Rightsizing

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 reality, both are different having a few similarities.

When you reduce your human resources for cutting cost purposes like to save money upon salary payment and increase profitability instead, yes it is downsizing. On the contrary, when you limit your human resources to a particular 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. Rightsizing is never always meant to reduce the number of employees that are cutting the size to the 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 replacing human resources or firing employees.

Rightsizing in the workforce entails the right skill sets, equipment, and environment provision at times. 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 the different methods of Rightsizing?

The following are the types of rightsizing:

Analysis-of-Activity

How fast and accurately an employee performs a job. It encompasses:

• Time taken for doing a task
• Outcome
• Acceleration
• Amount of work-loaded

Ratio-Analysis

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 Scale 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

A 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.

Model-de-Mathematic

Though complex, this method of rightsizing tells you what is the exact number of employees you need to perform successfully (like mathematical sums and models). Due to its time-consuming tenure methodology, this method is least followed by business organizations.

What are the important steps in rightsizing? 

Following are the steps in right-sizing:

Diagnosis in Terms of Organizational Structure and Design

To rightsize effectively, begin by dissecting your organizational structure and design. Assess the relevancy of each department, the roles they play, the workforce they house, and the resources allocated to them. Questions like, "Are all tasks and positions necessary?" become crucial. Compare the efficiency of an organic communication system versus a bureaucratic one. Determining whether your structure needs a revamp or minor adjustments is essential. This step is pivotal as it lays the groundwork for the entire rightsizing initiative, ensuring that the organization remains agile and responsive to market demands.

Identification of Pivotal Human Resources

Once the structure is clear, focus on identifying critical human resources. These are roles that are indispensable to the company's success. Consider the importance of each role, the challenges associated with filling them, and the potential risks if they remain vacant. Are there positions that, if left unfilled, could stall projects or hinder company growth? Are there roles that have become redundant due to technological advancements? This step ensures that as you progress in the rightsizing journey, you retain talent that drives business objectives while parting ways with roles that no longer serve the company's goals.

Determination of Operations’ Vitals

With pivotal roles in focus, shift your attention to the operational needs of the company. Rightsizing isn’t just about workforce adjustments; it also revolves around financial implications. Understand the costs associated with hiring, training, or promoting employees to fill essential roles. Balance this with the expenses saved from eliminating redundant positions. It's also a time to examine other financial aspects linked to rightsizing, like potential severance packages or the costs of potential lawsuits.

Communication, Feedback, and Presumptions

An often-underestimated component of rightsizing is transparent communication. As HR professionals, we must be both communicators and listeners. Inform employees about the reasons behind rightsizing decisions and how they benefit the organization's future. But communication isn't one-sided. Encourage feedback, address concerns, and dispel any misconceptions employees might harbor. This two-way dialogue fosters trust and can smooth the transition process.

Rectification and Morale Boosting

The final stage of rightsizing often involves damage control. Let's be honest: rightsizing can lead to diminished morale, especially if layoffs are involved. It’s essential to reinstate confidence among the remaining employees. Reassure them about their roles and the company's direction. Perhaps offer training or other growth opportunities. The aim is to transform a challenging rightsizing process into an opportunity for rejuvenation and growth for the entire organization.

Legal and Ethical Implications

Rightsizing is not just about making strategic decisions; it's also about making ethical ones. It's imperative to be aware of labor laws and regulations that may impact the rightsizing process. Ignorance is not a defense in law. Any layoffs or terminations should follow due process, ensuring that employee rights are protected. Ethically, organizations must handle the process with dignity and respect, providing adequate severance packages and outplacement services when necessary. Moreover, always strive to be transparent and honest in your communications, ensuring fairness in every decision made.

Support Mechanisms

The transition during and after rightsizing can be tumultuous. Thus, providing support to both departing and remaining employees is paramount. For those leaving, consider offering outplacement services, career counseling, and financial planning assistance. For the ones who remain, workshops, and counseling sessions can be instrumental in dealing with survivor guilt and adapting to the new organizational structure. Encourage team-building activities and open forums where employees can voice their concerns and seek clarity, ensuring that everyone feels valued and understood.

Monitoring and Continuous Evaluation

Rightsizing doesn't conclude once the decisions are implemented. It's an ongoing process that requires regular monitoring and evaluation. Track the impact of your decisions on business performance, employee morale, and overall productivity. Set up metrics and KPIs to determine if the rightsizing efforts are yielding the desired outcomes. Continuous evaluation helps in timely course corrections and ensures that the organization remains agile and adaptable to changing market conditions. Remember, rightsizing is not a one-time task but a cyclical process, ensuring that the organization always operates at its optimal capacity.

What are the benefits of Rightsizing?

Benefits of Rightsizing for Employers:

Competitive Edge Over Alternatives

By rightsizing, a company ensures that it operates with optimal efficiency, aligning its resources perfectly with its objectives. This grants a competitive advantage as such organizations can quickly adapt to market fluctuations and outpace competitors burdened with inefficiencies, granting them a substantial edge in the competitive landscape.

Prospective Talent Acquisition

A streamlined organization becomes a beacon for talent. When the best in the industry observe an efficient, well-structured company, it acts as a magnet, drawing them in. This makes talent acquisition easier and ensures that the company attracts individuals who are the best fit for its vision and goals.

Employees Renaissance

When a company rightsizes, it doesn't just trim; it also refines. This involves upskilling and retraining employees, leading to a resurgence in their capabilities. This rejuvenation ensures that the workforce is not only leaner but also more skilled, adaptable, and ready to tackle modern challenges.

Time Efficiency

Rightsizing eliminates redundant processes and bureaucratic delays. By ensuring that each role is clear and necessary, decisions get made more swiftly. This streamlined operation ensures projects are completed faster, responses to market changes are quicker, and the overall time efficiency of the organization is significantly improved.

Productivity Improvement

With a rightsized workforce, each employee knows their role and its importance. Reducing overlaps and clarifying responsibilities means that everyone can focus on their core tasks. This clarity and purpose drive a notable boost in productivity, as energies are no longer dispersed but channeled efficiently.

Organizational Vitality

A rightsized company exudes vitality. It's a living testament to adaptability and modernity. Such organizations are better poised to innovate, adapt to changing market scenarios, and maintain a vibrant, energetic workplace atmosphere that's conducive to growth and progress.

Reduces Duplication of Work

One of the key outcomes of rightsizing is the elimination of role duplications. This ensures that multiple employees aren't inadvertently working on the same tasks. It reduces confusion, enhances clarity, and ensures that resources are utilized in the most impactful manner.

Benefits of Rightsizing for Employees:

Self-awareness of Position

Rightsizing gives employees a clear understanding of where they stand in the organization. It provides clarity on their roles, expectations, and the importance of their contribution, leading to increased self-awareness and purpose-driven performance.

Committed Workers

When roles are clear and every position is deemed essential, employees feel valued. This sense of importance fosters commitment. Workers are more dedicated when they know they play a crucial role in the company's success.

Creativity Introduction

A leaner, more focused workforce often leads to increased creativity. With clearer roles, employees can think outside the box, innovate, and introduce new ideas without the constraints of overlapping responsibilities or confusion.

Recognized Employees

In a rightsized environment, every contribution is more visible. Employees are more likely to receive recognition for their work, leading to increased morale, motivation, and a sense of belonging.

Energy Reloaded

When redundancies are eliminated, and roles are clear, employees can channel their energy efficiently. They no longer feel spread thin or overwhelmed. Instead, they can focus their renewed energy on their core tasks, leading to better results and increased job satisfaction.