Studies have tracked the performance of downsizing firms versus nondownsizing firms for as long as nine years after a downsizing event. The findings: as a group, the downsizers never outperformed the non-downsizers.(Cascio, 1993)
Downsizing is commonplace in present-day industrialized markets. Between 1995 and 2007, approximately 11.5 million people lost their jobs to downsizing in the United States alone (Lewine, Biemans, and Ulaga, 2010). Furthermore, according to data from the US Bureau of Labor Statistics (2005), sales and marketing personnel have been hit harder than many other groups of employees. Not only are reductions in workforce size becoming more frequent, organizations are changing their rationale for downsizing as well. In the past, layoffs were the last resort for employers. More recently, however, healthy firms around the world have been using downsizing as a preemptive way to cut costs.
Downsizing has become an international phenomenon, and it is not limited to North America or Europe. In the United States, more than 6.5 million jobs have been lost from downsizing since the recession began in December 2007, with numbers expected to grow in the foreseeable future (Datta, Guthrie, Basuil, and Pandey, 2010). Other countries have engaged in their share of downsizing activities, including countries whose tradition does not include such events. For example, recent times have witnessed significant employee reductions in economies such as Japan, Hong Kong, South Korea, and Taiwan. Even China has been affected, with major layoffs in a number of sectors; between 1993 and 2001 about 43 million urban employees were laid off, with most dismissals happening in the service sector and such industries as mining, weaving, and military production. European countries have suffered as well. For example, in Ireland, the unemployment rate jumped from 5.6 percent to 10.6 percent between 2008 and 2009, while in Spain the figure went from 9.5 percent to 17.4 percent over the same period (Datta et al., 2010, p. 282).