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Layoff is the temporary suspension or permanent termination of employment of an employee or (more commonly) a group of employees for business reasons, such as the decision that certain positions are no longer necessary or a business slow-down or interruption in work. Originally the term "layoff" referred exclusively to a temporary interruption in work, as when factory work cyclically falls off. However, in recent times the term can also refer to the permanent elimination of a position.

Downsizing is the ‘conscious use of permanent personnel reductions in an attempt to improve efficiency and/or effectiveness’ (Budros 1999, p. 70). Since the 1980s, downsizing has gained strategic legitimacy. Indeed, recent research on downsizing in the US (Baumol et al. 2003, see also the American Management Association annual surveys since 1990), UK (Sahdev et al. 1999; Chorely 2002; Mason 2002; Rogers 2002), and Japan (Mroczkowski and Hanaoka 1997; Ahmakjian and Robinson 2001) suggests that downsizing is being regarded by management as one of the preferred routes to turning around declining organisations, cutting cost and improving organisational performance (Mellahi and Wilkinson 2004) most often as a cost-cutting measure.

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Etymology

Euphemisms are often used to "soften the blow" in the process of firing and being fired, (Wilkinson 2005, Redman and Wilkinson, 2006) including "downsize", "excess", "rightsize", "delayering", "smartsize", "redeployment", "workforce reduction", "workforce optimization", "simplification", "force shaping", "recussion", and "reduction in force" (also called a "RIF", especially in the government employment sector). "Mass layoff" implies laying off a large number of workers. "Attrition" implies that positions will be eliminated as workers quit or retire. "Early retirement" means workers may quit now yet still remain eligible for their retirement benefits later. While "redundancy" is a specific legal term in UK labour law, it may be perceived as obfuscation. Firings imply misconduct or failure while lay-offs imply economic forces beyond one's control.

Unemployment compensation

The method of separation may have an effect on a former employee's ability to collect whatever form of unemployment compensation might be available in their jurisdiction. In many U.S. states, workers who are laid off can file an unemployment claim and receive compensation. Depending on local or state laws, workers who leave voluntarily are generally ineligible to collect unemployment benefits, as are those who are fired for gross misconduct. Also, lay-offs due to a firm's moving production overseas may entitle one to increased re-training benefits.

Certain countries (e.g. France), distinguish between leaving the company of one's free will, in which case the person isn't entitled to unemployment benefits and leaving the company voluntarily in the frame of a RIF, in which case the person is entitled to them. An RIF reduced the number of positions, rather than laying off specific people, and is usually accompanied by internal redeployment. A person might leave even if their job isn't reduced, unless the employer has strong objections. In this situation, it's more beneficial for the state to facilitate the departure of the more professionally active people, since they are less likely to remain jobless. Often they find new jobs while still being paid by their old companies, costing nothing to the social security system in the end.

There have also been increasing concerns about the organisational effectiveness of the post-downsized ‘anorexic organisation’. The benefits, which organisations claim to be seeking from downsizing, centre on savings in labour costs, speedier decision making, better communication, reduced product development time, enhanced involvement of employees and greater responsiveness to customers (De Meuse et al. 1997, p. 168). However, some writers draw attention to the ‘obsessive’ pursuit of downsizing to the point of self-starvation marked by excessive cost cutting, organ failure and an extreme pathological fear of becoming inefficient. Hence ‘trimming’ and ‘tightening belts’ are the order of the day (Tyler and Wilkinson 2007)

Derivative terms

Downsizing has come to mean much more than job losses, as the word downsize may now be applied to almost everything. People describe downsizing their cars, houses and nearly anything else that can be measured or valued.

This has also spawned the opposite term upsize, which means to grow, expand or purchase something larger.

See also

References

  • Baumol, W. J., Blinder, A. S. & Wolff, E. N. (2003). Downsizing in America: Reality, Causes and Consequences. New York: Russell Sage Foundation
  • Cameron KS. 1(994) Strategies for successful organizational downsizing. Human Resource Management, 33: 477-500.
  • Cascio, F.W. (2002) ‘Strategies for responsible restructuring’, Academy of Management Executive, Vol.16, pp. 80–91.
  • Mellahi, K. and Wilkinson, A. (2004) Downsizing and Innovation Output: A Review of Literature and Research Propositions, BAM Paper 2004, British Academy of Management.
  • Mroczkowski, T. and Hanaoka, M. (1997), ‘Effective downsizing strategies in Japan and America: is there a convergence of employment practices?’, Academy of Management Review, Vol.22, No.1, pp. 226–56.
  • Redman T and Wilkinson A (2006) Downsizing, in T. Redman and A. Wilkinson(eds),Contemporary Human Resource Management, London: FT/Prentice Hall, pp. 356-381
  • Sahdev, K. (2003) ‘Survivors’ reactions to downsizing: the importance Human Resource Management Journal, Vol.13, No.4, pp. 56–74.
  • Tyler M and Wilkinson A (2007) The Tyranny of Corporate Slenderness: Understanding Organizations Anorexically, Work, Employment and Society, 21: 537-549.
  • Wilkinson, A. (2004) ‘Downsizing, rightsizing and dumbsizing: quality, human resources and sustainability’ Total Quality Management Vol 15 no 8 http://www98.griffith.edu.au/dspace/bitstream/10072/16844/1/34201_1.pdf

Further reading

External links


Simple English

Layoff (also called redundancy in British English [1]), is when an employee does not work due to temporary or permanent suspension. There are legal differences from being fired [2] [3]. The meaning of "layoff" has changed over time. It first mean that there would be a temporary interruption at places like factories. In modern times, "laying someone off" is usually permanent, although in some special cases someone can be laid off temporarily.

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