Seniority-Based Selection

With seniority-based selection, the "last hired/first fired" concept is used. Because
seniority-based systems reward employees for their tenure, there is a lower risk that
older workers will sue employers for age discrimination under the ADEA. However,
using seniority does not protect the employer from further risks for potential
discrimination against other protected groups.  In addition, using seniority-based
selection may require the employer to retain employees with outdated skills or less
technologically savvy employees. 

Employee Status-Based Selection

Employers who have part-time or contingent workers on their payrolls may want to lay
off those workers first to ensure greater job security for remaining core workers. Unless
an employer's workforce is made up largely of contingent workers, this method alone
may not be sufficient to meet downsizing needs, and it may need to be used in
conjunction with other selection criteria.

Merit-Based Selection

Although this method of selection is often a preferred choice among managers because
of its added flexibility for weeding out marginal or poorly performing employees, it
should be scrutinized carefully. Because merit selection criteria are based either in part
or in whole on performance information (which is not always objective, may contain
rater biases and may not be well documented), this method has not been proven to
provide an accurate qualitative means for ranking the differences among individual
employees' performance in selecting employees for layoff.  Employers choosing to use
this method should carefully document the decisions for retaining or reducing all
employees in the selection pool. 

Skills-Based Selection

With this type of system, it is sometimes possible for employers to retain those workers
who have the most sought-after skills. However, be aware that this method may cause a
company to retain younger workers with needed and versatile skill sets, and to lay off
older workers who may not have the necessary skills. The older workers are protected
from discrimination by the Age Discrimination in Employment Act. Once again, clear
documentation should be maintained. 

Multiple Criteria Ranking

Although all of the above methods can be equally effective when planned carefully,
perhaps the most effective method of selection is using a combination of all the criteria
previously discussed. Below is a sample of the ranking criteria used by some
organizations that have implemented selection policies that are based on multiple
criteria such as seniority, skill, and performance considerations.

 Employee's long term potential and attitude

 Employee's skills, abilities, knowledge, and versatility
 Employee's education and experience levels
 Employee's quantity and quality of work
 Employee's attendance history 
 Employee's tenure within the company

Job redesign is the process of rearranging tasks and responsibilities to better align
roles with the changing environment inside and outside the organization.

Let’s start with the last part of the definition. Due to changing environments both inside
and outside organizations, job roles change. Today’s world has never been more
volatile, uncertain, complex and ambiguous (also referred to as VUCA). Inside the
organization, digitization and automation also impact job roles.

When it comes to the changing environment outside the organization, consider this
example. In the ’30s and ’40s, half a million people worked as Soda Jerks. The Soda
Jerk operated the soda fountain in a drugstore or supermarket and this was a highly
desired position. At the same time, elevator operators, switchboard operators,
and linotypists were highly common jobs.
This means that technology automates certain tasks, resulting in job changes. Some jobs will
get new tasks, while others disappearing. This process is illustrated in the image below.

