Disadvantages of downsizing?

Disadvantages of downsizing?

• A. It improves morale
• B. It increases the wage bill
• C. Valuable skills and knowledge are lost through making redundancies
• D. It improves training opportunities

Answer: (C)

Downsizing saves costs by cutting headcount, but a major drawback is the loss of valuable skills and knowledge. When redundancies occur, experienced employees take with them tacit know-how—how things are actually done, key processes, and relationships with customers. That know-how isn’t easily replaced, so productivity can drop, mistakes can rise, and future performance can suffer until new staff are trained and established routines are rebuilt. The remaining workers often face heavier workloads, which can erode morale and even drive more turnover. So this disadvantage best explains why downsizing can harm the organization in the long run.

Downsizing saves costs by cutting headcount, but a major drawback is the loss of valuable skills and knowledge. When redundancies occur, experienced employees take with them tacit know-how—how things are actually done, key processes, and relationships with customers. That know-how isn’t easily replaced, so productivity can drop, mistakes can rise, and future performance can suffer until new staff are trained and established routines are rebuilt. The remaining workers often face heavier workloads, which can erode morale and even drive more turnover. So this disadvantage best explains why downsizing can harm the organization in the long run.