Organizational Downsizing: A Review of Literature for Planning and Research

Abstract

The use of downsizing as management's strategic response to environmental and institutional changes is prevalent in all U.S. industries, including healthcare. The popular and research literature is inundated with reports on companies undergoing various stages of restructuring, which often include one or more staff reductions. This article provides a review of downsizing literature published from 1985 to 2002. Although the findings and conclusions of these articles are generally inconsistent, the prevailing opinion is that for downsizing to be successful, effective planning must occur long before, during, and after downsizing. Additionally, a downsizing plan should be included in the strategic management plan of all organizations, regardless of whether they plan to downsize or not. By including such a plan, the organization will be better prepared to begin the staff-reduction process should it be forced to do so in response to environmental changes. Finally, providing ample support and protection for staff is key to the organization's recovery and growth. The lessons provided in this literature review should assist healthcare managers in deciding how to plan and structure potential staff reductions.

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