Rightsizing And Downsizing

Organizations try to maintain profit ratio by one way or the other. However, not all strategies used by the company result as successful adoptions. The most frequently heard term in the Human Resource management is layoffs and restructuring. Downsizing being one of the form of such employee cutting have many faces of its effect on the corporate values. So the current study tries to understand the overview of downsizing and the HR skills required to execute down sizing in an organization.

Also the study tries to analyze the good and bad forms of the concept down sizing under the section by taking the concerns of rightsizing and dumb sizing.

What is Down Sizing Downsizing: Downsizing is kind of organizational restructuring. The term is mostly used when organization adopts a workforce reduction. Downsizing or Workforce Reduction: According to Steven Applebaum and his colleagues (1987) as cited in Alexis A. Halley refers the definition of term “downsizing” as coined to define the scaling down of car sizes by automobile manufacturers.

However the term was adopted to HR field in cutting down the employees during 1980s. Downsizing is a strategy to resize, streamline and shrink the organizational structure with respect to employee number.

Usually it is assumed that companies down size people to restructure their existing employees by number wise. However, Restructuring can also be defined as rebuilding the strength of an organization by changing its asset structure and its resource allocation patterns (see Hoskisson & Hitt, 1994). Why Use Downsizing: Companies mainly during the period of recession, try to increase the costs in many possible ways.

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One among those quick fixes is cost cutting through Employee layoff. In order to prove their profitability CEOs show up the reduced HR costs under profitability accounting.

What Is Rightsizing In Hrm

However, when firms use this tool cautiously, downsizing can be a life saver to the company. But repeated usage of the tool can result in the erosion of the human capital. Role of HR in Downsizing: The HR should play a vital role in cutting back the employees, yet retaining the life blood of the company. A company needs some employees in key positions with required skill set to be adhered to their competitive responsibilities all the time. HR need to identify which skill set or professionals to be retained during the period to void disturbance in the existing process.

Also the HR should take care of the effort load of the removed employees which ultimately falls on the retained employees due to the cut down on employees. The major challenge for HR in such circumstances is to deal with the remaining employee morale. The employee security becomes shattered and HR has to affirm them of their position in the organization. For this the HR should be communicative with management a well with the employees in getting their concern and feedback from time to time. Also the HR should assist management in planning the downsizing in an approached way.

There are different approaches and tools available to the HR to perform the Downsize efficiently and in a strategic way. Downsizing is a kind of change adoption. Change is observed in two ways: The Incremental Approach: This approach starts with denial of wrong followed by patching and crisis and then by rightsizing. However, this approach may create tension and anxiety in the organization. The phases and events are unpredictable in this approach. 2. The strategic approach: This approach involves rethinking, and searches for new mental maps and new tools. The strategic approach though lengthy results profitable in long run.