Downsizing is the process of reducing the number of people on the working payroll in an organization. It is a standard measure used by companies during times of market volatility or bad financial performance. 

When a company downsizes, certain employees are frequently notified that they will be laid off. These are usually permanent layoffs, but the employees may be rehired following a reorganization phase. Regardless of the method used, downsizing a business negatively impacts employee morale and profitability.