What are the main reasons of downsizing employees in your organization?

One the primary reasons for employee downsizing is to reduce costs. Employee payroll counts as a liability on the company balance sheet and, therefore, reduces the owners' equity. The retained earnings of a company are affected by the amount it pays out in payroll, and removing this obligation is one way to cut costs. Aside from payroll, employee benefits are also costly to companies, as are the operating costs associated with overproduction.

Companies sometimes downsize their employee base to increase productivity. This may seem counterintuitive on the surface, but some instances exist where this would be advantageous. For instance, if a company knows that it can increase the output of individual workers while remaining constant with its productivity, this can be advantageous for cost reduction. However, a company may also decide to downsize to increase productivity by replacing workers with sophisticated equipment that can do the same job.

Value

Downsizing the number of employees a company has generally signals that some restructuring and changes are underway. These changes generally take place for increasing profitability of the company. If shareholders and other investors perceive that the company will be making changes that increase its profitability, it will increase the value of company stock. This can result in more investors coming on board or current investors increasing their shareholdings in the organization. In either case, downsizing can increase the company's perceived value.

Companies may overextend themselves in terms of the number and types of services they offer from time to time. It may behoove company ownership to sharpen the focus of the company by eliminating some of the products or services that it offers. In doing so, a decrease in the number of employees may be necessary. Company officials may decide that outsourcing certain activities will result in increased productivity and reduced costs as well.

Workload

Internal organization

Inflation in the number of employees and the preparation of structure

We have downsized at our company due to the real estate laws and lack of sales. However we did start focusing on other areas in real estate that will hopefully lead to sales and managing of properties... 

Thanks for the invite,

Fortunately there is no downsizing in our company.