Investing in Retrenchment: Avoiding the Hidden Costs

by Cynthia Hardy



Closing businesses and laying off excess personnel has long been regarded as a managerial prerogative in the U. S. Employers have often taken advantage of the lack of government regulation to lay off employees as quickly and cheaply as possible. The experiences of Canadian and British organizations show, however, that there are hidden costs to the firm associated with this approach. The study of ten organizations which were faced with a variety of "downsizing" exercises has identified nine managerial tasks which are crucial for successful retrenchment and which can serve to protect both employee interests and organizational needs. These tasks revolve around a view of retrenchment as an investment in future viability-and it deserves the same creative analysis as any other competitive strategy.

California Management Review

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Published at Berkeley Haas for more than sixty years, California Management Review seeks to share knowledge that challenges convention and shows a better way of doing business.

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