Global Trends: Downsizing

Downsizing is a business strategy implemented by managers that affects the size of an organization’s workforce and its work processes. Companies implement downsizing strategies as a response to global competitive pressure and efficiency demands from organizational stakeholders. Some of the actions undertaken by businesses as part of downsizing include issuing early retirement to employees, attrition, and layoffs. Although most downsizing strategies are intended to control operational costs, the strategy is not necessarily linked to business decline: Global Trends: Downsizing.

If a business grows significantly, managers may embrace downsizing as a strategy to ensure there is sustainability, a process that can be referred to as rightsizing. At Apple Inc., layoffs are relatively rare. However, the company occasionally lays off employees as a strategic shift designed to save costs, with the savings being transferred to areas of strategic importance, including research and development.

Most companies downsize after analyzing the external environment and discovering opportunities and threats that may result from downsizing. For instance, increased trade tariffs are some of the external environmental factors that may influence HR departments of organizations to downsize (Ding & Liu, 2023). The historical trade war between the US and China is one such example that demonstrates the impact of trade tariffs on companies.

After a tariff is imposed, companies can decide to impose a tariff pass-through rate, which will lead to an increase in consumer prices; hence, no need to downsize. However, if a business seeks to maintain a pass-through rate of 1, it will need to downsize to cut costs.

In 2018, for instance, Trump’s tariffs on Chinese enterprises led to the Chinese losing 5 million jobs, including 2 million manufacturing jobs (Ding & Liu, 2023). These job losses were occasioned by companies downsizing to survive the global pressure. Given the recent threats by Trump to impose tariffs on Apple as a way of forcing the company to cease its manufacturing processes in India and other countries, the company may eventually be forced to downsize.

With Apple assembling $22 billion worth of iPhones in India for the period of one year ending March 2025, imposing tariffs may force the HR department to lay off a good number of employees to prevent the pass rate from being so high (Bloomberg, 2025). This is one of the roles of HR SWOT analysis, as it gives HR departments an insight into the threats and opportunities that exist in the external environment.

Downsizing and HR SWOT Analysis

Concerning HR SWOT analysis, downsizing is viewed as an opportunity for an organization to improve its production processes. It is a strategy to cut slack resources that may negatively impact an organization’s work processes, including innovation (Ramdani et al., 2020). Most managers assume that by having slack resources, they are likely to avoid external shocks, but that is not always the case.

This is because slack resources like excess employees make firms believe that they are prepared to respond to external threats, but in reality, they have less motivation to do so (Ramdani et al., 2020). The belief that there are enough resources to respond to problems makes firms not attempt experimental projects that can prevent further problems.

Besides, the existence of slack human resources leads managers to become self-serving and wasteful. Managers may decide to invest in projects that do not improve an organization’s production processes, which can eventually starve crucial innovation projects (Ramdani et al., 2020). By diverting resources that were initially meant to finance innovation initiatives, the firm loses value in the long run. To that end, downsizing is a form of discipline, an opportunity for managers to reduce innovation-related agency problems (Ramdani et al., 2020).

It is worth noting that Apple’s success is mostly due to innovation. The company has achieved high sales, not because it markets aggressively, but because of the innovative features contained in its devices. Once the company cuts down its HR resources in light of the impending trade tariffs, it will save more resources, which can then be committed to finance innovation initiatives.

Besides, innovation goes a long way to ensure a firm is more efficient and leaner. After downsizing, employees will no longer be focused on boring routine tasks. Instead, the process empowers them to embrace a multi-dimensional attitude to work, implying that they can work in different departments (Fernández-Menéndez et al., 2020).

For instance, a production engineer in an environment characterized by slack HR resources only focuses on their production work without paying attention to the aftermath of their work. However, once downsizing happens, such an employee may be empowered to undertake only quality assurance tasks. Given the freedom and autonomy granted to Apple employees, empowering employees to contribute significantly to the production process motivates employees.

Further, Apple’s HR SWOT analysis faces a problem of skills gaps, which can affect production processes. To that end, some departments are overcrowded with workforce, while there are severe skills shortages in other departments. For instance, the company faces a shortage of workforce, particularly in the content and cloud computing segments. Once downsizing happens, the company will lay off slack employees in overcrowded business areas (Ramdani et al., 2020).

This strategy will free up resources, which can then be used to hire employees in the areas facing shortages. Besides, downsizing will offer Apple an insight into the skill shortages it faces, which can be addressed by providing employee training and development programs to equip the current workforce with the necessary skills to fill the gaps. Overall, downsizing makes an organization’s human resources more efficient and lean.

