What is Rightsizing?

Rightsizing is a strategic corporate tactic for fine-tuning resources to cut costs and remain competitive. It is a sort of involuntary separation that effectively screens the workforce. It is especially prevalent at the highest levels of management.

The purpose of rightsizing

The primary purpose of rightsizing is to reorganise the firm to satisfy its new strategic goals better. Rightsizing, unlike downsizing, is not a one-time occurrence. It is a continuous operation in which the organisation may engage for months or years. One of the most significant advantages of rightsizing is that it enables businesses to function more efficiently and achieve their objectives.

The Advantages of Rightsizing

  • Rightsizing reduces the negative influence on the employer's brand. Layoffs typically indicate financial problems, internal disagreements, or a toxic culture. Rightsizing isn't as bad for a company's image because it involves gradual adjustments like moving jobs and putting recruiting on hold on occasion.

  • The technique aids in the development of an A-team. A-players are proactive personnel with a business-driven attitude and eager to take on new tasks and generate good change. Regarding rightsizing, human resource managers are focused on assembling a team of high performers while keeping the optimal number of people.

  • It also results in higher profit margins. Businesses can reinvest in top players by dismissing individuals who do not add to corporate earnings, can be replaced by machines or automation technologies, or whose knowledge has become obsolete to the firm.

What Is the Distinction Between Rightsizing and Downsizing?

Organisational rightsizing, contrary to common opinion, is not a more pleasant synonym for downsizing. While the two concepts are linked and have some similarities, their main aims are distinct. Downsizing lowers a company's workforce to boost profitability and decrease redundancies. However, rightsizing entails more than just reducing the number of employees. It is about growing the company to the appropriate size for its new business goals.

In addition to laying off some employees, a rightsizing business may acquire extra people with new talents and experience that the company lacks. They may also reassign specific individuals to different positions to better use their internal knowledge and functional skills in other areas. Rightsizing may include adding a new layer of management to boost guidance or reducing vertical levels to improve communication flow. Rightsizing may result in more extensive departments to enhance deliverable production. It may also take the form of simplified functional or project-based teams working on new projects.