Define: Downsizing

UK Accounting Glossary

Definition: Downsizing



What is the dictionary definition of Downsizing?

Dictionary Definition


  1. An act in which a company downsizes or is downsized
  2. Miniaturization
  3. automotive Reducing engine’s capacity at same power or increasing engine’s power without increasing capacity

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Full Definition of Downsizing


Downsizing is a cutback in a company’s operations and usually implies a reduction in its employee headcount as well. Downsizing results from many factors, including increased global competition, new technologies, and weaker labour unions; it takes various forms and has various outcomes. Some firms use downsizing as part of a long-term effort to transform their businesses; others turn to downsizing simply to slash costs and boost earnings. Sometimes downsizing boosts employee morale by giving the remaining workforce new responsibilities and opportunities; in other cases, downsizing leaves a demoralized staff that is undermanned when economic conditions improve. Some firms carry out downsizing relatively gently by offering workers strong incentives to retire; for other companies, downsizing means chopping heads as quickly and cheaply as possible. Whether downsizing generally helps or hurts a company’s long-term profitability remains controversial. Evidence can be presented on both sides, but most would agree that the answer greatly depends on how the downsizing is executed.


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Downsizing. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/downsizing/ (accessed: April 02, 2020).
American Psychological Association (APA):
Downsizing. PayrollHeaven.com. Retrieved April 02, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/downsizing/

Definition Sources


Definitions for Downsizing are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February 2020.