Advantages of Downsizing in Business
There are instances when there is no option but to downsize your business. The process often involves shrinking staff and dwindling resources as such, it is seen as a negative impact. However, this is not necessarily the case. While the concept of downsizing is difficult, it is not always a bad thing as more often than not, it helps fuel a business.
Downsizing can actually make a company perform better. Letting employees go can also be a difficult decision to make but once this is done, it can be the saving grace, especially of a company that is on the brink of shutting down. Some of the most common advantages of downsizing in business include the following:
Cutting down on labor costs
The major motive of downsizing is to reduce labor costs. Often, companies will downsize employees who are highly paid and those who are lowly paid can be picked to increase labor cost cuts. Union agreements do not prevent companies from doing this because the highest operation cost of any company is labor costs.
Another benefit of downsizing is so as to have a team that is more manageable. When a company is growing, it is only sensible to hire more people and buy additional equipment in order to facilitate needs. Once the company settles, however, the need and importance of certain personnel is also outgrown and this might call for letting go of such people in order to increase efficiency.
There are companies that have a high level of repetition whether in different apartments or people within the departments. Downsizing ensures that repetition is no longer a problem. A company becomes more efficient and it also saves money on jobs that mirror others. For instance, if there are two employees with similar duties and one is laid off, the other is forced to take assume all the responsibilities and this helps maximize on the resources available.
Downsizing unsettles those employees who stay behind though they are happy not to have being laid off. After the emotions subside, they become more effective and this also helps instill a sense of forward thinking.
Supervisors can then work together in order to motivate those employees left in the company and also offers training and career development opportunities. In addition to this, the business is also able to eliminate costs on positions that are of less value and it can be redirected to areas that have high performers.
While downsizing, it is possible to look at different departments and areas within the company. This makes it possible to re-distribute resources equally to all departments and this helps create balance. Also by downsizing, it becomes easier for a company to be more productive and efficient.
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