HR Strategy Recommendation

Apple should adopt digital and data-driven HR management to ensure HR efficiency. A paradigm shift to digital and data-driven HR management is crucial in this age of advanced digital technologies and burgeoning big data, since it will lead to an organization’s HR becoming lean and more efficient (Chen, 2025). The new strategy is not just about automating tasks, but changing how the entire HR department functions within the organization. It will encompass utilizing data analytics, artificial intelligence (AI), and machine learning (ML), among other innovative tools, to make critical HR-related decisions and improve the overall employee experience.

Action Plans

• Leverage predictive analytics to determine internal staffing needs across the company’s production cycles to curb staffing shortages and slack by 1^st January, 2026.
• Acquire an AI software that will collect feedback on employee experiences and offer improvement recommendations by 1^st December 2025, to ensure the company embraces a responsive culture.
• Adopt a performance management system, which will shift from the traditional one-time reviews to continuous digital feedback loops to align individual employees with changing business needs and goals by 1^st December 2025.
• Embrace digital practices, such as virtual reality practices, during onboarding processes for new employees, which will train employees about the company’s culture and history to bolster their understanding of Appl products by 1^st January, 2026.
• Adopt AI-powered tools that will match employees’ skills with their job fits within the company to facilitate internal job mobility and eliminate skills mismatch issues by 1^st January, 2026.
• HR should adopt data-driven diversity programs to ensure equity during hiring to bolster the company’s image as a diverse organization by 1^st December 2025.

References

Bloomberg. (2025, April 13). Apple India produces $22 billion of iPhones in a shift from China. The Economic Times; Economic Times. https://economictimes.indiatimes.com/industry/cons-products/electronics/apple-india-produces-22-billion-of-iphones-in-shift-from-china/articleshow/120245833.cms?from=mdr

Chen, J. (2025, January). The Digital Transformation of Enterprise Human Resource Management in the Context of the Big Data Era. In 2024 6th International Conference on Economic Management and Cultural Industry (ICEMCI 2024) (pp. 229-236). Atlantis Press.

Ding, Y., & Liu, Y. (2023). The Impact of tariff increase on export and employment of Chinese firms. China Economic Quarterly International, 3(3), 155–166. https://doi.org/10.1016/j.ceqi.2023.08.002

Fernández-Menéndez, J., Rodríguez-Ruiz, Ó., López-Sánchez, J. I., & Delgado-Piña, M. I. (2020). Innovation in the aftermath of downsizing: Evidence from the threat-rigidity perspective. Personnel Review, 49(9), 1859-1877.

Ramdani, B., Guermat, C., & Mellahi, K. (2020). The effect of downsizing on innovation outputs: The role of resource slack and constraints. Australian Journal of Management, 46(2), 031289622097060. https://doi.org/10.1177/0312896220970609

Appendix B

For this Assignment, research and identify a current global trend that has the potential to impact your chosen organization and its ability to be agile and adaptive and specifically the policies and practices of its Human Resources Department or Division and its AHROP, which must anticipate and address global trends in HR’s planning for the year ahead.

In a 3- to 4-page paper, respond to the following:

• Describe a current global trend (e.g., down-sizing, social media, aging workforce, virtual workplace, global office, health) that might impact your chosen organization and specifically its Human Resources Department/Division’s strategies.
• Using your HR SWOT analysis from Week 2, with corrections applied from Faculty feedback and suggestions, address this external trend as either (external) threats or opportunities, adding to your HR SWOT analysis, highlighting your changes so your Instructor can easily identify them. This will become the final version of your AHROP’s Appendix B.
  

  Global Trends: Downsizing

• Also, write an HR strategy (i.e., strategies are written as a single sentence with an action verb showing direction or movement and can be measured) to address this external trend, together with 6–8 key action steps (as bullet points) that are needed to make this strategy become a reality. Action steps are used to guide the execution of a strategy, allowing anyone to follow the plan. This can become one of your HR strategies in your final project using the required Template.
  Use the SMART acronym when developing your HR strategy (S-Specific; M-Measurable; A-Action-oriented; R-Realistic; T-Timely). Strategies are written as a single sentence.
  • Example strategy: Human Resources will implement the new HRIS system with all functionality (PeopleSoft) by June 1, 2020, with a zero-error rate.

Client’s Notes: