DECA Human Resources Management Practice Exam

Which of the following is an example of a potential disadvantage of downsizing?

1. Increased operational efficiency

2. Enhanced competitive advantage

3. Negative impact on remaining employees’ morale

4. Reduction in overhead costs

The correct answer is: Negative impact on remaining employees’ morale

A potential disadvantage of downsizing is the negative impact on the morale of the remaining employees. When a company decides to reduce its workforce, the employees who remain may experience a range of emotions, including anxiety, insecurity, and fear about their own job stability. This can lead to decreased motivation and productivity, as staff may feel uncertain about their future within the company or be preoccupied with the changes happening around them. In this context, the focus shifts from their usual tasks to concerns about job security, which can diminish their overall engagement and effectiveness in their roles. The other mentioned factors, such as increased operational efficiency, enhanced competitive advantage, and reduction in overhead costs, are typically viewed as potential benefits of downsizing. While these outcomes might be desirable for the organization from a business standpoint, they do not address the human element of the workforce that can be significantly affected by such decisions, thus highlighting why morale is a relevant concern in the context of downsizing.