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Introduction

As we come into the 21stCentury, company downsizing is still occurring as a

means of cutting cost and long term employees are still considered one part of the

organization that can be dismissed and have a great impact on lowering cost (Neighbors

and Soylu, 2011). In an effort to propose the effect of downsizing, which involves such

things as: outsourcing, forced early retirement, reduction in the workweek, buyouts,

mergers, and bankruptcy, the organization is looking for a quick fix. These will impact

the productive effect of restructuring. Most organizations use these downsizing methods

for their cost-cutting approaches. They feel they are the most accurate and valid

proposals for restructuring, with many time ignoring the management of their talent. The

impact of downsizing with outsourcing, early retirement, reduced workweek, buyouts,

and etc., causes trauma within the workforce. This would cause additional inferior

performances from employees, which will bring about from the fear of the unknown.

The recent occurrences in the downfall of our economy have made many doubt the

honesty of those that are considered to be the influential financial experts.

The US business industry is facing more economical concerns than ever before. The

downward spiral of the economy has touched all organizations, large and small.

Organizations are scrambling to restructure, and rescue their companies. The key for

success virtually does not exist. Some influential companies are managing to diversify

and stay afloat. Apple continues to create imaginative products that continue to show

profit and Google has been able to transform the world with a simple idea that is reliable

(McGregor, 2008: 51). The economic downturn has been seen by every industry. T.

Boone Pickens, the 16th wealthiest man, has found himself in a place where he had to

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diversify and reduce donations (McGregor, 2008: 43). Most companies opt for

organizational restructuring, when facing economic crisis and do not have experience in

downsizing (Lawson, 2008: 2). The businesses today are faced with downsizing, such as:

outsourcing, reducing staff, reducing workweek, buyouts, mergers, bankruptcy,

government bailouts, etc. Before an organization decides on what action to take, they

need a plan. Also, they need to consider their options, organization, staffing, leading, and

controlling. After careful consideration of all aspects of restructuring, the organization

should acquire strategies that help them attain their reorganizing goals.

Planning and effective restructuring

Planningfor initiative restructuring an organization has to become multi-faceted to be

successful. The economy crisis is stretching globally, and cost-cutting strategies require more

than a Band-Aid fix. The main focal point is on the budget. During the existing economic

crisis, the changing dynamics, and the decaying economic circumstances have caused

uncertainty and alarm from all. Organizational restructuring downsizing vary from outsourcing,

mandatory premature retirement, reduced workweek, buyouts, and even bankruptcy (Balogun,

2007: 94). The precise procedure for restructuring should be a specific based business plan with

goals and objectives that meet each need (Sahni et. al, 2008:2). The first focal purpose is on

resources, and a watchful, thought out look, is needed for a full-scale diagnostic strategy to cut

cost. The organization will need to be capable to draw from several qualitative strategies that

engage effective end goals (Taplin, 2006: 288). It appears that many organizations are speedy to

reduce the workforce, as a quick solution. The most important asset, employees, for

organizations are not being considered before initiating major change. During the planning

stage, all must adapt to survive and understand that change is inevitable. Effective restructuring

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starts with planning and groundwork, with ideas that are imaginative, and with the strategy to

create revenue

Contingency Plans

The present government action to revive our nations economy that is diminishing into

deep recession calls for extreme spending measures. The present statistics illustrate that twenty-

six million jobs disappeared in 2008, with 11 million people out of employment in December

(Muir, 2007: 2). Planning, during the lowest point the stock market has seen in over 5 years, can

present an organization with numerous challenges. Fat cat executives, who were trusted with

funds, lied, and created fraud to the general public, and the domino effect has most apprehensive

of their futures. The government has the resources to help prevent some of the anxiety (Muir,

2007: 1). Who to trust is questionable. In evaluating valuable strategies for direction, the

organization looks at the importance from core competency, crucial competitors, envision of the

future, maintain leadership, and internal development, reported in an article from Reuters (Sahni

et. al, 2008: 3). The finger pointing is contagious, but it appears the nucleus of the economic

demise has come from the banking/financial industry. They were the first group to be bailed out

from the government, according to Business Week (McGregor, 2008). It is very problematic,

why we think they will make improved decisions a second time. It was argued that politicians

site the bank (JPMorgan) as a model of the kind of management needed to save Wall Street from

future bouts of greed (McGregor, 2008: 49). Bailouts without control, gets the U.S. right back

where we started. Consumers are cutting back with the delicate economy and the media list

companies on a daily basis that are reducing jobs (Sahni et. al, 2008: 2). Wal-Mart, the king of

retail, is even reducing its workforce and slowing store expansions as reported in The Daily

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Oklahoman. To be effectual, the strategy will address the bottom line, that the cost structure has

to recover, realizing that this accomplishment is easier said than done.

