The Up-Side of Downsizing

It may not seem like downsizing, or restructuring if you want to be more politically correct about it, is ever really a good thing. I know if you ask those that have lost their jobs, there is no up side to downsizing. But what if you actually take a moment to step back and look at the big picture of downsizing. What would you see then?

So as not to call any companies out or single any one entity out, I'm going to use Company X as the company that just went through a restructuring phase. If Company X has 50,000 employees nationwide, but is losing money every year and its stock shares are dropping, what options do they have? You can only cut so many operating costs before one realization sets in... Labor is the most controllable overhead a company has. This, unfortunately, leads to downsizing.

So where is the up side of downsizing, you may ask yourself. Company X lays of approximately ten percent of its workforce, so roughly 5,000 employees. If Company X didn't lay off these individuals, the costs of paying these employees, and the cost of their benefits, could have driven Company X under. If this had happened, where would the other 45,000 employees, which now have jobs thanks to the downsizing, go? What would have happened to their families? Is that right to the whole, so that the few may be happy?

And what do you know about these 5,000 employees involved in Company X's downsizing? Do you think that the best of their employees would be restructured out of jobs? That's not a very likely scenario. It's much more likely that a large chunk of these employees were the under performers of the company; the dead weight, if you will. It doesn't seem very fair that these people who just show up and collect a check should keep their jobs, though not contributing a whole lot to the company that is giving them that check. Another chunk could be the group that is close to retirement, so they get offered a nice little package to move into early retirement. This is the only group that downsizing may not seem fair for, but again, I refer you to the 'good for the whole' theory I stated earlier.

Company X also sells products to consumers like you and me, and they have to find ways to keep us happy so we keep buying their products. There is only one way to do this: Spend money. It costs money to do research and development. It costs money make things more convenient for us. It costs money to advertise and tell us what they are trying to sell us. Downsizing the ten percent opens up more cash to spread out into the 'make the customer happy' department. Aren't we important, too? I think so.