Dumb sizing is when an organization reduces (downsizes) the number of people in its workforce so much so that it results in reduction of organizational efficiency hence crippling the business due to loss of knowledge and skills of the employees.
Most companies when in commercial pressure find an immediate solution to improve their balance sheet by cutting their payroll costs and hence downsizing their employees. However even though it appears that downsizing leads to reduced labor cost, better communication and faster decision making, downsizing causes more harm than good. Employees bring competitive advantage to an organization.
Hence loss of an employee also results in loss of valuable information that the employee held in his memory. Besides loss of corporate memory downsizing can also result in reducing the morale of existing employees, loss of knowledge and skill of the outgoing employee and disruption in the social networks within the organization. So indiscriminate downsizing could cause a serious gap in the skills of an organization. Hence even though downsizing seems an attractive option in the short term, it deteriorates the quality, effectiveness and productivity of an organization as a result of loss of knowledge and leads to a dumber organization resulting in dumb-sizing.