Responsible Restructuring

Responsible Restructuring

Creative and Profitable Alternatives to Layoffs




  • Applicable
  • Overview
  • Concrete Examples


University of Colorado-Denver management professor Wayne F. Cascio says your company will make more money during tough times if it finds a way to grow with its current employees instead of laying them off. Citing ample research (just see those careful footnotes and all those charts and graphs), he argues that it is simply good business to treat employees as assets to be developed, so they can help your organization reach its goals. If you downsize them out the door, you lose their expertise and commitment. Cascio cites companies that restructured successfully - Compaq, Cisco Systems, Sage Software - to illustrate different approaches. He wraps up with a critical bit of training: how to communicate internal information about the company’s plans to restructure, always a touchy matter. refers owners, top executives and human resource managers to this book because they will appreciate its combination of hard facts and how-to guidelines.


The Corporate View of Employees

When times get hard, many firms respond by downsizing their workforce. Companies where this is the first solution that comes to mind tend to view their employees as costs to be cut rather than as assets to be developed. Wiser companies take a different approach: cutting costs without cutting people. Here, people are laid off only as a last resort. First, managers seek growth strategies to improve the company’s competitive position by using the workforce more effectively. Overall, this latter approach works better.

Layoffs are designed to reduce costs, but some direct and indirect costs actually increase. Higher direct costs could include severance pay, accrued vacation and sick pay, supplemental unemployment benefits, outplacement, pension and benefit payouts, administrative processing costs and the costs of rehiring former employees. Indirect costs might include recruiting and hiring new employees, low morale and risk-aversive behavior among survivors, increase in the unemployment tax rate, a lack of staff when the economy rebounds, training and retraining. You could face lawsuits from ex-employees. Productivity and morale may suffer...

About the Author

Wayne F. Cascio, professor of management at the Graduate School of Business at the University of Colorado at Denver, has been researching employment downsizing and restructuring for 15 years. He is past president of the Society for Industrial and Organizational Psychology, and has written numerous books.

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