Definition of Rightsizing
Experts do not agree as to whether rightsizing is just another term for downsizing, or a more positive approach to streamlining employee costs and operating a more profitable company. If you are one of the people being rightsized right out of a job, you may not care what the company calls it. The end result: the company is trying to increase profits and safeguard the jobs of the remaining employees by reducing and reallocating the existing labor force.
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Goal
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The use of rightsizing is to gain control of payroll costs and to maximize returns on wage expenses. Companies evaluate each department or location to determine if the labor allotted to that area is appropriate. If employees have too little work, then cutbacks are called for. If they have too much work, which also can be determined by overtime costs, then hiring or internal transfers may be called for.
Positive Means
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While downsizing traditionally comes with layoffs, rightsizing advocates look for more positive means of reducing labor first. This includes offering early retirement, internal lateral moves, job timeshare and hiring freezes. The next step is to release those who use a lot of sick time and the poor performers. Only then would a company consider layoffs. The point is to alleviate over-employment without losing the services of the top performers.
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Organizational Structure
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Traditionally, downsizing has meant reducing the size of the organizational reporting structure by eliminating entire levels of management. Some of this carries forward to rightsizing, because it makes the reporting process more effective, and because higher educated and experienced employees require less supervision. Another example of reorganizing includes closing stores that are not showing a profit, and opening new stores in areas where the company anticipates seeing a profit. While it may lead to employees losing their jobs in one area, new jobs are created in the new area.
Emotional Toll
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The downfall to rightsizing and downsizing is the emotional toll it takes on everyone. Employees concerned about their professional future slow down production. Highly prized employees find new jobs in order to circumvent being laid off. The company can alleviate some concerns by communicating with employees and providing them outlets for their concerns, such a regular company meetings and professional evaluations. Proponents of rightsizing feel it reduces much of the emotional determent to operations.
Debatable
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Restructuring has been met by criticism and concern that it really does not save the company money in the short term. Unemployment claims, disability lawsuits and the general reduction in quality caused by changes in personnel costs the company more than it saves. Statistically it may takes years for company to see a real cost savings from rightsizing. On the other side of the argument, corporations are designed to stay in business indefinitely. Short-term sacrifices sometimes provide the most long-term benefits.
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References
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