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  PersonnelReview27,4 296 Personnel Review,Vol. 27 No. 4, 1998, pp. 296-311. # MCB University Press, 0048-3486 Received February 1997Revised July 1997Accepted October 1997 Downsizing: is it always leanand mean? Nicholas Kinnie, Sue Hutchinson and John Purcell University of Bath, Bath, UK  Caesar: ``Let me have men about me that are fat;Sleek headed men, and such who sleep o'nights.Yon Cassius has a lean and hungry look;He thinks too much. Such men are dangerous. (   Julius Caesar  , Act 1 Scene 2) Introduction Downsizing, and its associated euphemism, ``rightsizing'', became part of themanagerial lexicon in the late 1980s and early 1990s. Large scale redundancyprogrammes were seen to be the solution to the problems facing organisationssuch as AT&T, IBM, General Motors and British Telecom during this time.By the mid-1990s, however, doubts were emerging about whether downsizingwas the route to success that it was first thought. Evidence emerged thatmany downsizing initiatives had failed to achieve their objectives and theanticipated gains had not been realised. In 1996, Stephen Roach, the USeconomist, expressed severe doubts about the downsizing programmes whichhe had previously advocated. One of the reasons put forward for this failurewas the way downsizing was handled (Roach, 1996). As early as 1994,  Business Week reported, ``The sight of so many bodies on the corporate scrapheap is sparking a corporate debate about profits and legality, and about thebenefits and unforeseen consequences of layoffs'' (   Business Week , 1994, p. 61).In short, downsizing came to be associated with ``meanness .Over the same period, there was considerable interest in the ``leanorganisation'', which was derived from the concept of lean production firstpopularised by Womack and his colleagues (1990) and more recently byWomack and Jones (1996). These writers claimed that by adopting techniquessuch as total quality management (TQM), just-in-time (JIT) and team workingit was possible to produce more goods and services with fewer resources of allkinds. Subsequent research has sought to extend the concept of leanproduction away from its Japanese auto industry base and consider thetransferability of the concept to other sectors and countries (Oliver andHunter, 1994; Oliver and Wilkinson, 1994; Shadur and Bamber, 1994; Shadur et al. , 1995). However, other writers have developed a critique of theassumptions in the original work, especially its approach to change andtreatment of human resources issues (Bergerren, 1993).Some authors have pointed out that these two trends have been linked andthat downsizing was perceived as one way of achieving leanness. ```Lean' cameto be associated with using less personnel, and hence downsizing came to beseen as a way to become `lean' regardless of the question whether or not  Downsizing: is italways lean andmean? 297 srcinally Japanese ways of working were used in the new `lean' organisation''(Benders and van Bijsterveld, 1995, p. 9). Similarly, Millman argued (1996, p.9) ``Downsizing is invariably promoted under the guise of improvingproductivity and reducing organisational complexity, both being desirableattributes of the lean organisation. Despite these claims, the relationship between downsizing and the leanorganisation is problematic. In the first part of the paper, therefore, we posethe questions: what is the relationship between downsizing and the concept of the lean organisation? Is downsizing always lean? In the second part, tworelated questions are pursued: what are the consequences for employees of downsizing? Is downsizing always mean?The research reported here is the first stage of a larger project currentlyunderway in conjunction with the University of Warwick, and supported bythe Institute of Personnel and Development, into the people managementimplications of leaner ways of working. This first stage was based principallyon a study of the literature in the field together with some preliminary casestudies, which are not reported in this paper. A fuller description of the work,together with brief details of the cases, can be found in Hutchinson et al. (1996). Is downsizing always lean? As ever with words such as downsizing it lacks a clear definition, beingcapable of conflating a number of very different circumstances whenorganisations reduce the number of employees. For example, the definitionput forward by Cascio (1993, p. 96) as a ``planned elimination of positions or jobs'' tells us very little and provides an inadequate basis for answering thequestion posed. Furthermore, the literature in the field tends to concentrate onthe various ways in which these reductions in the workforce can be achieved:redundancies (or ``lay-offs ), voluntary turnover and early retirement.Our concern is not so much how workforce reductions are achieved as thecontext and motives for such reductions: what are the forms of downsizingand why does downsizing take place? Four different forms can be identifiedtogether with their associated motives. Forms of downsizing  Reductions in demand for products and services The first form involves making employees redundant and not replacing themwith new jobs so that the numbers of employees decline. These workforcereductions are often motivated by a desire to reduce costs because of a declinein demand or increased competition in the marketplace. Cameron (1994) hascompared this form of downsizing to throwing a grenade into a room, closingthe door, and expecting the explosion to eliminate the desired percentage of employees. This form is often the result of a top down directive implementedover a short time period and is, according to Cameron (1994), typicallyassociated with a failure to achieve the set objectives.  