What are the Advantages and Disadvantages of Impromptu Business Downsizing?

Impromptu downsizing refers to the abrupt changes that are made in businesses, mostly due to the lack of enough finances to keep them operating. Also, downsizing can occur when business owners want to run their companies by themselves, and it involves scraping off some positions, such as managerial posts. Despite the reasons for downsizing, the act has advantages and disadvantages for both the business owner and employees.

There are several advantages of downsizing. Firstly, downsizing in a company requires the same process to be done in departments (Mousazadeh, Jannati, Beiramy, AsghariJafarabadi, & Ebadi, 2013). Although the process may not favor employees, business owners benefit as they cut on cost. Also, it helps the owner to be in touch with every department, which ensures that operations run swiftly as the business entity is supervised by the owner. Basically, the owner is able to create a proper plan, which ensures that all departments are supplied with adequate resources (Redman, 2016). Secondly, downsizing helps the owner to scale a business down into a manageable size. Abrupt growth of businesses can be challenging to new business owners who, out of curiosity, may add unnecessary positions, which may require more resources to operate. Upon realizing the problem, scaling down helps them to start afresh and only hire necessary personnel.

On the other hand, downsizing has considerable effects. Firstly, it reduces opportunities for employees. Downsizing results in the reduction of the workforce through the termination of some positions (Redman, 2016). Fired employees may be promising talents that are demoralized in the process. Also, retained employees will have lesser opportunities for growing to the top positions of the business (Mousazadeh et al., 2013). Secondly, downsizing damages the public image of a business. A business that fires workers may experience a reduction in the number of clients as the changes would show that the business is failing. Therefore, before downsizing, the owner has to be vocal and highlight reasons for the changes to protect the company’s image.

Overall, downsizing is equally good and bad for business. Before resorting to the measure, business owners should weigh both outcomes and decide how to go about the process. The significant advantage of downsizing is that it helps in reducing operational costs as some unnecessary positions are terminated. Also, it helps the business to run swiftly as employees are answerable to the business owner. On the other hand, employees whose positions are terminated suffer the most as they would have to start looking for jobs afresh. Also, the process damages the company’s reputation. All in all, downsizing is not favorable for individuals who wish to advance within a given business.



Mousazadeh, Y., Jannati, A., Beiramy, H. J., AsghariJafarabadi, M., & Ebadi, A. (2013). Advantages and disadvantages of different methods of hospitals’ downsizing: A narrative systematic review. Health promotion perspectives3(2), 276.

Redman, T. (2016). Downsizing. In Encyclopedia of Human Resource Management. Edward Elgar Publishing Limited.