Downsizing Definition Essay Example for Free

Downsizing Definition Essay Downsizing occurs when a company permanently reduces its workforce. Corporate downsizing is often the result of poor economic conditions or the company’s need to cut jobs in order to lower costs or maintain profitability. Downsizing may occur when one company merges with another, a product or service is cut, or the economy falters. Downsizing also occurs when employers want to â€Å"streamline† a company – this refers to corporate restructuring in order to increase profit and maximize efficiency. Downsizing results in layoffs that are often followed by other restructuring changes, such as branch closings, departmental consolidation, and other forms of cutting pay expenses. In some cases, employers are not fired, but instead become part-time or temporary workers to trim costs. In a business enterprise, downsizing is reducing the number of employees on the operating payroll. Some users distinguish downsizing from a layoff, with downsizing intended to be a permanent downscaling and a layoff intended to be a temporary downscaling in which employees may later be rehired. Businesses use several techniques in downsizing, including providing incentives to take early retirement and transfer to subsidiary companies, but the most common technique is to simply terminate the employment of a certain number of people. Recentll, countrys largest cell phone company Grameenphone, has embarked on major operational cost-cutting measures that include the downsizing of its manpower in some specific sections of the company. GrameenPhone is the largest mobile phone company in Bangladesh. In the midst of lack of communication means, GrameenPhone has introduced an effective and user-friendly mobile phone network. It has put a positive impact on the lifestyle of the people of Bangladesh.It is one of the largest cellular operator in the country. It is a joint venture enterprise between Telenor and Grameen Telecom Corporation. Telenor is the largest telecommunications company in Norway, owns 51% shares of Grameenphone. It is amongst the oldest, most sophisticated, and diversified telecom companies in the world. Grameen Telecom itself owns 35% shares, 9.5% shares are held by Marubeni Corporation in japan and the remaining 4.5% shares are held by Gonofone Development Corp in New York. In addition, three leading international financial institutions the International Finance Corporation, Asian Development Bank and the Commonwealth Development Corporation are also shareholders of GrameenPhone. The three organizations each hold three per cent of preferred shares of GrameenPhone. It was the first company to introduce GSM technology in Bangladesh. It also established the first 24-hour Call Center to support its subscribers. With the slogan Stay Close, stated goal of Grameenphone is to provide affordable telephony to the entire population of Bangladesh. At present around 4800 employees, both permanent and contractual, are working in different sections of the GP. But the sudden decision to downsize its manpower has created panic among most employees of the company that saw substantial rise in its annual profit-earning in recent years. The victims of the latest cost cutting measures are in most cases permanent employees who worked in the sales and services departments. The company has abolished its logistics services in all regional offices and in the case of sales it has reduced the number of posts and declared the remaining post vacant. Interestingly, it has asked all the sales staff either to compete a fresh for the vacant posts or take an attractive exit package. Management is saying it is a part of the business alignment process, Through a so called performance evaluation process the company is conducting termination of permanent employee who were meant to be loyal and efficient. Even in many cases employees are being forcefully asked to leave the organization. some of the employees have complained that Grameenphone’s management has threatened them to submit their resignation letter otherwise they will be mentally humiliated as well as downsized at work. From employee source it is found that in many cases the company is violating the Bangladesh Labor Act 2006 but the government or the labor law enforcement bureau is not taking any actio n. The statistic shows that last year the company profit incensement was almost 205% and the employee of the company was suppose to get a potation of the profit as per the company policy. But it never happened. As Grameenphone’s profit already is in increase as per last year’s report than the company should provide a valid reason of termination of such a large number of employment within a short time. Recently the management have introduces a new system of re-interview within the company to ensure the existing position of the individuals. Management has claimed this process as a part of performance evaluation tool which has made the employee to raise their voice against this injustice. By using such words like ‘Business Alignment’ and ‘Change in structure’ actually the company is terminating the employment of permanent employee who has given his 8 hours of every single day with loyalty to built this organization to this height. Even in some cases the company had forced some of the female employee to attend the interviews during their maternity leave and terminated their employment contract as claiming the employee is less productive for the company which is a direct violation of Bangladesh labor Act 2006. Employees have claimed that the management is not providing any written announcement or instruction but verbally they are asking to leave the organization through phone calls and general meeting. This year the government has announced 11% inflation rate but Grameenphone being a multination company has provided only 0%-5% incensement to it’s employees though it’s quarterly report shows almost 81% increase op profit with is this year. Back in 2009 Almost 1500 permanent employees are asked to leave the organization without any valid reasons but based on performance evaluation process. So how come the number of termination became so high based on performance evaluation process after a certain period of time every year? And how downsizing a large number of senior employees into junior position became ethical practice or business alignment process? As a Norwegian company people had a better expectation from Grameenphone but now it seems to be the reason behind of distraction of hundreds of employee’s career.