Professional Documents
Culture Documents
Downsizing theory
Company’s history/background, HRM circumstance
Company’s HR problem and relevant events
Point of view
Application
3
What is downsizing?
4
Reasons behind Downsizing
Economic downturns 40%
5
Downsizing strategies
Workforce Reduction Systemic Strategies
early retirement as a way of life
1 3
transfers ongoing process
Job banks continual improvement
attrition simplification
lay-offs enroll employees to generate
firing and implement
accountability
Organizational Redesign
2
eliminate functions
cut hierarchical levels
drop divisions or products
consolidate or merge units
reduce work hours
lengthen shifts
6
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
7
About 68% of all downsizing,
restructuring, & reengineering
efforts are not successful
Negative:
8
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
9
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
10
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
13
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
14
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.
15
Recommendation
identify redundant jobs and ways to
eliminate organizational fat and
improve efficiency.
alternatives for layoff
16
Q&A