Effects of Downsizing in Australian Businesses - Case Study Example

EFFECTS OF DOWNSIZING IN AUSTRALIAN BUSINESSES Introduction Australia is one of the most populated first world countries in the world. Teeming with immigrants and Australian nationals the like, the country is a huge host of workers who are hungry of jobs and employment that would provide then the kind of living that they believe they most deserve. For how many years, it could not be denied that the trend of work related issues that has been given birth towards the economic conditions around the globe today has caused this particular fact a threat for everyone depending on the Australian economy for a living that would best provide them the chance to “living the life” in a foreign land. The process of downsizing of staff members of different business organizations in the country caused too much stress on the part of the people who are hoping to find better improved lives in Australia. Business administrators have their own reasons for resorting to this particular process of saving their organizations (Palmer, et al, 2002, 34). However, giving practical attention to these reasoning is not enough to identify the actual effects of downsizing in the country at present. In the discussion that follows, a focus on BOEING, Australia shall be presented so as to identify how downsizing has impacted the lives of the people in the society who used to work for the organization and the lives of those who were kept as workers of the company. It is through discussion too that the immense attention given to proper consideration towards the ways by which the company itself has fared in the industry that it is enjoined with. About BOEING, Australia For thirteen years of operation in Australia, Boeing has constantly stood as a source of proper employment for at least 7,000 employees around the country. Standing as air attendants, pilots, air control tower attendants and so on and so forth, the employment offerings of the company continued to feed many hungry people in Australia for thirteen years. However, as the competition in the industry increased through the years, the need to adjust the system of management that has been adapted to by the organization has come into a realization (BDM, Internet). This is the reason why since the early 1900’s, there has already been four major downsizing accounts in the organization. There was even a time when the organization surrendered its market position to Airbus which was a second place level airline during those times. The CEO of the company claimed that this was the only possible course towards surviving the path of competition that they were undergoing during the 1970’s in response to the challenge of the emerging airlines during the time (BDM, Internet). This was claimed by the said organizational officer during the time when they were actually enjoying a 70% share in the market (BDM, Internet). Losing the people with whom they have invested with so much with the trainings that they have provided to them for the many years, it could be observed how they actually lost that investment to the competitors since the employees who were removed from the company list of workers obviously opted to shift to the side of the Boeing competitors that simply wallow over losing their jobs. Effects of Downsizing in Boeing The employees were seen as the primary victims of the downsizing decision of the management of Boeing. However, it could not be denied that the company itself suffered from this decision. Basically, the organization was pushed to take necessary moves to reinstate only those that were practically giving them better chances of earning higher level of reputation and higher end of profits. Because of this, they were forced to re-manage the people and motivate them towards becoming more trusting to the organization even though there had been some serious histories of downsizing decisions that the organization has been under. The basic entities of the business were given up, especially in connection with their people investment in the form of the training that they have been providing their people through the years. The skills that they have been moulding upon their people has been suddenly given up as they decided to let go of the people with the fearful possibility that they are to shift their skills to the airline organizations that Boeing was in competition with. Yes, the results of downsizing affects not only the people but also that of the company letting go of the employees to a world of competitive attraction towards working with the competition organizations in the market (Gandolfi, 2008, 32). Understanding this particular fact and realizing the results that might affect the operation of the organization in concern, why then do business groups still opt to downsizing their staff members? The Reasons behind Taking the Option of Downsizing Downsizing as mentioned earlier is the process by which a business company lets go of a several number of its employees for the sake of instantly creating positive effects on the lessened rate of expenses that the company is incurring in connection with labor payment. Although it may seem positive in some ways for the company in concern, it also posts a particular sense of risk in connection with the possibility that the people they let go of would be coming to the aid of the competitors and turn their back on the organization completely. (Gandolfi, 2008, 78) Besides that, on the part of those who are left behind, the possibility of creating doubts in their mind in connection with the possibility that they might be the next ones in line to be laid off from work could not be avoided. However, with all these risks considered, there are still numerous business owners who rather opt to undergo downsizing. Why is this so? The diagram below is expected to show a clarified version of the explanation that is needed to make the possible understanding with regards the occurrence of downsizing proceedings in the modern business organizations at present: From this particular diagram, it could not be denied that the two alternatives for securing a company’s assets and finances lies in the process by which the vicious cycle of economics try to play the time of advancement that the company is involved with. The challenges and the competition that each business organization is involved in could be a considerable element that could push management administrators to decide on simply letting go of the people instead of practically going through the troubles of going through the issues that might be caused by lowering the salary grade of the people working for the