Human Resource Management on Downsizing Downsizing is the permanent reduction of a company's labor force by removing unproductive workers or divisions. It is the restructuring of an organization which may include layoffs, or it is a term for termination which is not prompted by the employee behavior but instead is a business decision made to cut costs. While it is generally implemented during times of stress and a decline in revenues, downsizing can also be used to create leaner and more efficient businesses. Reasons to Downsize Downsizing occurs for several reasons, like a slump in profits, plant closure, or business acquisition and most often to save money. This typically has nothing to do with employees’ performance. Rather, it’s a strategic business move to cut operational costs, maximize production, and increase profit. Companies downsize for a variety of reasons such as to reduce costs and including less than stellar economic conditions, a company merg...