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A company's reduction in the number of employees, number of bureaucratic levels, and overall size in an attempt to increase efficiency and profitability.


To reduce the size of a company. A company downsizes when its operations are perceived to become inefficient and it wishes to concentrate on certain competencies in order to improve profitability and reduce expenses. Downsizing often reduces the number of jobs at the company. Because downsizing reduces expenses, it often increases the company's value and/or dividends for shareholders.


  1. the use of PERSONAL COMPUTERS in a business in place of large mainframe computers. The introduction of smaller, faster and more cost-effective microprocessors has made it possible for tasks which formerly could only be performed by mainframe computers to be carried out at the personal workstation level, allowing a greater devolution of DATA PROCESSING down to the ‘desk top’.
  2. a term for policies aimed at organizational contraction, usually leading to REDUNDANCY for some employees. The oft-stated rationale for downsizing is that a smaller, more flexible ORGANIZATION will be able to respond better to market forces. Cost reduction, however, is probably an equally important motive. See DELAYERING, RIGHTSIZING.


a term used to describe the contraction of a firm's operations to make it ‘leaner and fitter’. The general aim of downsizing is to reduce costs and, by creating a smaller, more flexible organization, make the firm better able to respond quickly to changes in its markets. Downsizing frequently occurs during periods of falling demand or intense competition, and it often involves redundancies or earlier retirements among the workforce. Downsizing may also result from productivity improvements associated with technological changes that enable firms to produce the same or greater outputs with fewer employees.
References in periodicals archive ?
The economic effect of performance previous to downsizing is not proven, as is indicated by the lack of significance of the Varperf variable.
Eighty-two percent said they had been required to increase the amount of work they do, and they attributed this increase directly to downsizing.
The bottom line is that downsizing is widely used as a management tool to keep organizations responsive, competitive, and resilient.
companies believe their organization has "learned a great deal" from their experiences which will make future downsizings less difficult.
Only the western half of the county, which was affected by a major downsizing by Pitney Bowes in Norwalk, reported negative absorption and a slight rise in its vacancy rate.
In addition to the downsizing and the impact it's had on engineering and construction companies, it's also had a similar impact on the technology suppliers and responsiveness, Traywick explained.
Assessing the long-term impact of downsizing requires further research with a focus on the new dynamics in the changed workplace.
There is a great gap between downsizing to maintain a price and cheating on a spouse, but the memory of feeling cheated applies to both, and isn't easily forgotten.
Therefore, the stock price performance over a one-year window of the firm's announcing downsizing actions is very similar in magnitude to the overall market performance of the stock market as measured by the S&P 500.
Indeed, the lack of effective planning for corporate downsizing is backed up by AMA surveys: Fewer than half the companies that downsize plan to do so a year in advance.
The nation has focused on the massive (more than 30,000 jobs) downsizing of AT&T and its break up into three companies, and nowhere has the impact been felt more critically than in its home state, NJ.
Sounds simple, but again, the government is ignoring the lessons of past downsizing experiments.