Proposition 1: The government will be the key factor in formulating effective plans for

organizing restructuring.

Consider the Options

The decision list can be endless. The range of downsizing possibilities varies from early

retirement; reduce workweek, staff cutback, transition poor performers, to the most accepted,

which is outsourcing. Downsizing for organizational reorganization has been the most popular

with 70% of the companies (Lawson, 2008: 3). Using downsizing for restructuring purposes can

cause can impact the workforce for long-term. The most fearful to all disturbed, is the

uncertainty, which can cause turmoil in the organization, which can lead to other economic

concerns. According to a cost transformation study reported by Reuters Latest News, off

shoring and low cost country sourcing as the most effective, yet underutilized cost-cutting

method (Sahni et. al, 2008: 2). The managements restructuring responsibility will consist of

strategic forces and restructuring activities (Bruton et. al, 2002: 712). Taking slow, well thought

out strategies, are important for a successful restructuring. Restructuring work expectations can

increase efficiency (Sahni et. al, 2008: 4). Considering an example of the options, outsourcing

has become more admired. It is easy to comprehend outsourcing, due to the fact, that it allows

the organization to go outside, moreover for their employee talents or economic reasons (Sahni

et. al, 2008: 3). Outsourcing calls for organizational restructuring that involves a shifting

environment with tactical initiatives (Som, 2003: 2). In comparing salaries, it is hard to vie with

the lower price tag outsourcing creates from foreign countries. Many of the United States union

workers have shaped a pay scale that is totally out of line. Considering the appropriate option

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organizations most vital advantage (Lee and Albert, 2005: 30). Many organizations have pressed

long-term employees out of employment. Clear communication with employees is an important

approach. The goal is to keep a positive morale and productivity with employees. Deciding who

are extra creative and talent, a team assessment is needed. It is complicated to choose unless one

stays focused on the purpose. It has been reported that 70% of 514 personnel surveyed did not

have enough communication about the organizations disaster (Lawson, 2008: 2). Seventy

percent of employees surveyed anticipated economic and financial tribulations negatively.

Sixty-two percent reported their company would have difficulty meeting goals. According to

Lawson (2008: 4) other options to staffing will include looking a short- term contracts for

employees, adapting to a diverse workplace and culture, and merit pay. A proactive adjustment

to the workforce will encompass contributing strategically and structural shift for the standard of

improvement and fruitful jobs (Sahni et. al, 2008: 2). Strategies for expenditure cuts with

cutback in staff can provide quick resources. The importance to keep the right employees, and

not surrender costly talents is an essential tactic. The magnitude of communicating for talent

management during the predicament keeps the dread factor from influencing the efficiency of

employees (Sahni et. al, 2008: 3). Cost cutting reduces the current level of resource people,

direct and indirect, capital, and cost of capital.

Proposition 4: Talent, well educated, and experienced Staff will be the most important asset of

an organization when it goes for restructuring.

The primary function should contain an idea, goals, and principles to accompany the

management task (Som, 2003: 3). If the lead is to be victorious, creative thoughts are also a vital

quality. Changing is increasingly becoming a major component of everyday organization and

managerial live (Arkeny, 2008: 2). The development of reengineering for altering management

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must be adapted (Arkeny, 2008: 1). Strong communication from leading managers still ranks top

for having an encouraging impact. Relaying on the significance of the restructuring progression

is a crucial test for an organization (Som, 2003: 20). Thinking out all of the options, and making

decisions after all the information is evaluated is valuable. Technology is a valuable tool that is

used for the appraisal system. It will have feedback to support the unforeseen concerns and

address the new actions (Som, 2003: 14). Sur Modics Pharmaceuticals are implementing

numerous initiatives that are creating cost dropping policies. The first reducing move is to trim

down their workforce by 5%. It is felt this amount could save them $2 million a year (Arkeny,

2008: 1). They centralized and effectively leveraged existing and new technologies to also help

with the economic concerns (Arkeny, 2008: 2). Finally, they anticipate improving their business

with organization arrangement. Sur Modics pharmaceuticals anticipate these changes will have a

constructive impact and enhance their effectiveness, a point emphasized by Som (2003: 13).

