Downsizing 2020: Human Resource Management Event

Downsizing
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Downsizing
2020 has been a year that many will want to forget. The wealthiest people have increased their wealth immensely. Neate (2020) writes that billionaires saw their net worth increase to $10.2 trillion. This increase happened against the backdrop of faltering economies as the world was and still is trying to combat the effects of Covid-19. Woods (2020) writes that as billionaires in America were increasing their wealth, “40 million Americans filed for unemployment.” This is a cruel reality of today’s world. In the midst of struggling economies, those who need money the least tend to make more of it, and on the backs of those who are struggling. 2020 is also the year that many companies decided to downsize. The abrupt emergence of Covid-19 meant that governments had to act fast to prevent hazardous results as they deal with Covid-19. Economies were shut, and people’s movement was restricted. Trade was also greatly affected, and production levels went down. One of the industries that was greatly impacted was the airline industry. The airline industry saw their plans for 2020 go up in flames as countries decided to halt international flights. For airlines, the inevitable was to cut back on their expenses, and one way to do this is to downsize. Major airlines in the world started announcing layoffs, and this meant thousands or hundreds of thousands would eventually suffer this fate globally.
Companies downsize to cut costs and enhance their growth. However, during the Covid-19 pandemic, downsizing was a necessary move that was needed to help companies from collapsing. Two airlines in the United States started to issue warning signs early in the year as they projected that tougher times awaited them if the world remained locked down. United Airlines and American Airlines are two of the most badly hit airlines in the U.S. In August, American Airlines said that it would be forced to lay off 19,000 employees, mainly because of the effects of Covid-19 (Koenig, 2020). United Airlines issued a similar report indicating that it would be forced to lay off more than 16,000 employees in October. In October, the BBC (2020) reported that both companies had already started laying off workers, as they had indicated earlier. As per the article, Congress had agreed to bail out the airlines until 1st October. However, as federal aid came to an end, it was inevitable that they had to downsize. The repercussions of such an action translate to unpayable rents, children sleeping hungry, and a host of other problems that could be difficult to reverse as time goes on. The actions of airlines are indeed justified mainly because of the fall in demand that hit the aviation industry since the pandemic was announced. In the U.S., the federal government could be out of depth if the pandemic continues to ravage the economy, and companies will be forced to downsize and streamline operations.
The topic of downsizing is relevant to the material in the course because of several reasons. One of the reasons it is relevant is that it helps showcase the practical nature and difficulty of human resource management. Downsizing usually impacts the health of an organization, and this is where human resource management is put to the test. First of all, downsizing has to be guided by a strategy that will reduce the impact of the layoffs on the organizations. Without a strategy, the chances are that downsizing will deplete morale while also negatively impacting productivity. Zorn et al. (2017) write that if done wrongly, downsizing could lead to loss of valuable “knowledge when employees exit; remaining employees struggle to manage increased workloads, leaving little time to learn new skills; and remaining employees lose trust in management, resulting in less engagement and loyalty.” Aside from the above, an organization can also suffer from reduced innovation in the long-term, something that may not be evident in the short-term. The above shows that there is a need for organizations to tread carefully before making the decision to downsize. The above statement brings a clear perspective on the responsibilities of human resource management and the significance of its decision-making process. In understanding the role of human resource management in an organization, one gets to understand the importance of the role they play.
Aside from the above, downsizing is relevant to the course material because it helps showcase the importance of the role human resource management plays after a company decides to downsize. Regardless of the reasons for downsizing, an organization is bound to encounter some problems after making the decision to downsize. Some of the common problems organizations encounter after downsizing include retraining, maintaining customer relationships, reallocation of job responsibilities, maintaining satisfaction rates, and communication, which is necessitated by the action to downsize. If left unchecked, these problems can cause major problems for organizations in the long run. With a weak human resource management docket, a company is likely to end up bankrupt if changes are not made, and fast. After downsizing, the role of human resource management does not change, and the load does not get any lighter in spite of a streamlined organization. In the short-run, a downsizing organization will depend on human resource management’s wit and adaptability to cope. It will be the work of human resource management to ensure that an organization is able to maintain a strong and healthy relationship with its clients. Also, it will be the work of human resource management to ensure that productivity levels do not reduce in any way. For American Airlines and United Airlines, understanding their downsizing decisions brings into perspective the work of human resource management for both companies. People never ask the question of what next, but the downsizing event of these two companies forces one to think of their future because as things are currently, the world will take a few more months before normalcy resumes.
How Downsizing Enhances One’s Understanding of Course Material
Human resource management is made up of three words. These include human, resources, and management. Human involves the skilled and unskilled labor or workforce in a company. Resource mainly involves or refers to scarce availability. On the other hand, management means ways in which scarce resources could be put to use to help meet the objectives of an organization. Human resource management exists to help ensure that there is apt utilization of the workforce in an organization.
As already indicated, downsizing could happen for different reasons. However, for the two airlines, it happened mainly because of tough economic times. For ma...