Psychology

Organizational Downsizing

Downsizing refer to a reduction of the number of staff on the operating payroll in a
business enterprise. In contrast, a layoff is met for a temporary downscaling wherein employees
may later be rehired, whereas downsizing is designed to be an irreversible downscaling
of employee operational cost. One may downsize to reduce costs, boost productivity or adapt to
market shifts. In some circumstances, a company may choose to decrease in reaction to a decline
in demand for its goods or services. There are numerous ways to downsize an organization:
offering employees early retirement benefits and offering incentives like severance pay or
pension benefits. Other strategies include lowering the number of new employees, decreasing the
number of newly created positions, or failing to fill open positions.
Impact of Downsizing on OD Strategy

Downsizing may be helpful for organizational development in a few critical situations.
The first comes when a company needs to cut costs because of financial problems. Another case
where downsizing might be beneficial is when a company is going through a significant change,
like a merger or an acquisition, as it can aid in streamlining the organizational structure and
lowering costs during a frequently uncertain period (Frone & Blais, 2020). Similarly, downsizing
might also be a good plan of action when a company wants to boost productivity and efficiency
as it might entail scaling back organizational hierarchy layers or streamlining procedures and
processes.

Implications of Downsizing

The financial repercussions of downsizing are familiar. When a business downsizes, it
typically fires employees, which can cause revenue to drop. However, it may help increase
revenue by decreasing the organizational expenditure if it has more than enough employees
(Freeman & Cameron, 2021). Downsizing could also result in a reduction in self-esteem among
employees who have not been laid off. These workers might be less productive because they
think they could lose their jobs at any time. Last but not least, downsizing can hurt a company's
reputation, especially if the company is viewed as callous or cold-hearted and may make finding
and keeping talented employees challenging, which may adversely affect a business's bottom
line.

Tencent Organization Downscaling

Internet juggernaut Tencent reportedly intends to reduce its human resources by 30%
(Huang & Zhang, 2022). The action is thought to be a reaction to the business's recent
difficulties, which include a disheartening earnings report and a decline in stock price. One of the
most prosperous businesses in the internet sector is Tencent, but it is now up against more and
more competition from rivals like Alibaba. Furthermore, the Chinese government has harshly
penalized internet service providers, which has caused the sector to contract.
Benefits of Downscaling to Tencent Organization

There are several benefits that Tencent may enjoy from the downsizing efforts, among
them; Lowering costs, where when a company downsizes, it typically hires fewer people, which
can lower costs. For instance, a business might spend less on salaries, and at the same time, a
smaller company might need less office space and equipment, which could lower costs.
Improving efficiency where downsizing also can improve productivity within a company since
each employee might need to assume additional responsibilities and put in more effort since
fewer people are working there. People may become more productive as a result, which may
result in a more effective workplace. However, spite the positive impacts, there are specific
negative impacts; Employees who have been laid off may feel that they were not appreciated by
the company, while those who survive may think that they are in danger of becoming laid off in
the future and can make them feel less involved in their work, lowering productivity.
Downsizing can also lower self-esteem for employees still employed by the company. The
company's capacity to draw in and keep top talent may also suffer due to downsizing because
prospective employees are unlikely to want to work for an organization that is downsizing if they
perceive it to be unstable.

Recommended Techno Structural Interventions

In combating the negative impacts associated with downsizing among employees, there is
the need to implement certain technostructure implementations to ensure the employees retain a
positive intent towards the organization's operations. Some


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