Purpose and benefits

Downsizing (or redundancy) is a toxic solution. Used sparingly and with planning it can be an organisational lifesaver, but when used repeatedly without a thoughtful strategy it can destroy an organisation’s effectiveness.
One outcome of downsizing must be to preserve the organisation’s intellectual capital.
How downsized employees are treated directly affects the morale and retention of valued, high-performing employees who are not downsized.
Downsizing should never be used as a communication to financial centres or investors of the new management’s tough-minded, no-nonsense style of management—the cost of downsizing far outweighs any benefits thus gained.