Which of the following describes a potential downside of downsizing?

• A. The business becomes more efficient and can become more competitive
• B. Remaining staff feel vulnerable and demotivated
• C. It reduces the cost of wages and rent
• D. It delays decision making

Answer: (B)

Downsizing often hits morale and motivation among the remaining staff. When people see colleagues leave and worry about their own jobs, they can feel vulnerable, anxious, and less committed. That emotional strain can lead to lower engagement, reduced effort, higher absenteeism, and even higher turnover as people seek more stable surroundings. Over time, this undermines teamwork, productivity, and the quality of service or output, which is a real drag on long‑term performance.

The other common outcomes of downsizing aren’t portraying a downside in the same direct way: reducing wage and rent costs is typically a financial or efficiency benefit, not a morale issue. And while restructuring can create some decision‑making challenges or uncertainty in the short term, the central drawback that consistently follows from fewer people handling more work is the negative impact on staff morale and motivation.