Strategies for responsible restructuring

Executive Overview As organizations struggle to enhance their competitive positions, employment downsizing continues as a preferred part of a restructuring strategy. Its objective is to reduce operating costs as a way of increasing earnings and stock prices. A study of S&P 500 firms from 1982–2000, however, casts serious doubt on the long-term payoff of this approach. The purpose of this article is to suggest several alternative approaches to restructuring. In contrast to employment downsizing, a strategy that regards people as costs to be cut, a responsible restructuring strategy focuses on people as assets to be developed. This focus recognizes that people are the source of innovation and renewal, especially in knowledge-based organizations, and that the development of new markets, customers, and revenue streams depends on the wise use of a firm's human assets. The article presents company examples and research-based findings that illustrate mistakes to avoid and affirmative steps to take when restructuring responsibly.