Cost-benefit analysis of organizational interventions: The case of downsizing

Assa Birati, Aharon Tziner

Research output: Contribution to journalArticlepeer-review

3 Scopus citations


This article advocates a new approach to assessing the desirability of downsizing. The model treats downsizing programs the same as any other projected investment by a firm. The steps involved in reaching a decision include: (a) Estimation of cash outflows at the initial stage of the process regarded in this paper as the investment in the downsizing project; (b) Assessment of the net inflow from downsizing; (c) Estimation, on the basis of (a) and (b), the real, post-tax rate of return on the downsizing plan and comparison with the real, post-tax cost of capital to the firm; (d) Ranking and comparing the downsizing project to all other potential investments. The final decision of whether to accept or reject a downsizing plan will then depend on the relative desirability of the project (when all other non-quantitative considerations are also evaluated) to other investment alternatives, taking into consideration the limited resources of the firm for capital spending.

Original languageEnglish
Pages (from-to)277-286
Number of pages10
JournalJournal of Business and Psychology
Issue number2
StatePublished - 2000


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