A study of over 250,000 manufacturing plants by the National Bureau of Economic Research found that the productivity-enhancing role of downsizing has been exaggerated. MYTH Downsizing is a last resort. FACT Data indicate that for many companies, downsizing is a first resort. Now that the recession is behind us, we can expect less downsizing of workers. Companies are not downsizing because they are losing money.
MYTH Jobs are secure at companies that are doing well financially.
FACT Financially sound companies, some with record profits, are downsizing. General Electric, Campbell Soup, Compaq Computer, and American Express Travel-Related Services are examples. MYTH Downsizing is a one-time event for most companies. The best predictor of whether a company will downsize in a given year is whether it has downsized the previous year. FACT Middle managers continue to lose jobs out of proportion to their presence in the workplace.