Call it downsizing, layoff, rightsizing or smart sizing; in essence, it is all one and the same thing. This restructuring strategy is about reducing the manpower to keep employee costs under control. Take the case of auto-giant General Motors, which in 1991 decided to shut down 21 plants and lay off 74,000 employees to counter its losses.
Another example is that of IBM, which had never laid off staff ever since its incorporation, but had to layoff 85,000 employees to stay in business. This type of restructuring is tough to manage and is mostly adopted to overcome adverse situations. Downsizing is not always a result of business losses; it may be needed even in cases of takeovers, acquisitions and mergers, where duplicity of the staff propels this form of organizational restructuring.
Whether you are acquiring a business or some other business is acquiring your business, restructuring will be needed post acquisition. The business being acquired undergoes major restructuring to get in-line with the organizational setup of the acquiring business.
When AT&T acquired BellSouth, BellSouth was restructured to fit into the organizational setup of AT&T. And it wasn’t just BellSouth that was restructured, as AT&T too saw some restructuring to accommodate BellSouth. Altogether, AT&T had to cut down 10,000 employees over a period of three years, following acquisition of BellSouth.
Also, when two businesses decide to merge together, organizational restructuring is a must to unite the two distinct organizations into one organization. When Glaxo Wellcome and SmithKline Beecham merged together to form Glaxo SmithKline in 1999, both the companies had to undergo major restructuring, and there was some major downsizing before as well as after the new company was formed.