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The Management Playbook: What You Need to Know About Problems in Retrenchment – an Analysis of Why Downsizing is Not Always Good

This briefing on Problems in Retrenchment was prepared by Casey N. Culbreath while a Management major in the College of Business at Southeastern Louisiana University.


The definition of retrenchment is a cutting down or back, reduction, or the act of reducing expenditure in order to improve financial stability.  Problems in retrenchment can be severe for a company.  The top ten effects of downsizing is double the work for current employees, production changes, negative community impact, creativity decreases, employee stress, customer service, violence and legal issues, communication loss, skill and knowledge loss, and a negative external image for the business.  If the employer is not careful how the effects are handled, it can resort in the downfall of the company.

The Idea in a Nutshell

The most important entity in the company is the people.  Whether it is the employees, consumers, or the customers, every person is an important element in the business cycle.  When the employees feel stressed, neglected, and insecure or over worked, it can change their work ethic for the worst.  In return, their production decreases or their customer service decreases which makes the customer unhappy and will find another store.  It is important to know that when the employer takes care of the employee, the employee will take care of their employer and be loyal to them.  Downsizing can not just hurt the employees, but it can also harm the business.  That is why if employers see any negative signs I have stated below, it is imperative to make a strategy or a change to correct and help everyone involved.

The Top 10 Things You Need to Know About Problems in Retrenchment

In retrenchment, workers are being laid off.  The employees that were kept are now required to take on the work of the workers that were laid off.  So not only do they have to do their work in the same amount of time, but also others as well.  Workers will be doing twice with work with no raise.  More work from the employees will put more strain on them emotionally and physically.  Especially if the current employees did not know how to do the other person’s job, it can become very over whelming.  The workers will have to start all over with training of their new job being taken over and they may feel incompetent and production decreases is fore coming.  Also, with the work overload, employees may feel a competition to keep their jobs which can lead to more work hours.

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