Reasonable human resource practices for making employee downsizing decisions

Downsizing became a common business practice in the 1980s and continues to be a common practice today. For 2008, the U. S. Bureau of Labor Statistics reported that 1,517,857 workers were laid off. Given the current economic climate, this is not entirely surprising. However, downsizing seems to be a common practice regardless of the economic situation. In fact, since 2000, the lowest number of layoffs in a year was 884,661. Recently, researchers and practitioners have begun to question the effectiveness of downsizing as a turnaround strategy. At the company level, downsizing does not always lead to improved profitability. And, in terms of human resources, downsizing often results in discrimination litigation and negative outcomes for survivors, such as lower job satisfaction and higher levels of stress. The HR department, a key player in downsizing, has both strategic goals and legal compliance requirements. These goals are not necessarily incongruent. Strategic human resource management aims to align HR goals with the company’s strategy. Desirable strategic organizational outcomes include profits, growth, increased market share, and the survival of the firm. Strategic HR contributes to these goals by managing the downsizing process while at the same time attempting to achieve its own goals of maintaining job satisfaction, organizational commitment, and employee morale. In addition, HR must comply with legislation on Equal Employment Opportunity (EEO) for members of protected groups according to gender, race, ethnicity, color, religion, national origin, disability, and age. Age discrimination, in particular, is a common result of downsizing, because older workers are often laid off in greater proportions. HR should aim to use practices that minimize negative effects on both terminated and surviving employees, while avoiding legal problems that could result from downsizing. In this article, we propose a set of eight reasonable HR practices that can benefit and protect both the employer and the employee. For the employer, such practices are helpful to attain its strategic and compliance goals. For the employees,