Rightsizing an organization: a definitive guide

What helps organizations get a competitive edge? Enough flexibility to respond to the market changes, keeping up with customer expectations, and meeting the talent demand.  

When external factors like COVID-19 impact economy, aligning the business goals with a current HR strategy becomes a real challenge. Need to build new hiring strategies, retrain workforce, rearrange staff, and even downsize employees are common issues that business face during critical changes. 

Naturally, downsizing doesn’t fit in the modern HR strategy that focuses on employee development and building a sustainable corporate culture. 

As a viable alternative to downsizing, organizations opt for rightsizing. In this post, we’ll dive deeply into the concept, its advantages, and best practices of implementing rightsizing at your organization. 

Downsizing concentrates on reducing workforce to save money on payroll and other HR expenses, while the goal of rightsizing is to maintain the right number of human resources. In terms of rightsizing initiatives, companies may initiate staffing cut as well. However, such changes are usually followed by hiring specialists that’ll fill the skill gaps and bring their unique expertise to the company.  

In general, rightsizing helps you get a bird-eye view on organization and assess its “as-is” state, including an evidence base for workforce sizing. What’s more important, rightsizing doesn’t disrupt HR processes and helps you implement necessary changes at the same time. 

Let’s compare these concepts below: 

First, rightsizing helps you avoid the negative impact on your employer brand. As a rule, lay-offs signalize about financial issues, inner conflicts, or toxic culture. Rightsizing isn’t that damaging to a company’s image as it relies on gradual changes like shifting roles and putting recruitment on hold from time to time. 

Second, this approach helps you build a team of A-players. A-players are proactive employees with business-driven mindset that willingly take new responsibilities and drive positive changes in a company. In terms of rightsizing, HR managers are focused on gathering a team of the top performers, maintaining just the right number of employees. When downsizing, businesses rarely select talents for laying off by their potential and skillset that may be relevant in the future, considering mainly performance metrics and financial aspects.  

Finally, this technique leads to increased profit margins. By laying off employees that don’t contribute to business profits, can be replaced with machines or automation tools, or whose expertise becomes irrelevant to organization, you can reinvest in top players.   

In a nutshell, rightsizing is aimed at bringing an organization to the right size of employees and relevant skillset. This continuous process involves different HR management techniques:

• Altering job profiles and position transfers to maintain expertise within a company and solve business goals at the same time.
• New strategic hires to bring external professionals with expertise that a company lacks.
• Lay-offs of underperforming workforce.

To determine the need for rightsizing, consider outlining the objectives you need to accomplish and current issues that prevent you from reaching your goals. Here are a few tips: 

Meeting business goals. Has your organization met yearly business goals? Were there any bottlenecks that prevented you from succeeding? Is there a disparity between gross revenue and net profit?  Answers to these questions will help you determine critical issues and the role of human resources in them.

Workforce gaps. These common HR issues like mismatch with job profiles and actual roles, duplication of positions, employees “on bench”, or lack of talents with rare expertise are the reasons to consider a rightsizing strategy. 

Impact of external factors. Economy or market changes, worldwide pandemics, or any other external factors may lead you to organization rightsizing. For example, with COVID–19 quarantine measures, restaurant businesses had to lay off some employees and retrain others to delivery couriers and call center operators. Since traditional offline businesses had to switch to online deliveries and takeaway format, these measures helped them stay afloat and retain the biggest part of their workforce. 

Do you feel like rightsizing your organization as fast as possible? Consider our tips first to ensure successful changes: 

• Evaluate the current state of workforce. An internal audit helps you detect “to be” roles, critical roles to the organization, underperformers, and duplicate roles that should be reduced. Once the rightsizing process goes in action, make sure you perform evaluation recurrently to keep your finger on the pulse. Remember: rightsizing isn’t one-time activity.
• Assess operational details like ability to move some workforce to remote work, switching some employees to part-time job, or additional equipment and software to ensure smooth workflows.
• Consider rehiring possibilities. Laying off doesn’t mean ending your professional relationships forever. By keeping your organization open to ex-employees you’ll be able to save time on recruiting and onboarding in the future.
• Engage your employees in a decision-making process. Employee surveys like 360-degree reviews help you assess management and subordinate relationships and determine promising talents or top performers. Also, gathering employee feedback takes the heat out of the not quite so easy process as rightsizing that’s inevitable connected with laying offs or role switches.