organization. Although the process might hurt the reputation as well as that of the market placing of the business organizations in concern, downsizing has practically provided a quicker escape for business organizers that give them a proper sense of managing market change that affects their entity. Although this may have been observed as a practical source of management decision for many organizations today in connection with the current economic situation of the world, it is still strongly suggested that business administrators find better ways by which they could assist in creating the most effective procedures that could keep their business entities secured while taking care of their people to the number of staff members that they could assist. It is believed by modern business enthusiasts that communicating with the people about the necessary changes that needs to be taken into proper consideration and the motivation establishment for the employees that are aimed to be kept but needed to undergo certain adjustments to keep the business entity growing even in the middle of crisis. Applying the following procedures and theories of management could actually create a possible advancement and assurance in the process of motivating people and assisting them towards finding better options of working with the organization through all the adjustments needed to be given attention to. The said theories of management could be noted as follows: Theory X and Y This theory refers to the separation of the idea of the managers towards empowering or motivating their employees to perform well with their duties. Whereas, theory X refers to the managers who at most believes that their employees would only work out well when they are commanded with fierce and with ample application of authoritative demands from the management(Gandolfi, 2008, 70). On the other hand, theory Y involves managers who believe that employees should be empowered in a psychological manner for them to be able to reach their full potential at work. They believe that every employee is willing to work; all they need is motivation at a right course. In this theory, it is obvious that theory Y is much applicable, today, it s the most commonly used manner of employers in motivating their employees to perform fine jobs. However, not closely observing authority in this manner of motivation could cause a certain point of lapse of application of rules especially when the employees become highly overwhelmed of the fine treatment that they receive from the management. AAP Theory Every person has a unique individuality, and that individuality requires different needs. Hence, risking to motivate separately different people may lead to some complications; however, taking the effort in closely attending to the needs of each employee provides the company with better hopes of fine results from the performance of their people force. (Gandolfi, 2008, 77) Dual Factor Theory The needs of people are subdivided into two main categories. These categories include both the hygiene factor and the motivation factor. These two factors both include the most important needs of the company employees such as the wage and job satisfaction matters. Being able to provide these needs may mean that the company management needs to apply more effort in implementing policies to be able to meet the required satisfaction factors of the employees, however, the ‘loyalty’ returns to the company would make the efforts all worth it. Equity Theory Equality among all employees basing on the performance that they apply for the company’s cause is indeed a way by which the management could encourage fine performance from the workers. Everything must be in uniform, especially when it comes to rewards and benefits that the employees receive from their company. Doing s may cause the management to create fine programs that could handle such demand from the workers, while it would also result to better realization of job satisfaction on the part of the employees. (Gandolfi, 2008, 82) Expectancy Theory Everyone expects something from something. When an employee does a good job, it is normal that he expects appreciation from the management. Hence, knowing what the employees expect and providing them could encourage them to do better, however, it should be realized that too much application of this theory may result to the employees being too demanding from the company. As seen in the five theories, human motivation processes requires fine decision form the management. Once the process is decided, it is up to the management again, to take the risk of applying the process in actual motivating practice. Hence, from the first towards the fifth theory that has been listed herein, it could be noticed that the main focus of the responsibility of encouraging the employees lies on the management. Then as the results of the process progress, the employees are the ones who are expected to act bringing the end results back to the management. Conclusion As seen from the example provided herein in connection with the change management that BOEING should have taken instead of continuously downsizing its employee force, it has been proven that keeping the people through applying strategic people management is an essential part of business empowerment especially when crisis affects the organization. Gaining the loyalty and the trust that the working force have for the organization is the best source of security that any particular business entity could acquire. Yes, instead of downsizing, it is better to have the people pick their own choice of either staying with the company while waiting for things to get better or letting go of the organization and working for others who could accommodate their financial needs more freely than what the company could provide. This way, the business organization would be able to keep those who are willing enough to handle the needs and the demands of the company without forming any union or rebellion against the management as they know very well what they are putting themselves into. References: Palmer, I. Dunford, R. & Akin, G. Managing organizational change: a mulitiple perspectives approach". Second edition. Wiley Publishing. (2002). The Big Downsize Mistake. http://www.smartcompany.com.au/the-growth-doctor/the-big-downsize-mistake.html. (September 14, 2009). Gandolfi, F. (2008) Surviving corporate downsizing: An Australian experience, The ICFAI University Journal of Soft Skills, Vol. 2, No. 2. Gandolfi, F. (2008) Downsizing executioners and the experience of executing downsizing, The Journal of American Academy of Business, Cambridge, Vol. 13, No. 1. Read More