As we all know we are in the middle of an economic downturn; how could we forget with the media highlighting it each day.

I recently heard a word that has been popular during recent times - “Rightsizing”. Effectively this means downsizing, but it betrays a less negative meaning. This rightsizing is unfortunately becoming more frequent during these tough economic times. However, there are many potential costs of reducing staff numbers.

While many business advisers can provide you with a list of future costs associated with downsizing, such impacts have actually been researched and reported. An article titled ‘ The Impact of Downsizing on Workplace Attitudes’ was published in the Group and Organisation Management journal in 1999.

Firstly, this highlighted the different reactions to downsizing by management when compared to front-line employees. One of the big costs associated with downsizing is reduced morale of those employees who managed to keep their jobs. These employees have to undertake a greater workload, under greater pressure which ultimately results in increased stress, reduced company loyalty and reduced performance.

A recent article in Fortune magazine further highlighted by mentioning that medical claims increased ninefold among employees who were left behind after downsizing.

What this means is that if you are really forced to downsize, then it needs to be a priority that you focus on the health and wellness of your remaining staff to ensure that they can continue to lead your company in the right direction.