Downsizing

Downsizing, layoffs, and rightsizing are forms of organizational restructuring. Organizational restructuring refers to planned changes in organizational structure that affect the use of people. Organizational restructuring often results in workforce reductions that may be accomplished through mechanisms such as attrition, early retirements, voluntary severance agreements, or layoffs. The term layoffs is used sometimes as if it were synonymous with downsizing, but downsizing is a broad term that can include any number of combinations of reductions in a firm’s use of assets—financial (stock or cash), physical (plants and other infrastructure), human, or informational (databases). Layoffs refer specifically to employment downsizing.

Employment downsizing, in turn, is not the same thing as organizational decline. Downsizing is an intentional, proactive management strategy, whereas decline is an environmental or organizational phenomenon ...