Syllabus: Cambridge - IGCSE Business Studies
Module: 2.3 Recruitment Selection and Training of Employees
Lesson: 2.3.3 Why Reducing the Size of the Workforce might be Necessary
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Introduction
Why would a thriving business decide to downsize? This part of the Cambridge IGCSE Business Studies syllabus challenges learners to explore tough decisions that employers face. Aligned with Unit 2.3.3, this topic equips students with insights into organisational strategy, economic pressures, and human impact — all crucial for building economic and business literacy in the classroom.
Key Concepts
Students should understand the following, as defined in the Cambridge IGCSE Business Studies (0450) syllabus:
Redundancy: When a job role is no longer required, not due to the employee’s performance.
Retrenchment: Strategic reduction in workforce size to improve efficiency or cut costs.
Voluntary vs Involuntary Redundancy: Some workers may opt to leave, while others are selected based on criteria such as last-in-first-out or performance.
Causes of Downsizing:
Fall in demand for the product or service
Automation or introduction of labour-saving technology
Business relocation or closure
Cost-cutting during periods of financial loss
Outsourcing or offshoring
Impacts:
Short-term cost savings
Long-term effects on morale, reputation, and productivity
Potential legal and ethical implications
Students must evaluate when and why these actions are justified, balancing business needs with ethical considerations.
Real-World Relevance
The COVID-19 pandemic saw major employers like British Airways and John Lewis restructure, citing falling revenues and changing consumer habits. More recently, technology companies such as Meta and Amazon have cut staff to manage post-growth recalibration, even while remaining profitable. These examples underline how workforce reductions are often about strategic positioning, not just survival.
Mini Case Example:
Marks & Spencer announced over 7,000 job cuts in 2020, later attributing the move to changes in consumer shopping behaviour and a shift to online sales. It prompted discussions on automation, e-commerce, and redeployment.
How It’s Assessed
Assessment typically takes place in Paper 1 (Short-Answer and Structured Questions) and Paper 2 (Case Study-Based Questions). Key question types include:
Define: e.g. “Define the term ‘redundancy’.”
Explain: e.g. “Explain two reasons why a business might reduce its workforce.”
Analyse: e.g. “Analyse the benefits and drawbacks of reducing staff during a recession.”
Evaluate: e.g. “Do you think the business made the right decision to reduce its workforce? Justify your answer.”
Encourage students to link responses to the case material, weigh pros and cons, and show understanding of wider business implications.
Enterprise Skills Integration
This topic naturally draws on several enterprise competencies:
Decision-Making: Evaluating when downsizing is the best option.
Problem-Solving: Navigating alternatives such as retraining or redeployment.
Empathy and Ethics: Considering the human cost of business decisions.
Strategic Thinking: Linking workforce size to long-term goals and resource planning.
In-class activities might include role-play board meetings, stakeholder mapping, or designing a redundancy plan for a hypothetical firm.
Careers Links
Understanding workforce reduction ties directly into several career pathways and Gatsby Benchmarks:
Human Resources (HR): Professionals must manage redundancy processes, consultations, and compliance.
Business Management: Managers assess staffing needs as part of operational planning.
Labour Law: Legal careers intersect through employment rights and redundancies.
Trade Unions and Policy: Careers in advocacy and policy-making deal with employment rights and ethical frameworks.
These links help students grasp how business decisions ripple through sectors and society.
Teaching Notes
Tips for delivery:
Use current business news to bring lessons to life — stories from BBC Business or Financial Times work well.
Discuss ethical dilemmas and stakeholder impact through structured debates.
Use past papers to familiarise students with command words and mark schemes.
Common pitfalls:
Confusing redundancy with dismissal for poor performance.
Overlooking the impact on remaining staff morale and productivity.
Extension activities:
Research and present a local or national case study of downsizing.
Create an HR policy that balances cost reduction with staff well-being.
This unit offers real-world complexity, making it ideal for cross-curricular links with PSHE, citizenship, and economics.
