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Impact Identification

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Impact Identification

Oftentimes, business organizations are faced with numerous challenges including financial difficulties that force them to downsize their workforce. However, it must be appreciated that every business organization must strive to ensure that there is a friendly working environment that supports the wellbeing of every employee in order to ensure high productivity. Financial turbulence forces many business organizations to reach a point of reducing their workforce (Redman, 2016). However, this move should be taken after careful consideration of how it will affect the primary stakeholders such as the customers, the local community and the suppliers. Equally important, before making a downsizing decision, a business organization must consider how such a move will affect organizational productivity. Before downsizing the organizational workforce, an organization ought to weigh both short-term and long-term consequences of reducing its workforce. This paper discusses the short-term and long-term consequences of downsizing workforce on the customers, suppliers and the local community.

There is no doubt that at one time, an organization may be faced with financial difficulties that would force it to reduce its workforce and maintain a lean workforce that is sustainable. However, this decision ought to be arrived at after considering the short-term and long-term effects it has on the customers. The immediate short-term effect on the customer is the reduction in supplies that will not meet the customers’ demand (Redman, 2016). This is caused by the fact that the organization may remove some of the best talents or the remaining employees get disgruntled or worried about their job security causing a drop in production. Elsewhere, the long-term effect of this move is customer switching to other organizations that have the ability to satisfy their demands. In other words, customers may not appreciate the decision and may, therefore, pull out of the business.

When downsizing the organizational workforce, it is always important that a business organization considers how such a move would affect the suppliers in order to make necessary adjustments and avoid the negative effects associated with the move. There are several short-term effects of this move to suppliers (Zimmermann & Brauer, 2018). For example, some suppliers may be tempted to think that the organization is in financial turmoil and would therefore not be able to pay its debts. This will cause some suppliers to stop their supplies and this will affect the productivity of the organization. Elsewhere, the long-term effects including suppliers switching to other organizations where they are sure that they will be paid. In other words, they will pull out of the business at the detriment of the organization to benefit the competitors if the organization cannot buy enough from them.

Like customers and suppliers, the community is a constituent part of the primary stakeholders that are equally affected by the decisions made by an organization. When a business organization reduces its workforce, the community is equally affected. For example, the short-term effect on the community is the fear that the most qualified people from within will not be hired by the organization (Zimmermann & Brauer, 2018). Furthermore, the organization would be seen by the local community as breaking the social contract and this would affect the potential customers and employees. This will elicit conflicts between the organization and the community leading to long-term consequences such as negative publicity that would adversely affect the organization’s ability to attract and retain customers and employees in order to remain competitive.

In summary, every business organization is faced with several management problems. However, when coming up with solutions to those problems, it is important that both short-term and long-term effects are kept in mind in order to adjust the plan and avoid adverse effects that may follow.

Reference

Redman, T. (2016). Downsizing. In Encyclopedia of Human Resource Management. Edward Elgar Publishing Limited.

Zimmermann, M., & Brauer, M. F. (2018, July). Incentivized to downsize? Exploring managers’ motivation to engage in workforce downsizing. In Academy of Management Proceedings (Vol. 2018, No. 1, p. 13965). Briarcliff Manor, NY 10510: Academy of Management.