XYZ Company has the option of either diversifying its customer base or increasing the number of clients it has to increase scope of operations or to lay off people in the shirt term for attaining a favourable financial position.
Downsizing is an option that the XYZ Company has carefully thought about and is aggressively pursuing as well following the suit of the organizations that have laid their employees off due to the current financial crisis. A study that analysed the downsizing strategies of the hospitals in the recent years revealed that “hospitals which undertook significant organizational restructuring while heavily downsizing were perceived to perform better than hospitals that heavily downsized but conducted little or no organizational restructuring, but performed worse than hospitals that undertook significant restructuring while maintaining their workforce complement. However, when the method of conducting the change management process was controlled for, these performance differences were reduced or eliminated” (Rondeau & Wagar, 2003). Similarly it is recommended that the XYZ Company should use the downsizing strategy as the situation demands it, however the company should also investment in job security enhancing programs for the surviving staff and should explore motivation and morale boosting programs. The restructuring of the business process and the hierarchical structure would also be beneficial in making the company more lean and efficient in its operations.
Conclusively it can be deduced that downsizing is necessary step for the XYZ Company which cannot be avoided in the short term. The company has to downsize in the short term and will have to bear the blunt of the adverse effects that it can raise. While in the long term it is recommended that the company should diversify its customer base to avoid the issues that it is currently facing.
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