Higher Business Management - Delayering and Downsizing

In Internal Organisation, a confusing topic seems to be Delayering and Downsizing.

Remember the definitions first of all:

DELAYERING means to remove levels of management. This results in flattening organisational structure. Think of the example in Scottish schools where Assistant Head Teachers and Senior Teacher roles were removed creating in effect only 3 promoted levels.

DOWNSIZING means laying off or closing down production of the company to cut costs, but usually they aim to keep output and production the same.

Communication and decision making should be increased and sped up if Delayering is used as you are removing levels of management which may have been unwieldy.

For both delayering and downsizing, a manager’s span of control may be widedned as jobs and maybe even whole departments can be removed. This will increase the manager’s workload and the number of people who report to him/her (span of control).

Delegation and empowerment may result from both delayering and downsizing as employees will be given more authority and responsibility to carry out tasks. This however, will increase their workload and potential for stress. But again it should increase their involvement and motivation.

Delayering should ensure the firm remains competitive as it is layers of management being removed whereas in downsizing the reduction of staff in perhaps key areas mean it may be difficult for output to remain the same, or at least in the same standard of quality.

Both delayering and downsizing are sometimes viewed as cost cutting measures, though in reality delayering is really about increasing organisational efficiency, whereas downsizing is aimed at lowering costs in order for the firm to remain competitive or even to avoid administration/liquidation.