The Aftermath of Downsizing

Source: Journal of Accountancy

In this article, Jack Hagel discusses the economic crisis and the impact of downsizing on employees who are not “downsized.” According to Hagel, employees who manage to keep their jobs in spite of their company's decreased workforce are often handed additional tasks that were previously tackled by former coworkers. Eventually those employees become susceptible to burnout.

According to consultant Ron Rael, of the High Road Institute, companies that are trying to maintain their previous levels of productivity with fewer staff over a long period of time experience a negative impact on company morale, culture, and profitability. As employees continue to work longer hours they do burn out and become less productive. The extra workload takes a toll on employees' health as well, potentially leading to increased medical costs.

Not surprisingly, overloaded employees who fear losing their jobs experience increased stress. They also feel the pressure to come to work in spite of sickness in order to hold on to their jobs. Companies with sick and stressed employees have higher medical costs and decreased productivity.

In addition, the extra tasks that have been handed to the remaining employees are often not a match for their skill set – meaning that these employees are not as happy or satisfied in their jobs.

Rael explains that trying to save money by operating a company without the necessary staff will cost a company in other ways. Companies will struggle to move forward with worn out, stressed out employees who are generally too burdened and tired to learn new ideas and tackle new initiatives.

For the complete article, read “The long-term effect of doing more with less: Doing less.”

From Journal of Accountancy, American Institute of Certified Public Accountants, January 2013, http://www.journalofaccountancy.com/Issues/2013/Jan.