Rightsizing: A pact between the two stakeholders

Rightsizing is a word that was hardly heard of, about 10 years back, atleast in India. However, today, it’s a process almost all large companies have undergone and most senior leaders have been touched upon by rightsizing, either as the recipient or as the sponsor, and thus there is a better appreciation for it.

Rightsizing or retrenchment comes up a lot of times in any organization – more so in cases of organization design and workforce effectiveness, when organizations are trying to redefine their go-to market strategies in light of the changing business priorities, evaluating their staff productivity or recreating newer functions and roles. The organization’s perspective to Workforce Transition is usually the means to activating an important strategic need. Sometimes it is corrective in nature, sometimes towards reorganizing the current structure and business, and at times it is about divesting one and investing into a new line of business and thus mapping of skills and thereby reskilling to the extent possible and for the rest, it is the inevitable journey of transitioning out.

And companies approach downsizing/rightsizing in a variety of ways as it becomes a part of strategy execution where one needs to internalize the humane impact of the decisions the most. Thus for most organizations, there is a fair bit of anxiety and an avoidance strategy to begin with. 

Employees on the other hand, have a high degree of anxiety and if the communication is not handled well, it could lead to irreparable damage to the talent pipeline and the organization brand. Thus, whatever be the trigger for taking this path, the approach to rightsizing leaves an impact on the existing employees as well as the outgoing employees and thus the organization’s brand and ability to attract talent in the long run. 

Like any other successful relationship, the employer – employee relationship is also an outcome of mutual respect, trust and support. The litmus test for the same becomes even more important in tough times as when the organization is trying to manage an important business outcome and the impacted employee would be thinking about his own personal commitments first. While both the parties will think about the ‘What’s In It For Me’ (WIIFM) first, the opportunity for both sides to exhibit their commitment to each other’s success and engagement is immense. 

Some of the important aspects to keep in mind in such a situation from the organization’s perspective would be:

The focus on those left-behind: The communication to the rest of the employees is almost as important if not more. This is because they continue to be in the business for a reason. They need to know that the business rationale has resulted in this decision. Ensure the employees know what they need to know, focus on building their commitment in the organization’s current and future state.

Outplacement in India is fairly an unknown practice. However, with the world moving constantly towards super specialization rather than being generalists, soon we will also become more used to outplacement. This would also mean that a lot of regulations will need to come into play, like it is in most of the developed countries, where outplacement is a regular practice.

Thus for both the organizations and employees, the way ahead is only going to get tougher – there will be more instances of outplacement requirements and there will be higher degree of awareness of what’s not acceptable. That coupled with government probably getting into regulating the basic requirements of severance for the employees, will make people more aware and more prudent about how this gets managed.

An important consideration of course that organizations need to keep in mind is that this today continues to be a practice for non-unionized workforce. However, going forward, with unions or trade associations getting formed amongst the white collared workers in the new age sectors, that have had maximum instances of outplacement, there will be a need at an industry level, to not just do outplacement at an individual/organization level, but come together as industry bodies to institutionalize regulations that will help all the organizations and employees, while doing what is right, within the realms of the Indian economy. 

An important consideration that organizations need to keep in mind is that this today continues to be a practice for non-unionized workforce