Stage 1: Clarification of the organizational strategies: Goals and objectives The main target of
this stage is to clarify the organizations’ strategy. This strategy should be communicated
among the organizational leaders in order to create support for the determination of the goals
and objectives. Accordingly, this is the moment for members to express their concerns and
ask questions.
Stage 2: Assessment stage: Relevant choices and key decisions In order to determine a
downsizing method the main relevant choices and matching key decisions have to be made in
this stage. In general, an organization has to make a choice which kind of downsizing
strategy, as discussed earlier, will be applied. Stage
3: Implementation stage: Reduction in workforce This stage consists of the implementation of
different methods in order to achieve a workforce reduction. The kind of workforce reduction
depends on the choice of downsize strategy. Several decisions have to be made while there
is also a ‘maintaining perspective’ with people who try to preserve their own function. That
is why the implementation of a downsizing strategy should be carried out from a top-down
perspective. Further, it is important to maintain the organizations’ focus on the main target
and remind the individuals that the restructuration is necessary for the performance
improvement.
Stage 4: Survivor Syndrome: Behavioural implications of remaining workforce Within a
restructured organization, employees have to accept an expansion of the responsibilities and
learn new activities/jobs. In contrary to this expansion, employees often do not notice an
increase of their compensation. This can result in an environment in which employees do not
strive for organizational success but are preoccupied whether there will be additional lay
offs. Also the feeling of guilt towards struggling co-workers while receiving payments and
uncertainty of career advancement are important aspects for the organization to deal with.
Survivor syndrome can be described as “emotional after effects” (Mirabal & Young, 2005).
In the workforce this exhibits with anger, frustration, anxiety, and mistrust. The restructured
organization needs to deal with a workforce which is willing to take fewer risks at the
expense of the productivity.
Stage 5: Organizational renewal and growth: New or modified strategies This is the final
stage in which implementing the organizations’ renewal and growth process. Despite all
efforts, organizations often fail at this stage because a lack of communication with the
employees. Especially at this stage it is important to communicate the growth plans and
renewal strategies in order to prevent ineffectiveness. Important is, once a downsize strategy
has been chosen, that the whole organization has to anticipate and keep itself focussed.

Advantages:
1. Financial saving: The greatest benefit to downsizing is the financial benefit. Money is
saved when there are less people to pay, less resources costing the company money
and just less of everything overall. The more you can reduce costs, the more you can
steer them into areas of the company that need the cash infusion to stabilize. This may
allow you to then increase resources and/or staff once the company is doing well
financially.
2. Less RepetitionAll companies have some level of repetition, be it among
different departments or the people within them. However, when a company
has to downsize, repetition becomes less of an issue, as there are fewer people
to do the jobs they have, much less the exact task list of another person's
position. The company becomes more efficient and saves money on jobs that
may closely mirror others.
3. Increase productivity: Anytime you are forced to do the same -- or more -- with less,
you have to get creative about it. Downsizing means that staff and management alike
have to come up with more efficient and effective processes to ensure that company
goals and directives continue to be met. This makes the company run a bit tighter,
which is a benefit from downsizing that could carry over even into healthier financial
times.
4. Utilization of technology: Anytime you are forced to do the same -- or more -- with
less, you have to get creative about it. Downsizing means that staff and management
alike have to come up with more efficient and effective processes to ensure that
company goals and directives continue to be met. This makes the company run a bit
 tighter, which is a benefit from downsizing that could carry over even into healthier
financial times.
Disadvantages
Communication
Formal and informal communication networks are disrupted by company downsizing activities. From
casual conversations at the coffee pot to international communication streams, downsized employees
are no longer part of the company communication process. Remaining employees may have
difficulties determining how to find information about current operations, knowing who is
responsible for projects or defining the new chain of command. The loss of the communication
structure hampers the flow of information, the company’s decision process and the internal exchange
of ideas.

Skill and Knowledge Loss

Eliminated employees retain knowledge that is often lost during downsizing. Problem solving
methods, customer preferences, operational approaches and company history are some of the
information areas lost during company restructuring. Companies may be able to encourage
documentation or the dissemination of critical information prior to a downsizing announcement;
however, many critical skillsets and business information will still be forfeited when employees
leave the company

Employee Stress
Employee positions are eliminated during a downsizing, but the quantity of work generally remains
consistent. Remaining employees are saddled with additional responsibilities and requirements that
can impact the amount of work they are expected to perform. Initially, employees may be more
productive since they still have a job, but the stress due to workload increases quickly and can erode
the initial productivity boost. Some employees can also experience survivors' remorse as they worry
about the fate of co-workers, friends or relatives who were terminated.

Negative Corporate Image

Company downsizings may be seen in a positive light by stockholders or business owners, but
layoffs generally cause a negative business image for potential employees and existing customers.
This negative image can hurt the company’s ability to hire and retain top talent needed to grow the
business in the future. Customers may look to competing companies for service or products if the
downsizing impacts customer service levels, support or product quality.