In the July 1, 2002 issue of the Journal of Business Strategy, Barbara Davison wrote the article "The Difference between Rightsizing and Wrongsizing." She goes on to quote me: "Cutting staff is a common response during economic downturns, but if staffing plans are not linked to the business strategy, rightsizing can go badly wrong."
I had forgotten this interview. So here are some questions for you to ponder:
What are the best ways to right size an organization? Why are they best?
What are the worst ways to right size an organization? Why are they the worst?
During the current economic downturn, to stay financially viable, organizations will surely need to get on the treadmill. It is a time to shed the fat organizations accumulate during the glory years. It is a time to confront performance issues ignored for a long while. It is a time to optimize resources, to get the biggest bang for the money. Getting on the treadmill should improve the organization's cardio-vascular system. You get in shape. You get healthier, and you feel better. You also can run faster and for a longer period of time. You are not only leaner but also more agile.
So managers are told to review their headcount and make adjustments. Often managers have little or no experience in rightsizing. The focus on headcount rather than skills or dollars and cents does not help either. Instructions from upper management might be sketchy.
Righsizing involves redesigning the organization for a variety of reasons: (1) improving profit margins, (2) in anticipating lower demand, (3) capitalizing on technological innovations, (4) streamling operations, and/or (5) eliminating duplication or non-value added activities.
Redesign should start with the end in mind, and that end must be clearly and properly communicated throughout the hierarchy. Sound change management processes must be in place too.
Some indicators of poorly executed resizing:
I had forgotten this interview. So here are some questions for you to ponder:
What are the best ways to right size an organization? Why are they best?
What are the worst ways to right size an organization? Why are they the worst?
During the current economic downturn, to stay financially viable, organizations will surely need to get on the treadmill. It is a time to shed the fat organizations accumulate during the glory years. It is a time to confront performance issues ignored for a long while. It is a time to optimize resources, to get the biggest bang for the money. Getting on the treadmill should improve the organization's cardio-vascular system. You get in shape. You get healthier, and you feel better. You also can run faster and for a longer period of time. You are not only leaner but also more agile.
So managers are told to review their headcount and make adjustments. Often managers have little or no experience in rightsizing. The focus on headcount rather than skills or dollars and cents does not help either. Instructions from upper management might be sketchy.
Righsizing involves redesigning the organization for a variety of reasons: (1) improving profit margins, (2) in anticipating lower demand, (3) capitalizing on technological innovations, (4) streamling operations, and/or (5) eliminating duplication or non-value added activities.
Redesign should start with the end in mind, and that end must be clearly and properly communicated throughout the hierarchy. Sound change management processes must be in place too.
Some indicators of poorly executed resizing:
- The little guy gets the ax ... the driver, the office assistant, the mail clerk, the person at the bottom of the totem pole.
- Personal scores are settled ... when managers release people with whom they might have "bad blood" or with whom they have unfinished business.
- Those with different views get "purged" or sent to the "gulag", e.g., given undesirable assignments intended to drive them out of the company.
- The "untouchables" stay, even though they are not performing. Favoritism. Nepotism. Nationalism. Racism. Outright discrimination.
- The dollars saved are miniscule. the cost of acting is greater than the cost of not acting.
- Firing on one end while hiring the same people on the other end.
- Lack of focus on the core skills needed to run the business successfully.
- No clear appeal system in place to ensure due (fair and consistent) process.
- Outsourcing to partners who cannot do it better and at a higher cost to boot.
- Empires seem to be protected.
What are some other indicators that possibly are more important than those listed above? Your experience with this process?
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