What is downsizing and what are its implications for organizational structure?

Downsizing refers to the intentional reduction in workforce size with the goal of improving organizational efficiency or effectiveness. In a simple downsizing, it is possible that as size decreases, the firm should reduce its complexity, centralize, and become less formalized. However, this assumes that downsizing occurs proportionally in all parts of the organizations and this is not always the case. White-collar managerial and staff jobs have been disproportionately reduced in recent downsizings. Thus, a new downsized structure will not necessarily look like a mini-version of the old structure. In practice, downsizing is often accompanied by reducing horizontal and vertical complexity.