They are trying a range of steps to elevate their problems. Their strategy consists of numerous

thought out procedures. It is evident that numerous companies just reduce employees without

much deliberation. Effective downsizing has numerous steps, which include approach,

participation, guidance, research, and encouragement (Arkeny, 2008: 1). Reduction of staff is a

swift fix, but the organizations need to evaluate its talents, and make sure they consider the long-

term worth of each employee. The successful managers deal with their human resources and

talents as important assets for business performance (Arkeny, 2008: 2). Thus, we propose;

Proposition 5: Cost-cutting initiatives will impact all levels of employees during restructuring

Controling

The culture of cost management is about accountability. New systems are evolving,

because it is now obvious that the majority sectors of the economy will not escape untouched

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(Lee and Albert, 2005: 34). Wealth appears to still be evident with the entertainment industry

and professional athletes. To be productive, integrated management will effectively restructure

with compromise, acceptance, and be open to some change (Taplin, 2006: 286). Large

companies are buying adversary companies and diversifying, as reported from Beyond Cost

restructuring Business and no industry is protected, and nothing seems to be recession proof. In

February 2009, the Daily Oklahoman reported outsourcing for maintaining the heavy framework

for American Airlines. It also said that nine other major airlines outsourced 71% of their heavy

framework. The car industry has also made the news with their hands out for a government

bailout. GM is reporting that offers for buyouts and early retirement have been offered. Many

companies are attempting to be proactive; Wal Mart is increasing truck efficiency by more than

25%. They also have an environmental campaign by cutting energy used by improving routes

and loading trailers more efficiently. Companies are getting creative to supervise workforces

during the economic downturns (Lawson, 2008: 1). It is innovative ideas that will add up to

make a more optimistic impact on our market. When setting goals and making plans, decisions

need slow, deliberate action. This is important when downsizing, even though, it creates an

instant financial aim (Lawson, 2008: 2). The advantages are for the few companies that can

manage and engage their existing talents. Completion will involve leadership, communication,

research, support, and cost-cutting actions (Appelbaum et. al, 1999: 475). The bottom line for

organizations is to be competitive and profitable, in a world full of pressure and circumstances.

Therefore, we propose;

Proposition 6: During organizational restructuring in all industries, most of the organizations

will not be protected from economic hard times.

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Conclusion and Discussion

In todays difficult times, the economy seems to be heading for a recession. The

challenges for organizations to restructure with effective cost cutting policies are essential for

survival. Todays management is faced with serious financial crisis that they have never faced

before. Human resources need strategies and skills to keep the best talent for their organization.

Being creative, in these difficult economic times, is a strategy that is necessary for organizational

restructuring. These concerns are being felt not only in the United States, but also globally. One

set restructuring plan does not work for everyone; the approach needs to be developed with

several individual initiatives. Business strategy and management of talents are important when

considering cost-cutting restructuring, so the organization can keep its most talented employees.

Working toward a stable work environment should be the managers long-term goal. The impact

of cutting cost on a corporation can be demoralizing to their employees. These negative

consequences on organizations can have a long-lasting impact. The restructuring organizations

need to diversify, whether it is outsourcing, replacing staff, reducing the levels in the

corporation, etc. The purpose of reduction in force is to create a more profitable, effective

organization in this financial crisis. Gradually working on the reduction plan, considering how

the changes and cost-cutting efforts are going to affect the company, will build a better future.

Corporations are facing the most difficult economic situations; how they organize their

restructuring will be crucial to their survival.

Continuous innovation with a practical approach is necessary for the complex, difficult

task facing organizations today. All answers seem to be logical, but the human factor issue

needs attention. Business structure has to adapt to the struggling economy with flexible

strategies. Restructuring is trying to turnaround a circumstance by using cost-cutting measures

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to increase profit (Muir, 2007: 1). The variety restructuring measures are announced daily by

organizations that were considered safe. New and old approaches have been integrated.

Unfortunately, there is no sure cure. Successful organizations structure will need a philosophy

that encompasses competitive strategies. Effectiveness for success should emphasis confidence

in the economy. This is difficult when the government had to step up with $700 billon to bail the

out the collapse of Bear Sterns and Lehman Brothers, the sale of Merrill Lynch and

Countrywide, the failure of Fannie Mae and Freddie Mac, and Wall Street (Muir, 2007: 4). The

list seems to be endless, yet no one seems to take the blame. The people trusted these financial

institutions, and it cost many their life savings and retirement. This economic downturn, which

has created a need for reorganization, has created difficult times in the U.S. and globally.

Successful business strategies used for restructuring and the management of talent is linked for a

successful business challenge. The downhill spiral has been helped with rate cuts and bailouts

(Byrne, 2008: 64). According to Dennis Dammerman, it will take at least until 2010 to flush it

out of the system (Byrne, 2008: 64). It is apparent that many industries are going to have to

change their game plan, the present one does not work. The question remains to be seen if this is

enough for a company to survive.

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