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Which Way Should You Downsize in a Crisis?

The recent economic downturn has left many organizations in a quandary. Just several years ago, the
major issue was winning the so-called "war for talent": how to attract, motivate and retain the best and
the brightest. But then the current recession turned that thinking upside down. Now, many organizations
are scrambling to figure out how best to restructure and cut costs without jeopardizing the valuable
human capital that they built during the prior period of growth.
To help such companies, the authors have developed a framework that integrates the seemingly paradoxical
practices of talent management and downsizing. The framework looks at two important dimensions.
The first is the type of downsizing, either reactive or proactive. The second dimension of the
framework is the approach to managing employees, either control-oriented or commitment-oriented.
Those two dimensions--type of downsizing and approach to talent management--can be combined
to form a two-by-two matrix consisting of four quadrants. Each quadrant represents a different
strategy, with a distinct philosophy, focus and key HR and downsizing best practices. The authors contend
that there is no "one size fits all" approach to downsizing and that managers need to devise the
approach that makes the best sense for their particular company, depending on its position in the
matrix's quadrants.
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