Employment downsizing, the planned elimination of positions or jobs, is a defining characteristic of modern life in organizations. It may be reactive (in response to a change in economic or organizational conditions) or proactive (executed in anticipation of such changes). In the most recent economic recession, downsizing was global in scope, with 8.5 million layoffs in the United States and more than 50 million worldwide. As Datta, Guthrie, Basuil, and Pandey (2010) have noted, in these turbulent economic times even countries that traditionally have avoided layoffs (e.g., South Korea, Japan, Taiwan, and Hong Kong) embraced the practice. Export-oriented and labor-intensive firms in China, and firms in both manufacturing and services industries in Britain, Canada, Australia, New Zealand, South Africa, South America, and Eastern Europe participated as well. Not surprisingly, therefore, employment downsizing has attained the (dubious) status as one of the most high-profile, significant, and pervasive management issues of our time. Over the past three decades, downsizing has occurred in virtually all industries and sectors of the economy, and it has affected business, governments, and individuals around the world (Cascio, 2010a; Gandolfi, 2008).
Although employment downsizing is a multifaceted phenomenon, characterized by antecedents, implementation, and consequences, this chapter addresses just three issues: what it is, what causes it, and some things we still do not know (i.e. directions for future research). The chapter does not consider other aspects of downsizing, such as its costs, consequences, or alternatives to it, that provide a more complete picture of the full scope of this phenomenon. For more on those issues, see other chapters in this volume or consult Cascio (2002, 2010), Datta et al. (2010), or De Meuse, Marks, and Dai (2011).