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The Downsizing Phenomenon Worldwide
Downsizing as a management tool was first introduced in the US during the mid-20th century. It refers to the process of reducing the number of employees on the operating payroll by way of terminations, retirements or spin-offs. The process essentially involves the dismissal of a large portion of a company's workforce within a very short span of time. From the management's point of view, downsizing can be defined as 'a set of organizational activities undertaken by the management, designed to improve organizational efficiency, productivity, and/or competitiveness.'

This definition places downsizing in the category of management tools such as reengineering and rightsizing. Downsizing is not the same as traditional layoffs. In traditional layoffs, employees are asked to leave temporarily and return when the market situation improves. But in downsizing, employees are asked to leave permanently.

Both strategies share one common feature: employees are dismissed not for incompetence but because management decided to reduce the overall work force. In late 1990s and early 2000s, different organizations adopted different kinds of downsizing techniques and strategies (Refer Table II).
|- Attrition: Natural reduction of workforce that occurs when employees leave the organization due to retirement, death or resignation. |
|It is a normal Human Resources (HR) practice of a downsizing company to freeze hiring totally/partially. |
| |
|- Voluntary retirement and buyout benefits: Voluntary retirement benefits encourage employees to retire early with full or reduced |
|pension benefits before the stipulated…...

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