Tiếng Việt
Workforce reduction has long been a difficult decision, often associated with loss, instability, and anxiety within organizations. However, in the bigger picture, many companies have weathered the storm and even emerged stronger after implementing this strategy in a scientific and well-directed manner. So, can downsizing be seen as a step back in order to move forward further? This article will analyze five notable cases both domestically and internationally to draw practical lessons for business leaders.
1. IBM – From a Conservative Giant to a Symbol of Technological Transformation
In the early 1990s, IBM faced a severe crisis. Revenues plummeted, its outdated business model, and a cumbersome organizational structure made it impossible for the company to compete with emerging technology firms. Between 1993 and 1995, CEO Lou Gerstner made a historic decision: to cut more than 60,000 employees — the largest workforce reduction at that time.
Alongside the workforce reduction, he restructured the entire system, shifting the focus from hardware to IT services. As a result, IBM not only escaped the crisis but also became one of the world’s leading technology solution providers throughout the following decade.
Lesson Learned:
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Workforce reduction must be accompanied by a clear repositioning strategy.
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Decisive leadership and transparent internal communication help stabilize the organization after upheaval.
2. Ford – When “Redesigning the Organization” Matters More Than Product Innovation
In 2006, Ford was on the brink of bankruptcy. CEO Alan Mulally launched the “One Ford” program, with a key focus on streamlining the global management structure. Over 30,000 employees left the company during the two-year workforce reduction process.
In 2006, Ford was on the brink of bankruptcy. CEO Alan Mulally launched the “One Ford” program, with a key focus on streamlining the global management structure. Over 30,000 employees left the company during the two-year workforce reduction process.
Lesson Learned:
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Workforce reduction should not be the goal, but rather a tool to optimize processes.
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Investing in the remaining workforce is a vital factor after restructuring.
3. FPT Software – Streamlining to Enhance Service Quality
In Vietnam, FPT Software faced competitive pressure from regional rivals such as India and China in the software outsourcing industry. Between 2017 and 2019, the company reduced its workforce by about 10% in some low-performing departments, while simultaneously increasing investment in automation and advanced skills training.
After streamlining its operations, FPT Software focused on developing high-value areas such as artificial intelligence and digital transformation, achieving double-digit growth for three consecutive years thereafter.
Lesson Learned:
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Reducing staff in outdated departments helps reallocate resources more effectively.
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Leveraging the transformation period to retrain and upgrade internal capabilities.
4. Nokia – A Costly Lesson on Workforce Reduction Without Innovation
Unlike the successful examples, Nokia is a typical case of workforce reduction without a clear transformation strategy. After losing market share to Apple and Samsung, Nokia laid off tens of thousands of employees between 2009 and 2013. However, the lack of a new technology direction, coupled with frequent leadership changes, prevented the company from making a recovery.
Although Nokia later somewhat recovered by selling its device division to Microsoft, the once world-leading brand had missed its golden opportunity in the mobile era.
Lesson Learned:
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Workforce reduction is only effective when accompanied by a clear strategic vision.
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Lack of innovation means merely delaying the inevitable collapse.
5. A Vietnamese Startup in the E-Commerce Sector
During the Covid-19 period, a Vietnamese e-commerce startup (referred to as “X”) had nearly 300 employees but faced a revenue decline due to high operating costs and a shrinking market. The leadership boldly reduced the workforce by over 30% in Q2 2020, while implementing a flexible (remote) working model, focusing on retaining strategic positions and the technology team.
By 2022, the company not only survived but also returned to growth thanks to a streamlined business model with low fixed costs. They attracted Series A investment from a major regional fund.
Lesson Learned:
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Startups can view workforce reduction as an opportunity to reinvent their core capabilities.
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Flexibility in structure and operating models is key during a crisis.
Key Factors Determining Success or Failure in Workforce Reduction
From the examples above, it is clear that not all workforce reductions lead to positive outcomes. Success or failure depends on various factors:
1. Clear Objectives
Businesses must clearly define the reason for workforce reduction—is it to cut costs, restructure, or drive innovation? The more specific the objective, the easier it is to manage actions and communicate them effectively.
2. Transparent Internal Communication
One of the biggest mistakes is withholding information or communicating unclearly. This can spread anxiety throughout the organization and negatively impact overall productivity.
3. Data-Driven Decision Making
Workforce reduction should be based on clear criteria such as performance, strategic roles, and growth potential, rather than simply on rank or seniority.
4. Post-Reduction Plan
Businesses need to implement support programs for job transitions, retraining, or motivation for remaining employees to maintain stability.
Conclusion: Workforce reduction is not the end—it’s a new beginning.
In reality, workforce reduction can be a necessary strategic decision on the path to sustainable development if executed correctly. Organizations like IBM, Ford, and FPT Software have proven that after the “storm” comes an opportunity for rebirth. However, this requires careful consideration, strong change management skills, and long-term vision from leadership.
In today’s era of constant change, “streamlining to accelerate” is no longer just a slogan but a survival strategy. Workforce reduction—when done right—can be a springboard for businesses to transform, adapt, and achieve sustainable growth in the future.
