In today's economy, many companies are retrenching off numerous workers to embrace technologies advances; however, other companies do this to keep in business through cost cutting. In business when large corporations swallow small ones, and especially when little companies borrow finances to compete big ones, this new acquisition is frequently broken up and sold off to clear the debt. This is one of the reasons that lead to downsizing and dismantling of AIG Company. AIG's iconic New York world headquarters had to be sold for condominiums, as the global insurer to downsize the work force.
Reason for downsizing
Chartis suffered a $2.4 billion net loss for the third quarter through flagship assets and casualty of American International Group (AIG). This led to the need of a two percent downsize of its workforce. These losses were contributed to the restructuring process and losses from sales of assets.
Downsizing exercise is normally met with objection; stakeholders of Chartis/AIG also experienced this during the process. During the process, workers are unsettled and these affect their productivity. After the completion of the process employees morales ware down since some workmates make bonds which if affected reduces the work spirit. However, for continuity of the business the move was inevitable. Stakeholders gave benefits dues to the retrenched workers and give incentives to the remaining to boost their spirit. The process was successfully managed that is why Chartis is still in operation.
Chartis still faces instability with workforce since the remaining workers are always questioning stability of the company, and sustainability of their jobs.
Chartis has not fully overcome the challenges of downsizing; however, the management believes it was the only move they could undertake by then. Workforce downsizing affect the economy growth and should be the last option incase a company need to cut its cost.