Document Type

Closed Project

Publication Date

Summer 2013


Antonie Jetter

Course Title

Human Side of Technology Management

Course Number

ETM 519/619


Employee downsizing has become a central theme in reorganization strategies over the past thirty years. Cameron (1994) defines downsizing as “an intentionally instituted set of activities designed to improve organizational efficiency and performance which affect the size of the organization’s workforce, costs, and work processes.” According to the U.S. Bureau of Labor and Statistics, over 1 billion U.S. employees were laid off between 1998 and 2007 due to downsizing efforts (Schmitt, Borzillo & Probst, 2012). Morgan Stanley estimates that 80 percent of recent layoffs in the U.S. involved white collar employees (Cascio, 2002). Many organizations believe that their downsizing efforts will automatically increase efficiency and performance, strengthen competitive advantages, optimize economies of scale, and yield financial benefits. However, annual surveys from the American Management Association (AMA) show that only 41 percent of organizations have achieved productivity gains and 37 percent have long term gains in shareholder value (Fischer & White, 2000). Another AMA survey reveals that approximately one third of organizations rehired laid off employees as contractors due to needing their unique skills and knowledge (Schmitt, Borzillo & Probst, 2012). Wyatt Associates’ survey of over 1,000 firms found that only 46 percent reduced expenses, 32 percent increased short term profits, 22 percent increased productivity, and 17 percent reduced bureaucracy (Cameron, 1994). Cascio (2002) found no consistent evidence that downsizing resulted in long term improved financial performance, specifically return on assets. These results demonstrate that downsizing has not been effectively managed in many organizations to yield optimal results. This paper will explore best practices for managing the downsizing process and provide recommendations for the research administration downsizing and restructuring processes at Portland State University.


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