and continuing as an after-effect of merger and acquisition mania, downsizing, according to its proponents, has turned into one of the inevitable outcomes of living in a global world where continual adjustments to products, services, and the price of labor are needed to remain competitive" (Kets de Vries & Balazs, 1997, p. 11).
Many analysts contend that "developments in management indicate that downsizing is here to stay. A major contributing factor has been the increasing popularity of global benchmarking. Finding one's overhead costs wanting compared to not only domestic but also international competitors has turned into a convincing argument to take large numbers of employees off the payroll" (Kets de Vries & Balazs, 1997, p. 11). Another reason for the continued introduction of downsizing practices is the administrative "impact of the revolutionary transformation in information and communication technology. Changes in such technologies have led to a growing redundancy of the traditional, go-between role of middle managementùa group of people previously preoccupied with collecting, analyzing, and transmitting informati...