“Rightsizing”

Author: Nrupa Rajhans

“Mise à la Bonne Taille” is a sweet French word for rightsizing, but in reality it is not so sweet, it’s quite sour. Rightsizing means reducing employee numbers so that the workforce is the "right" size for the amount of work that needs to be completed and restructuring with the goal of reducing costs and improving efficiency and effectiveness.

Definition of Rightsizing:

“The process of a corporation reorganizing or restructuring their business by cost-cutting, reduction of workforce or reorganizing upper-level management. The goal is to get the company molded properly to achieve the maximum profit. The term rightsizing is often used by companies instead of downsizing because it sounds less drastic.”

The Objectives of Rightsizing:

·        To ensure that all required functions are properly organized and performed

·        The functions not required are either eliminated or outsourced.

·         The best person is placed in each position.

·        The main objective of rightsizing is to gain control on the cost and to maximize the profitability by using the above objectives.

 Rightsizing can be achieved in an organization by many means such as:

·        Freezing recruitment means to stop recruiting until not required.

·        Releasing the long term sick i.e. suggesting the old people for early retirement

·        Releasing poor performers (Downsizing)

·        By restructuring the organization

Example:

Below is the Hierarchical structure of Sales and Service division Before Rightsizing

And the result After Rightsizing -

With rightsizing used to reduce the number of workforce, will initially improve productivity figures of the organization. This trick gives the link between reducing numbers and productivity and also tells when to stop the reduction of workforce as soon as the productivity improves. Another way of rightsizing includes the closing of nonprofit areas and opening of new areas where the organization anticipates the profits. This may lead to employees losing their job in one area but new job are created in the new area.

Impact of Rightsizing on the remaining employees:

Rightsizing has a severe impact on all employees. The employees who are laid off during the process are left jobless. But those employees who are retained face big challenges. The common byproducts of rightsizing that the employees will have are low employee morale and feelings of job insecurity. If the employees feel that their colleagues have not been treated with dignity, their work performance will often suffer. 

HR’s role in Rightsizing:

HR plays a major role in the process of rightsizing. It has to manage the problem of dismissing a large number of employees in a dignified manner in order to help minimize the trauma associated with rightsizing. Employees who are laid off tend to suffer from depression, anxiety, insomnia, high blood pressure, marital discord, and a host of other problems. Thus, when companies decide that rightsizing is the best course of action, the HR managers should do this work in such a way that it does the least harm to employees and their families. This also includes taking the time to allow dismissed employees to air their thoughts, instead of laying them off quickly and impersonally, and providing assistance in finding new jobs.  

HR’s another major challenge is to deal with the remaining employees of the organization. As there are many negative effects of rightsizing such as less employee trust, feelings of job insecurity, low motivation, etc. To improve these effects, the HR managers should provide the support and guidance which the employees need. HR managers should also communicate with employees regularly to discuss performance and strategies for meeting the goals. In addition, managers should encourage employee initiative and effective communication and also provide employees with rewards for excellent work. By promoting employee initiative and even employee involvement in decision-making, managers can help restore employee trust and commitment and helps to increase employee motivation. Therefore a HR manager should be very smart and alert at the time of rightsizing.