Retrenchment is the practice of terminating the employment of a large number of employees in a company or other organization, generally done with the specific objective of reducing total number of employees in a company. It is not quite right to describe retrenchment as a corporate strategy. It is more of one of the means of achieving specific corporate objectives such as cost cutting, out sourcing of some of the operations, or major automation, reduction in total business activities or any other objectives which require substantial reduction in manpower requirements.
Retrenchment can benefit company only when the company is overstaffed, or when it is implementing any other program, which involves substantial reduction in manpower requirement. Of course it is assumed the the basic strategy or objective that give rise to need of retrenchment must also be right for the retrenchment to benefit the company.
About a decade back, the practice of retrenchment, also described as "downsizing" had become kind of fashionable in business and industry across the world. However indiscriminate retrenchment led to problems for many companies. As a result the slick salesmen of "easy to use", "ready-made" management practiced developed the term downsizing with a new one - right sizing. But the fact remains that downsizing or rightsizing, these are only means to an end and not worthwhile objective in themselves.
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