Is Your Company Rightsizing? Check Out Strategic Rightsizing Tips

Transforming business environments with evolving customer demands and setting organizational goals to address these changes have become inevitable for companies. It might require them to rethink their workforce composition. To pivot internal objectives according to the external environment, companies might have to lay off certain employees. They can then hire new human resources and rotate the existing ones to new roles. When companies deploy these changes to their human resource plan for meeting strategic goals, it is called rightsizing.

Many people confuse rightsizing with downsizing. It then creates strategic contradictions. Downsizing refers to lowering the number of employees for improving profitability and cutting costs. In contrast, rightsizing involves hiring new employees as well. The target of rightsizing is to achieve the most optimal combination of human resources for a company. Now that might include downsizing and upsizing both.

Is your company rightsizing? Do you have the best-fit human resource composition? Clarification of these questions is significant for your company. It enables you to develop a workforce with the proper skillset and expertise to make your company more competitive and sustainable. Therefore, knowing the appropriate rightsizing strategy is essential for your business’s success.

If you feel the need for rightsizing, this article can certainly resolve some of your queries. It highlights four rightsizing strategic tips that can produce the most optimal human resource for your company.

Develop a professional HR team

Your HR team would do all the necessary interactions with employees while rightsizing. It is not easy for employees to experience change, whether it’s downsizing, upsizing, or job rotation. You should have skilled HR professionals to deal with the situation accordingly. Now that might involve training them externally through online MBA no GMAT programs specializing in workforce management.

Moreover, the HR team does the needs assessment for rightsizing. It serves as the cornerstone for the whole process. Suppose your HR team itself doesn’t possess the necessary skill set to do this analysis properly. How can you expect a positive output of rightsizing? Therefore, the prerequisite for an effective rightsizing strategy is competent HR professionals in your company. 52% of large-scale global organizations have plans to increase investment in the HR department. The expenditure on HR training and development has gone beyond $130 billion globally.

Benchmark performance for Decision Making

Setting performance as the criteria for critical decision-making serves the actual purpose of rightsizing your company. Especially when you must do large-scale layoffs, making the layoff decision based on performance is preferable. Moving ahead with your top performers irrespective of seniority creates the soundest workforce technically for your company.

However, it would help if you also respected your senior employees. You can give them early warnings to uplift their performance before making any layoff decision. That is how you can create the right balance of seniority, experience, and performance in your workforce. Companies laid off 2.305 million workers only in the US in 2020. The COVID-19 pandemic placed a massive urge on companies to rightsize their human resources. Almost every company made layoff decisions based on employee performance.

Be Analytical in your rightsizing approach

Human resource is the most fickle asset of your company. It is imperative to consider every external and internal factor while making a critical decision about them. Therefore, you need to be analytical while rightsizing your workforce. It helps you to gain an insight into every stakeholder. They can either add acceptability or disapproval to your rightsizing decisions.

Ideally, you should dissect it across three significant dimensions; structures, processes, and expenses. Structures refer to the organizational infrastructure of management and the hierarchal division of the line of authority. Processes refer to the overall operational philosophy of the business. At the same time, expenses refer to any expenditure throughout the value chain of the company. Thus, your rightsizing strategy must incorporate all these dimensions before taking any critical decision. For instance, you can determine the employees at various levels in the organization hierarchy, their input in processes, and the costs of retaining them.

Adopt Smart Communication

Restructuring for a company can be strenuous. It certainly has a stressful impact on employees. There is a healthy chance that the remaining employees’ performance also gets affected if layoffs have taken place. Therefore, honest, thoughtful, and strategic communication is essential to maintain the existing and laid-off employees’ trust and well-being.

Effective organizations take a very well-calibrated approach to rightsize. They involve the HR department and other stakeholders at different levels of the organization. In case your last rightsizing strategy declined your company’s overall performance. It is because you didn’t have effective communication. Most of your workforce probably started to become conscious of job security. When employees are always worried about job security, their performance declines.

Conclusion

The modern business environment is immensely competitive and fast-moving. Therefore, you must make difficult decisions and rightsize your company. Otherwise, improper workforce composition can prove harmful to your company. Human resource is the most critical asset of a company. It requires significant considerations as well. Rightsizing is one of those considerations that create the most optimal workforce combination for your business. It provides you the perfect balance between human capital, required skillset, and operational competence. You must weigh the relevant factors and adopt the most befitting rightsizing strategy.