Downsizing: is it always lean and mean?
| Pages | 296-311 |
| Published date | 01 August 1998 |
| Date | 01 August 1998 |
| DOI | https://doi.org/10.1108/00483489810213883 |
| Author | Nicholas Kinnie,Sue Hutchinson,John Purcell |
| Subject Matter | HR & organizational behaviour |
Personnel
Review
27,4
296
Personnel Review,
Vol. 27 No. 4, 1998, pp. 296-311.
#MCB University Press, 0048-3486
Received February 1997
Revised July 1997
Accepted October 1997
Downsizing: is it always lean
and mean?
Nicholas Kinnie, Sue Hutchinson and John Purcell
University of Bath, Bath, UK
Caesar: ``Let me have men about me that are fat;
Sleek headed men, and such who sleep o'nights.
Yon Cassius has a lean and hungry look;
He thinks too much. Such men are dangerous."
(Julius Caesar, Act 1 Scene 2)
Introduction
Downsizing, and its associated euphemism, ``rightsizing'', became part of the
managerial lexicon in the late 1980s and early 1990s. Large scale redundancy
programmes were seen to be the solution to the problems facing organisations
such as AT&T, IBM, General Motors and British Telecom during this time.
By the mid-1990s, however, doubts were emerging about whether downsizing
was the route to success that it was first thought. Evidence emerged that
many downsizing initiatives had failed to achieve their objectives and the
anticipated gains had not been realised. In 1996, Stephen Roach, the US
economist, expressed severe doubts about the downsizing programmes which
he had previously advocated. One of the reasons put forward for this failure
was the way downsizing was handled (Roach, 1996). As early as 1994,
Business Week reported, ``The sight of so many bodies on the corporate scrap
heap is sparking a corporate debate about profits and legality, and about the
benefits and unforeseen consequences of layoffs'' (Business Week, 1994, p. 61).
In short, downsizing came to be associated with ``meanness".
Over the same period, there was considerable interest in the ``lean
organisation'', which was derived from the concept of lean production first
popularised by Womack and his colleagues (1990) and more recently by
Womack and Jones (1996). These writers claimed that by adopting techniques
such as total quality management (TQM), just-in-time (JIT) and team working
it was possible to produce more goods and services with fewer resources of all
kinds. Subsequent research has sought to extend the concept of lean
production away from its Japanese auto industry base and consider the
transferability of the concept to other sectors and countries (Oliver and
Hunter, 1994; Oliver and Wilkinson, 1994; Shadur and Bamber, 1994; Shadur
et al., 1995). However, other writers have developed a critique of the
assumptions in the original work, especially its approach to change and
treatment of human resources issues (Bergerren, 1993).
Some authors have pointed out that these two trends have been linked and
that downsizing was perceived as one way of achieving leanness. ```Lean' came
to be associated with using less personnel, and hence downsizing came to be
seen as a way to become `lean' regardless of the question whether or not
Downsizing: is it
always lean and
mean?
297
originally Japanese ways of working were used in the new `lean' organisation''
(Benders and van Bijsterveld, 1995, p. 9). Similarly, Millman argued (1996, p.
9) ``Downsizing is invariably promoted under the guise of improving
productivity and reducing organisational complexity, both being desirable
attributes of the lean organisation."
Despite these claims, the relationship between downsizing and the lean
organisation is problematic. In the first part of the paper, therefore, we pose
the questions: what is the relationship between downsizing and the concept of
the lean organisation? Is downsizing always lean? In the second part, two
related questions are pursued: what are the consequences for employees of
downsizing? Is downsizing always mean?
The research reported here is the first stage of a larger project currently
underway in conjunction with the University of Warwick, and supported by
the Institute of Personnel and Development, into the people management
implications of leaner ways of working. This first stage was based principally
on a study of the literature in the field together with some preliminary case
studies, which are not reported in this paper. A fuller description of the work,
together with brief details of the cases, can be found in Hutchinson et al.
(1996).
Is downsizing always lean?
As ever with words such as downsizing it lacks a clear definition, being
capable of conflating a number of very different circumstances when
organisations reduce the number of employees. For example, the definition
put forward by Cascio (1993, p. 96) as a ``planned elimination of positions or
jobs'' tells us very little and provides an inadequate basis for answering the
question posed. Furthermore, the literature in the field tends to concentrate on
the various ways in which these reductions in the workforce can be achieved:
redundancies (or ``lay-offs"), voluntary turnover and early retirement.
Our concern is not so much how workforce reductions are achieved as the
context and motives for such reductions: what are the forms of downsizing
and why does downsizing take place? Four different forms can be identified
together with their associated motives.
Forms of downsizing
Reductions in demand for products and services
The first form involves making employees redundant and not replacing them
with new jobs so that the numbers of employees decline. These workforce
reductions are often motivated by a desire to reduce costs because of a decline
in demand or increased competition in the marketplace. Cameron (1994) has
compared this form of downsizing to throwing a grenade into a room, closing
the door, and expecting the explosion to eliminate the desired percentage of
employees. This form is often the result of a top down directive implemented
over a short time period and is, according to Cameron (1994), typically
associated with a failure to achieve the set objectives.
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