PersonnelReview27,4 298 Within the UK movements in the trade cycle and changes in thecompetitive position of a firm have always led to fluctuations in bothworkforce numbers and hours worked. In this sense downsizing is really anew word for a long established employer practice. The word ``downsizing''used in this context does, however, imply two important conditions for thisactivity. First, the choice of redundancy, or collective dismissal as it is termedby the EC Directive, is taken in preference to other forms of cost reductionsuch as pay cuts (as in Hewlett Packard in the 1980s), hours reduction(Volkswagen in the early 1990s), labour hoarding as commonly practised inthe 1960s when unemployment was low, or short-term lay-offs as oftenoccurred in the motor industry 30 years ago. Second, downsizing presupposedthat the workers in question were employees of the organisation with open orpermanent contracts. Spot contract employees, agency staff and fixed-termcontract workers are not made redundant; their contracts just expire. Thus thequestion is why in the 1980s and 1990s has such a fundamental breach of theemployment relationship been used in preference to other forms of labourinput reduction? Turnbull and Wass (1997) have argued that employers usethis option because of the lack of restraint provided by the State. Deregulationof the labour market has made it much easier (and cheaper) to use redundancy,while other forms of reduction, such as short-term lay-offs or shorter workingweeks, have been more difficult to implement since they require payreductions for all. There is also a strong ``me too'' element here becauseemployers see other organisations in the same industry making employeesredundant and perceive a need to be seen to be doing something in the eyes of the City. Indeed, in the US context Business Week (1994, p. 61) commented that``Critics believe massive downsizing has become ... a bone to throw to WallStreet when investors begin baying for cost cuts . Structural changes resulting from changes in ownership or devolution Structural changes to the organisation resulting in reductions in the numbersemployed take a number of forms. Senior managers may decide to simplify thestructure of the organisation by removing layers from the hierarchy or``delayering'' as it has come to be known. Peters (1989) recommended that anorganisation should have no more than five layers and examples of thesekinds of changes which have attracted publicity include BT, BP, Boots,Storehouse, the Stock Exchange and Rolls-Royce. Research suggests that themain reason for delayering is to reduce costs (Ezzamel et al. , 1993) althoughother reasons include reducing bureaucracy, speeding up communications andimproving responsiveness to customer demands.A related change is where there is a move to decentralise the organisationoften with a related reduction in the numbers employed in head officefunctions. It is still surprisingly common to find head offices being reduced tobelow the 100 employee threshold to symbolise corporate leanness (Goold andCampbell, 1987). This may be linked to the establishment of strategic business  Downsizing: is italways lean andmean? 299 units where, in theory, each of the businesses takes responsibility for its ownaffairs. The extent to which such decentralisation of discretion in the humanresources field is genuine, however, has been the subject of extensive research(Kinnie 1990; Marginson et al  ., 1993; Purcell and Ahlstrand, 1994).Reductions in head office staff may also take place because of anacquisition of one organisation by another or a change of ownership, forexample the Lloyds/TSB merger in 1995/1996 which resulted in the closure of TSB Head Office at Birmingham. Indeed, large scale redundancies of headoffice staff may be used as one of the arguments to support such mergers inthe first place, especially when functions are to be integrated, for example, inthe utilities where substantial savings are made by combining customerservice and billing units. Similarly, the privatisation of public sectororganisations may involve substantial redundancies as new ownersappraise the levels of employment required. Core-periphery model ± greater flexibility Reductions in the numbers of permanently employed staff also take placewhen an organisation adopts the core-periphery model which was popularisedby Atkinson (1984). The associated practices involve distinguishing betweenactivities which are central or core to the business and those which areperipheral. Core staff will generally enjoy permanent or long-term contractsand good terms and conditions. Peripheral staff will comprise various othergroups including short-term contracts or casual employees and staff employedby labour agencies insourced to the firm (Purcell, 1996). More qualitativechanges are involved in some circumstances when the working practices of core staff are modified, especially when new technology is introduced. In thesecases these staff will be obliged or encouraged to acquire competence in awider range of tasks and to become functionally flexible.This model may be applied where market demand is difficult to predict orhighly seasonal and cannot be handled by normal methods such as increasedovertime working. Often a temporary expedient develops into a new labourforce strategy. Adopting this model can mean that employees in areas such ascatering, security, payroll, IT and even personnel are made redundant andtheir jobs are put out to tender by outside contractors. Permanently employedstaff are reduced, causing a reduction in the often all important ``head count''and their jobs are taken on by sub-contractors who do not appear on thepayroll figures.In this situation core employees are often required to develop multiple skillsfollowing a more general redesign of jobs (Cameron, 1994). These staff may berewarded for their flexibility by the use of relatively sophisticated humanresource management techniques: they may be guaranteed job security, givenfinancial rewards for skill acquisition and access to training and developmentopportunities. In this instance, the uncertainty resulting from fluctuations inthe market is transferred from the core employees to the peripheral employeesand the sub-contracting organisations.