The Contemporary Implications of Downsizing and Globalisation for the Global Company and Workforce - Essay Example

?The Contemporary Implications of Downsizing and Globalisation for the Global Company and Workforce Introduction Reducing costs is one of the strategies that managers can use to enhance or, in extreme cases, save the company’s outcomes. Numerous other options are available, such as creating additional distribution channels, portfolio diversification, and developing new products/services. Even though there is an abundance of findings proving that organisations have tested and even resorted to these profit-generating instruments extensively, it is certain that the 1990s is regarded as the period of downsizing (Hassard et al. 2009). Downsizing is the most widely used management strategy thus far. But downsizing might be unsuccessful if applied without consideration of globalisation. Integrating a global culture into the organisational foundation is the task confronting all companies wanting to survive in the contemporary global economy (Marmolejo 2012). A number of firms with extensive experience in the global economy, such as Gillette, have gained knowledge of making global culture an element of the company’s standard operations (Hassard et al. 2009). This essay discusses the reasons companies employ downsizing and integrate globalisation into their operations, and the implications of these strategies for work and daily life in economically developed countries. Downsizing and Globalisation in Organisations Even for the highly developed organisations on the international arena, the growth of major economic organisations creates concerns, like how to successfully bring together downsizing and globalisation. Can a downsized company, for instance, cope with technologies inclined towards globalisation? For every company, the development of the markets continuously renews concerns for global integration. In a thriving economic state, the movement towards globalisation necessitates a focused and sustained willpower. In the current state of global recession or, more optimistically, sluggish progress, perhaps the biggest challenge for the company seeking to globalise is to safeguard the available resources for its master plan against the temporary economic stagnation (Okpara 2008). In addition, the development of the social setting will challenge one of the fundamental premises of globalisation, the capacity to downsize globally or, more specifically, the justification of downsizing by a global perspective. Developments with regard to global integration and competition, industrial streamlining, and trade agreements have permanently transformed business activities for the almost all managers. A particular implication for managers is the currently widespread adoption of organisational downsizing. Downsizing has been especially widespread among electronic or technology firms nowadays (De Meuse 2004). Nevertheless, downsizing affects every venture that aims for competitive advantage through cutting of costs. There are two main situations where downsizing could be essential. The first takes place in organisations that are burdened with unproductive assets or constantly failing units. They must figure out whether to sell them to those who can transform these assets into something productive (Gandolfi 2006). The second situation takes place when jobs depend on obsolete technology, such as newspaper companies. Nevertheless, wholesale ‘slash-and-burn’ strategies, like blanket employee downsizing, rarely result in lasting advantages in profits, efficiency, etc (Gandolfi 2006). Downsizing-- which started in the latter part of 1980s as a desperate, never-to-be-repeated strategy to significantly reduce costs to aid companies in competing globally or in surviving major failures in their operations-- has currently become a mainstay in the global economic arena. There exists a strong interconnection between the three major motivators for downsizing, namely, customer demands, latest technology, and global competition, as well as customer-oriented policies and information-based marketing (Blackburn 1999). Particular companies like those in the telecommunications, financial, banking, and steel industries that were highly secured organisations beforehand, are confronting series of downsizing with its troubling implications for employees, managers, and executives (Gandolfi 2006). One of the major steel companies in the UK, the Corus, declared in 2003 the shutting down of one of its primary steel-manufacturing facilities, accompanied with massive layoffs (Kakabadse et al. 2004, 11). The reports verify the worldwide adoption of downsizing as a mandatory technique of retaining competitiveness. For instance, according to Kakabadse and colleagues (2004), between 1991 and 1995, employee downsizing in the UK are approximated to have been roughly 34% (p. 11). The most important basis for downsizing is to reduce costs. Expenditures for employees comprise around 30% to 80% of overall business expenditures (Kakabadse et al. 2004, 11). However, there are further bases for downsizing. Advances in technology resulting in efficiency boosts, more innovative product development, and improved product/service quality have raised profits (Gandolfi 2008). If organisations fail to economise in the face of this progress in efficiency, they will certainly fail to retain or strengthen their competitive advantage. The advantages of downsizing to a company involve enhanced efficiency, greater profit, faster