Best practices in white-collar downsizing: managing contradictions

Executive Overview It is no secret that U.S. industry, once the most productive in the world, is now lagging behind its global competitors. What is not well known is that blue-collar productivity is not necessarily the problem. Between 1978 and 1986, for example, the number of production workers declilned by six percent while real output rose 15 percent. White-collar productivity decreased six percent while the number of workers increased by twenty-one percent. Downsizing, which involves reducing the workforce, but also eliminates functions and redesigns systems and policies to contain costs, is becoming more common in U.S. companies. Despite its pervasiveness, however, downsizing has rarely been investigated by organization and management researchers. This article seeks to identify the processes used in effective downsizing as well as the consequences that result. The authors studied organizational downsizing and redesign for four years in thirty organizations in the automobile industry. Six general strategies are presented that highlight the best practices of these firms that are downsizing effectively.