Workforce Reductions:

Downsizing Strategies Used in Selected Organizations

GGD-95-54: Published: Mar 13, 1995. Publicly Released: Mar 13, 1995.

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GAO provided information on how 17 private companies, 5 states, and 3 foreign governments planned for and carried out downsizings, focusing on successful strategies and approaches that may help federal agencies to implement federal employment reductions mandated by the Federal Workforce Restructuring Act.

GAO found that: (1) while private companies base downsizing decisions on corporate restructuring and work requirements, state and foreign governments tend to undertake downsizing as a cost-cutting or government streamlining or efficiency measure; (2) companies stress the importance of identifying needed structural changes and strategic workforce planning before making downsizing decisions; (3) factors constraining government downsizing strategies include public sentiment, budget limitations, legislative mandates to maintain certain programs, and personnel laws; (4) few organizations rely solely on attrition or hiring freezes to achieve significant workforce reductions, but use a variety of approaches including redeployment, retraining, and separation incentives such as waiver of early retirement penalties, additional service credit, supplemental pensions, lump-sum cash payments, tuition assistance, and new business start-up assistance; (5) organizations offer less generous incentives over successive downsizings and institute involuntary separations as a final downsizing tool; and (6) to address employee morale, organizations emphasize the importance of open communications during downsizing and provide employee and family counseling, job placement, relocation assistance, and career training services.

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