and more successful decision-making, lesser operating costs, a boost in shareholder value, and stronger and leaner operations. A number of studies verify an increase in efficiency and profit (Gandolfi 2008). The Cranfield study identified more readiness in taking risks, and enrichment in customer service and product/service quality (Cornelius 2001, 326). Apparently, the advantages of downsizing have to be balanced with the disadvantages of the strategy. An American economist, Stephen Roach, recognised as the pioneer of downsizing, cautioned about the manner downsizing was being applied in numerous organisations (Gandolfi 2006, 126). Roach argued that it was being misapplied. The challenge of attaining favourable results from downsizing may vary. However, in general, this will require the manager initially learning systematically the nature of downsizings and their primary roots, to aim to lessen the most detrimental impacts of it for survivors and leavers by explaining accurately and understandably the reason for downsizing (Manson 2000). Fostering trust and implementing constructive steps to cultivate flexible and productive employees afterwards becomes a main concern for every organisation. The global growth of businesses is not something new. The later growth of modern capitalism greatly sped up the global business expansion, and nowadays transaction across the globe is fundamental to the success of all modern economies. Global expansion is an ancient phenomenon, yet it is occasionally called ‘globalisation’ (Parker 1998). Globalisation does in fact have an exact definition at present, and employees, executives, and managers should recognise the actual nature and implication of globalisation for their organisations before they can develop strategic plans for globalising their businesses. In a number of studies, organisations aiming for globalisation all understood in the beginning of the ‘globalising’ process that the task is not only a matter of expanding globally (Scholte 2005). They knew and responded to the prospects globalisation offers for generating new value for consumers and thus completely transforming the competitive scenery. The use of globalisation has previously has once been to reduce the forces of developing economies like China. However, there is a lack of a suitable emphasis on the advantages of globalisation, and the prospects offered by the progress of developing economies (Scholte 2005). Hence, the progress of businesses in the UK will be rest on the use of globalisation, making sure the UK is strategically established to make the most of present and upcoming trends. The resilience of business value chains helps organisations profit from cost-effective economies, either through outsourcing or off-shoring. The growth of developing economies presents an immense prospect for UK companies (McCann et al. 2008). The purchasing power of the people in these developing economies is increasing drastically (Fanning & Munck 2011). Reinforcing connections with these economies, as staying watchful for new powerful global competitors, is a way to translate globalisation into a vast prospect for UK companies. DHL, a popular carrier company, presently has branches in more than two hundred nations. DHL successfully used globalisation as one of its management strategies. The company builds value, which consumers are eager to avail, by providing customers the chance to reach and request the services of the company anywhere (Korine & Gomez 2002, 16). The customer shells out money for the company’s services because the company is able to satisfy the needs of customers anywhere in the world. Similarly, the Internet’s underlying basis has been global communication (Marmolejo 2012, 94). Hence companies such as Google, Yahoo!, Amazon, and so on, use globalisation as a major component of their business approach. One of the most important corporate challenges of doing business in a globalized arena is the demand to serve an ever more advanced, informed, competitive, and diverse market. Several studies reported that consumers have become more perceptive, well-off, and informed in their decisions (Korine & Gomez 2002). This had resulted, consequently, in claims that companies should adapt their products/services more directly or, personally, to consumer preferences and needs. Because globalisation has boosted competition throughout all segments of an economy, no venture seems to be free from these challenges. Niche marketing and customisation depend greatly on an accurate knowledge of consumer needs and the development of an array of ‘soft’ human abilities like interpersonal communication, understanding, and cultural awareness (Korine & Gomez 2002). Managers are ever more encouraged to recognise and cultivate these abilities among the workforce, and harness their own abilities to manage people. Abilities in diversity management and cross-cultural communication are a vital component of this group of abilities. They are especially applicable in the framework of Diasporas all over the world and the growth of diverse workforce (Marmolejo 2012). Diversity in the global and local settings would appear to require the successful tapping of diverse labour markets. Thus, globalisation emphasises another key challenge for managers, which is, the demand to manage diversity dynamically and productively (Prakash & Hart 2000). The idea relates diversity to greater equal opportunity in distributing gains from globalisation and the management of resources and the expansive companies able to develop resources. The demand of workforce diversity has been pushed towards companies by the combination of forces besides heightened globalisation, such as changes in demography. For instance, the usual labour force in Western countries is depleting and transforming in structure (Kakabadse et al. 2004, 13): For not much longer will white, Anglo Saxon males dominate in the workforces of the USA or the UK. In the USA, by 2008, women are expected to make up 48 per cent of the US workforce. Minority groups like Hispanics (13 per cent by 2008) and Asians (5 per cent by 2008) are entering the mainstream labour force in increasing numbers. The purported competition for skills is accelerating the pace of change in the gender, ethnic, and racial composition of the future pool of labour. Any company determined to become successful in an ever more aggressive, competitive, and global marketplace will make it if it has the capacity to draw a labour force with the abilities and experiences in very limited availability (Fanning & Munck 2011). In order to accomplish these companies need to create past performance for managing successfully workforce diversity. For instance, British hospitals mitigated the crisis of an inadequate supply of nurses by attracting potential talents across the globe in 2003 (Fanning & Munck 2011, 43). In spite of a prohibition on this form of recruitment enforced in 2001, the country is still pirating talented medical personnel from Third World countries across the globe (p. 43). The corporate rationale for enhancing workforce diversity transcends the recruitment concerns and the pursuit of new skills, even though these confer competitive advantage. It includes other advantages of workforce diversity like greater marketing contributions from the diverse workforce, less compliance to previous values and standards, more ingenuity from diverse points of view, and more prompt and successful decision making from diverse groups (Deal & Kennedy 2000). Increased system resilience will stem from diversity management in the sense that the system will become more flexible and more diversified. Implications of Downsizing and Globalisation for Work and Daily Life in Developed Nations Downsizing produces an array of implications for work-life balance in successful economies. It has been claimed that downsizing’s effects on work and daily life are huge and extensive. Studies report negative psychological impacts stemming from laying-off, including anxiety, vulnerability, depression, lowered self-worth, marital conflicts, family troubles, poor physical condition, and psychological trauma (Deal & Kennedy 2000). There are several findings indicating that unemployment brought about by downsizing has the tendency to create irreversible harm to the victims’ work life. In addition, victims have mentioned a decline of earning capacity. Several researchers further report that victims have experienced weakened motivation, reduced loyalty and dedication, doubts, and feelings of pessimism that affect their subsequent jobs (Gandolfi 2008). Researchers have investigated widely the attitudes, sentiments, and actions exhibited by survivors throughout and after the process of downsizing. One prevailing theme of downsizing studies has emphasised the survivor disorder as a set of detrimental employee consequences. For instance, these psychological consequences result in weakened organisational loyalty and commitment, reduced quality of work, diminished organisational participation, and lowered career awareness (Manson 2000). Other unfavourable consequences of downsizing involve heightened job uncertainty, anxiety, trauma, stress, resentment and excitement, and positive inequality. Survivors have a tendency to exhibit defective work performance and attitudes, like heightened inclination towards conflicts, heightened resistance to change, elevated tendency to leave, and weakened motivation and commitment (Manson 2000). Aggravating the survivor disorder is the survivor’s feeling of culpability embodied by the victim’s feeling of guilt or regret for some misbehaviour, and is frequently manifested in the form of resentment, anxiety, and depression. Feelings of guilt among survivors have a tendency to occur when survivors realised that their own performance deserved the same outcome as that of the victims (Manson 2000). Researchers have discovered it is not the dismissals as such that generate survivor guilt, resentment, and hostility but the way in which the dismissals are meted out and dealt with. Furthermore, hatred and resentment about the dismissal of fellow employees may possibly lead to survivor guilt (Gandolfi 2006). On the other hand, thus far, very few studies have examined the emotional responses of the individuals putting downsizing into effect. Nonetheless, there are several research findings indicating that the doer of downsizing endure the same emotional and psychological consequences as those of survivors and victims in the sense that performing downsizing duties is professionally difficult and emotionally exhausting (De Meuse 2004). A number of commonly mentioned effects of downsizing involve diminished degrees of organisational profitability, efficiency, and success. Moreover, downsizing has been reported to generate feelings of isolation, increased self-centred attitudes, loss of confidence, and reduced job satisfaction and morale producing an array of psychological consequences for those involved in downsizing (Manson 2000). Ideas of flexibility seem to have an effect on perceptions of globalisation. A major attribute of globalisation is the current global labour differentiation. A differentiation can be drawn between low-cost developing economies and high-cost developed economies. Work in the latter is information- and knowledge-based with considerably talented employees who experience better job fulfilment and more stable job agreements (Bourguignon 2002). On the contrary, jobs in low-cost developing economies is more habitual and easier; these works demand a smaller number of abilities, less experience and less proficiency. In high-cost economies the expert, highly knowledgeable employees make organisations more reliant on the particular abilities and proficiencies of their workforce, in comparison with the setting in low-cost economies (Daniels et al. 2002). There appears to be a definite similarity between globalisation and work-life flexibility. In a global point of view high-cost economies appear to have a work culture that displays the features of well-designed flexibility. Low-cost economies in contrast appear to have greater statistical work-life flexibility (Fanning & Munck 2011). It is claimed that the global labour differentiation is a primary root of current interest in cost-effectiveness and outsourcing prospects that compliment low-cost economies. Hence, globalisation within this perspective is pushing organisations to enhance their flexibility so as to deal with the threat from low-cost economies that are previously more statistically flexible than developed economies (Korine & Gomez 2002). As the reaches of organisations expand globally, a company’s extent of work-life initiatives should broaden too. Empowering and harnessing the current global labour pool requires dealing with the varied aspirations and needs of all workers. Hence, organisations should be consistent in providing benefits that are important and are prized across cultures. Work-life initiatives are becoming increasingly popular. UK companies are ever more interested in helping their staffs gain work-life balance (Vincola 1998). According to Gandolfi (2008), these work-life programs are becoming more and more recognised because organisations understand the connection between employee morale and organisational outcome or performance. A global work-life policy is vital for the triumph of globalisation. As organisations keep on implementing work-life programs, they should be resolute to adopt the programs from a global point of view. Nowadays, many UK companies are involved with some form of global enterprise (Vincola 1998). Many UK employees are hired at transnational companies, and their population is swelling consistently. To provide benefits and programs that are needed by global employees, organisations should evaluate work-life concerns within the perspective of the national, cultural, and social contexts of their workforce (Cornelius 2001). For instance, knowing the difference between European and American perceptions of work-life issues will assist UK firms in developing beneficial work-life policies for their American staffs. In European societies, according to the current findings of The Centre for Work & Family at Boston College (Vincola 1998, 24): Work and family issues tend to be regarded as socio-political as well as economic concerns... It’s widely expected that all social partners—including workplaces, governments and trade unions—should be involved in addressing work and family issues. Work and family priorities are not regarded as being primarily a corporate concern. In European countries, work and family concerns are intimately related and social and economic development is thought to be inevitably connected. Consequently, social policies in Europe include essential, family-oriented privileges like general health benefits, even if employers are more and more expected to provide family-oriented benefits and programmes (Vincola 1998). Organisations with beneficial policies are repaid by better employee loyalty and dedication. Studies report that individuals nowadays demand greater work-life balance and it is advisable for organisations to adapt (De Meuse 2004). In a marketplace where companies are streamlining, merging, and downsizing, an empowered and committed labour force will be the most important resource of an organisation. Conclusions As discussed, an obvious impact of globalisation is the speeding up of structural transformation in societies liberally exposed to foreign direct investments and global exchanges. In order to minimise unfavourable possibilities and to capitalise on advantages of trade, workers and companies have to adjust promptly and successfully, by advancing to new practices and product designs/categories, and employing new talents and capabilities. The evolving requirements of current employees have generated unmatched demands for multicultural, inclusive, and flexible strategies and programmes. Although organisations understand the advantages of executing a work-life policy, it is important that they carry this out from a global point of view. As UK firms keep on going globally, the capacity to sustain efficient and empowered employees is vital for survival and success. References Blackburn, B. (1999) “The Vicious Circle of Competitive Unemployment” International Journal of Sociology and Social Policy 19: 1-2, pp. 1-26. Bourguignon, F. (2002) Making Sense of Globalisation: A Guide to the Economic Issues. UK: Centre for Economic Policy Research. Cornelius, N. 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