Final answer:
Downsizing can lead to decreased operational efficiency, lower employee morale, and stifling of innovation and creativity despite saving companies money on salaries and benefits.
Step-by-step explanation:
Although downsizing can save a company money in salaries and benefits, it can create several disadvantages. One of these is decreased operational efficiency, which can occur because the remaining employees might be overburdened by the increased workload, or may lack the specific skills of the employees who were laid off. This can lead to fatigue, errors, and potentially lower the quality of output, negatively impacting the company's performance. The process of downsizing also often leads to lower employee morale. Employees who survive the layoffs may feel insecure about their future at the company, which can reduce their engagement and commitment. Lastly, downsizing may stifle innovation and creativity as a reduced number of employees may have less time for creative thinking and idea generation, focusing instead on core tasks to keep the business functional.