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Posted on April 5th, 2012, by

The last two and a half decades of management development are characterized by the real boom in the major concepts of organization management improvement. All these powerful tools of management came into being due to increasing competition in international markets and the cumulative effect associated with the achievement of a new quality level of managerial knowledge. This paper aims at discussing the issues of managing changes through downsizing strategies and maintaining sustainable business through forming the conditions of hypereffective manager emergence.

Downsizing is now widely used in fast growing, highly profitable economy sectors in order to create a flexible economic structure within an integrative approach to organization theory. In the contemporary management theory, downsizing is understood as a strategy of transformation of organizational design, work processes, corporate culture, values, relations, and mission; a reactive or proactive strategy aimed at optimizing firm size and lowering production costs (Belasen 214; Gandolfi 128).

A number of scientists come consider downsizing as including the following strategies: dismissal strategy; strategy in organizational structure change (reduction of managerial levels and (or) business processes); comprehensive strategy of systemic change, which consists of strategies of change in logistics, marketing, stakeholder relations (Belasen 220). In this case, all three key strategies can be implemented simultaneously or sequentially. According to researchers, companies should conduct downsizing regularly; downsizing is not necessarily associated with the implementation of business processes – downsizing activities may be conducted within the traditional hierarchical structure. Moreover, downsizing can be applied after the reengineering in case of its failure (Gandolfi 130-31).

Let us analyze downsizing in detail from the positions of various levels of organizational culture.

Superficial level: 1) as in the case of reengineering, a change in organization’s configuration occurs (elements of objective organizational culture). However, in this case, not only the traditional, hierarchical elements of organizational structure can disappear, but also some business processes; 2) the organization may experience the atmosphere of change and expectations of negative changes (if the company management decides to notify the working group about upcoming downsizing in advance); 3) the mass dismissal of workers causes the activation of trade unions (strikes, pickets, demonstrations); informal groups appear consisting of employees most likely to be dismissed; the revival of strike-breaking institution is possible; 4) old and new employees are given jobs (typically, lower-paid jobs than before the cuts).

Deep level. Change of company’s values and ideology is expressed as follows: 1) some strategic, most of the tactical and operational objectives of the firm may be transformed; 2) priorities in the politics of relationships with stakeholders change – the balance of the company’s interests is shifted to management and (or) shareholders; 3) the value personnel work increases, changes in the marketing and financial policies are possible; 4) there is a change in managers’ relations with subordinates – emphasis on psycho-social side of work, 5) gossip and rumors begin to occupy a specific place in organizational communication; 6) organization gradually transforms from the individualist into the corporatist one; 7) there is a departure from the family relationship to competition relationship between workers, 8) management decision to minimize the negative effects of downsizing enhances organizational culture of the company (Gandolfi 133-39). Contrary is also true: the lack of attention to workers in reduction policies weakens the organizational culture. This, in turn, reduces the possibility for increasing the company competitiveness in the future.

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