What is Rightsizing?
Rightsizing is the process roadmap towards the achievement of business objectives by way of right-sizing the number of employees you have in your company. It is often confused within the two domains downsizing and rightsizing, though it is far from the reality, both are different having a few similarities.
When you reduce your human resource for cutting cost purposes like to save money upon salaries payment and increase profitability instead, yes it is downsizing. On the contrary, when you limit your human resource to a particular right number to attain your business goals, this is rightsizing indeed.
What is the difference between Rightsizing and Downsizing?
The two concepts are usually confused! Downsizing can be caused by economic downturns like recession or the pandemic we recently had of COVID-19. Whereas the Rightsizing never always meant to be reducing the number of employees that are cutting the size to a right one at possible levels of the organizational setups to reach certain strategic business objectives instead. Rightsizing is sometimes defined as redefining the job descriptions instead of replacement of human resources or firing employees.
Rightsizing in the workforce entails the right skills sets, equipment, and environment provision at times rather. Or the newcomers may come into the existing workforce strength of your human resource battalion to add, share and teach your existing employees the expertise, knowledge, and experiences requisite to cope with the market uncertainties in turbulent times of the business world.
The rightsizing activity analysis is the rightsizing is carried on at all organizational tiers that are: lower, middle, and upper management levels. It is that the rightsizing is a result of several marketing conditions and some external factors. If buying power diminishes due to inflation, it may decrease the graph of your market demand of services required, hence you go for right-sizing instead to limit your production facility to a certain number of employees and produce units as per lower demand – hence, the supply lowers as well.
What are different Methods of Rightsizing?
Following are the types of rightsizing:
How fast and accurate an employee performs a job. It encompasses:
- Time is taken for doing a task
- Amount of work-loaded
The ratios are taken into consideration for restructuring purposes like materials used, sales grabbed, and labor input. The variables to consider here are:
- Turnover - Ratio: Asset and/or liability replacement by an organization to see how efficiently these are utilized.
- Production - Ratio: Input versus output is calculated. How effectively capital and human resources are producing the required units to serve the economy as well as to get to the economy of scale. Where Economy of Scales means reaching maximum production with minimum input.
- Cost-per-Hire-Ratio: The whole sum cost of recruitment, for a new hire from advert to travel to admin, is calculated, and then the decision is taken accordingly.
Analysis of Drivers
Simple analysis of what is the driving force behind success. For example, any advertising company can look into the number of adverts and the team it has to meet the requirements of the existing market conditions. Similarly, the possible drivers behind the curtain teamed up are seen to go farther into the rightsizing.
Though complex, this method of rightsizing tells you what is the exact number of employees you need to perform success (like mathematical sums and models). Due to its time taking tenure methodology, this method is least followed by business organizations.
What are important steps in rightsizing?
Following are the steps in right-sizing:
- Diagnosis in terms of Organizational Structure and Design: This is the step whereby you are required to deeply look into the very necessity of each department, the number of employees working in those divisions, and the tasks and machinery assigned and provided to them respectively to work smoothly. Ask yourself a question: Are those all worth doing whatever is done? And then see what is needed: rightsizing, increasing, or restructuring of your human resources. Too, you need to see that the Organizational Structure and Design is either organic in nature having an easy chain of communication or is Bureaucratic in working style possessing a strict chain of command; and what is required when, why, how much, where, and how.
- Identification of pivotal human resources: This step is after the structural diagnosis. By way of the former, it helps you to identify the very vital human resource required to be a successful business concern. How much a role is critical, how difficult is to fill a position, and how the risk can be minimized by certain position introduction are the questions of key concern you must ask yourself in this step before going any further into the rightsizing.
- Determination of Operations’ Vitals: The third step into rightsizing is the determination of operational requisites. What HR requirements you have in terms of certain unavoidable roles you need for your story to be a headline business magazine’s success story inviting profitability and expansion are already defined by the former two steps of the rightsizing. But here it is pivotal to know what financial costs you have to bear for that new hiring to fill the roles required or to boost the existing workforce people to higher positions through training programs. And do you have that financial costing budgetary allocation preparations in advance or do you have to arrange them? Not only the labor but some other charges concerning the rightsizing impacts must be taken into your consideration here.
- Communication, feedback, and presumptions: Being an HR Specialist, you are also a psychologist for your employees. Do share the information with your employees regarding the reasons behind and the benefits of the rightsizing. Not only this but collect the feedback and resolve the questions and presumptions concerning your employees, if any.
- Rectification: To finally do what is directed by the previously discusses three steps of rightsizing, this fourth and the last step is to rectify the wrong done – if any – or carry on to the novelty-based or experienced introduced steps. The decline of employees’ morale, if due to rightsizing, has to be carried on to the better level by you. Things would not be as smooth as you think or you read! You will have to make the necessary behavior changes requisite, say you must share the information of rightsizing done due to what reasons and how it would benefit the remaining employees being the necessarily required workers even after few are fired!
What are the benefits of Rightsizing?
Following are some benefits of rightsizing for employers:
- Competitive edge over alternatives
- Prospective talent acquisition
- Employees renaissance
- Time efficiency
- Productivity improvement
- Organizational vitality
- It reduces duplication of work
Mentioned below are the benefits of rightsizing to the employees:
- Self-awareness of where they are standing
- Committed workers
- Creativity introduction
- Recognized employees
- Energy reloaded