Lecturer: Nguyễn Thị Minh Hiếu

Students: Nguyễn Tuyết Nhung

Nguyễn Thị Như Ngọc
Nguyễn Thanh Hằng
Tutorial: 2 – BA06 1
 Agenda

 Downsizing theory
 Company’s history/background, HRM circumstance
 Company’s HR problem and relevant events
 Point of view
 Application

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What is downsizing?

a company strategy to reduce the scale ( size )

and scope of its business  improve the
company’s financial performance
a reduction in a company’s workforce  improve
its bottom line

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Reasons behind Downsizing
Economic downturns 40%

Making better utilization of staff 27%

New technology 18%

Tranfer work to other plants or 15%

abroad

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 Downsizing strategies
Workforce Reduction Systemic Strategies
early retirement as a way of life

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transfers ongoing process
Job banks continual improvement
attrition simplification
lay-offs enroll employees to generate
firing and implement
accountability

Organizational Redesign

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eliminate functions
cut hierarchical levels
drop divisions or products
consolidate or merge units
reduce work hours
lengthen shifts
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 Common outcomes of
downsizing
Positive:
- increase in stock value Percent of first day
stock change
Sears 60,000 7.7%
Xerox 50,000 3.6%
US West 100,000 7.0%
McDonnell 9,000 4.6%
RJR Nabisco 8,700 7.9%
IBM 6,000 4.0%
DuPont 4,500 3.4%
(US News & World Report, 12-20-93)

- improve performance
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 About 68% of all downsizing,
restructuring, & reengineering
efforts are not successful
 Negative:

- Effects after downsizing

- The Dirty Dozen Attitudes Associated with Downsizing

- Legal Risks in Downsizing

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Company History/ Background
 Technology corporation headquartered in
Palo Alto, California, United States.
 founded in 1939
 Major product lines include personal
computing devices, enterprise servers,
related storage devices, as well as a diverse
range of printers and other imaging products
 Mark Hurd is currently company
chairman, chief executive officer, and
president
 2007 revenue was $104 billion
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 Company HRM’s circumstance
320,000 employees doing business in 6 main
divisions in 178 countries around the world
general task of HR departments: finding and
deploying managerial and technical resources
The tools:
- software softPeople
- the website for recruiting jobs at HP
(www.jobs.hp.com)
work force has increased incredibly through the time
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 HR Problem
complex HR system
- Economic Crisis 2007-2009
 cut down the labor force to reduce costs.
- the two big Merge and Acquisition in the history:
history
Hp-Compaq and Hp-EDS (Electronic Data
System)
 simplify the HR system as soon as possible

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 Events
In 2005:
2005
- massive layoff of nearly 15,000 employees
 10% of the HP’s total work force
 $1-$1.6 billion in annual savings from salaries
payment in the next 2 years
In 2008:
- plans to layoff 24,600 employees over three years as
part of its acquisition of EDS
 8% of the combined company’s workforce with
nearly half of the layoffs occurring in the U.S
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 advantages and disadvantages
 Advantages:
- Reduced the total labor costs
- The organization structure was simplified
- Improve the performance of HP’s HR system
 Disadvantages:
- invent the cost in the economic long-term
- negative attitude from investors
 lower price of HP’s stock on the stock market.

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 Recommendation
identify redundant jobs and ways to
eliminate organizational fat and
improve efficiency.
alternatives for layoff

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Q&A