Home Digital Marketing What is Rightsizing in Business?

What is Rightsizing in Business?

Social, political, and economic changes force businesses to adjust and develop viable strategies to keep up with the stream. This includes not only changing the big picture but also implementing proper techniques at each level. Workforce rightsizing helps the company to use a talent for achieving business goals efficiently.  

Rightsizing Meaning 

Rightsizing is a modern approach to reorganizing the business to achieve business objectives faster and efficiently. Rightsizing often involves optimizing the workforce, restructuring management, readjusting job roles, and reducing expenses.

Rightsizing vs Downsizing: Key Difference

What is Rightsizing in Business?

Some people believe that rightsizing is just a delicate word for downsizing. However, downsizing usually happens as a response to an economic downturn or failure. Downsizing is always associated with cutting jobs and even eliminating entire divisions to reduce costs. 

Rightsizing, on the other hand, is a part of strategic planning that is associated with the reorganization of the workforce to improve performance and achieve greater results. Rightsizing doesn’t always lead to reduced costs and labor force. 

Rightsizing the workforce usually includes such activities as reassigning job roles, and reorganizing staff to better meet business goals. 

Does Your Company Need Rightsizing?

Although rightsizing is a common practice, it doesn’t mean you should implement it right away. Start with analyzing the work results of your employees. Here are two methods that help to define if your company requires rightsizing: 

  • Ratio analysis describes how companies’ resources are utilized compared to the past. It helps organizations determine which aspects of work require reorganization. Examples of ratio analysis include productivity ratio, cost per hire ratio, turnover ratio, etc. 
  • Activity analysis determines how employees manage their work time. It helps to outline an unproductive workforce and implement strategies for increasing productivity.   
  • Drivers analysis helps to highlight what is behind each activity. The driver’s analysis helps determine the number of employees needed for a certain activity. For example, the number of turns to the support team determines the number of employees needed to address all customer questions.

How to Rightsize the Workforce? 

Rightsizing is widely used by many corporations to increase talent capacity. Below you’ll find key steps modern companies implement for productive rightsizing.

Analyze current workforce structure 

Before you start rightsizing your organization, it’s good to dive deep into workforce structure, learn more about job roles and define their contribution to the company’s outcomes.  

At this stage, you’ll find gaps and redundancies to deal with, and understand how each department and employee helps the company reach its goals. Your key task here is to decide if the company needs to reduce the workforce, hire new talent or reorganize the structure without changing the staff. 

Point out key job positions

Based on the information collected during the first step, you can highlight the most important players for company success. When analyzing each job position, you can ask yourself the following questions: 

  • Is this position crucial for your company’s success? How?
  • Is it hard to fill the position in case of downsizing?
  • Does this job role help to minimize a company’s risks?  

You can verify if current employees have enough skills and experience to provide value in their positions and decide to keep them, move them through a role or department or hire someone else. It would be best if you asked for a third opinion on key players. Talk to managers and department heads before making any decision.

Determine operational requirements

Operational requirements define essential actions to be performed to keep the company functioning at its best. These actions may include providing employees with new equipment, improving employee training programs, remodeling or shrinking offices, etc. 

At this point, it’s crucial to understand the total cost of the workforce. It helps to assess how changes will affect your company’s budget and develop several scenarios to implement cost-effective strategies. 

Implement changes and plan ahead 

When you outline operation requirements, you can start a rightsizing process. Even if the implementation will go smoothly, we recommend analyzing your results and planning rightsizing continuously to help your company stay competitive. 

Rightsizing Pros and Cons

Rightsizing is a live process that has its flaws and advantages. Compared to outdated downsizing, rightsizing can bring companies the following benefits: 

  • boost company’s profits,
  • cut procedural redundancies,
  • improve staff productivity,
  • eliminate the number of inefficient employees,
  • help companies prepare for future growth.

Although rightsizing aims for improving the overall workforce structure, it also poses certain challenges for management. For example, reducing the number of staff may raise uncertainties among employees and push them to quit their jobs.

A massive outflow of personnel can arouse suspicion among new candidates and undermine the company’s credibility. And finally, these events may delay the recruitment process.  

Wrapping Up

Rightsizing is a process that requires detailed planning based on a preliminary analysis of key company assets. When conducted properly, it can significantly improve a company’s outcomes. Key goals of rightsizing include: 

  • reorganizing the workforce to tailor it to companies’ objectives,
  • improve employees’ productivity, 
  • eliminate staff redundancies and fill the gaps,
  • provide cost-effective solutions in workforce management. 

Rightsizing differs from downsizing in the scope and the situation they operate in. Downsizing is used in crises, while rightsizing is a part of continuous strategic planning.