With a new year rapidly approaching, it is the perfect time to reassess your business to ensure you have the strategies in place to hit your 2024 growth targets. The surge in energy prices and the challenges posed by the cost of living in 2023 prompted almost every small business to reassess their operations and optimise their workforce. Rightsizing provides an opportunity to analyse your staffing requirements and see if there are positions that need to be added, subtracted, or changed to align with your organisation’s overall strategy, values, and ethos.

When initiating a business rightsizing project, numerous factors should be considered. Properly executed, rightsizing can position your organisation ideally to confront upcoming challenges, maintain productivity levels, and capitalise on emerging opportunities. However, if the process is rushed or lacks a clear strategy, it may lead to a deficiency in crucial skills and risk expensive Employment Tribunal claims.

In this article, we provide a brief guide as to how to rightsize your business.

What is rightsizing?

Rightsizing is not merely a euphemism for downsizing; it extends beyond reducing the employee base for profit. Downsizing focuses on cutting staff numbers for financial gain, while rightsizing is a continuous effort to ensure your business maintains an optimal staffing level with the necessary skills to achieve its goals, irrespective of its size.

The rightsizing process may involve staff reductions, early retirement options, or increased staff levels by hiring new talent, enhancing management, or establishing specialised departments. Unlike downsizing, which occurs at a specific time, rightsizing is an ongoing restructuring activity that keeps the business well-positioned to perform effectively and adapt to changing needs.

How do I undertake a rightsizing exercise?

Considerations when undertaking rightsizing include revising your business strategy, aligning human resources with goals through an organisational audit, evaluating the necessity of current roles, and ensuring each employee is a good fit for their position. Methods for rightsizing may involve examining specific departments for potential outsourcing or assessing performance to identify areas for improvement, training, or redundancy.

It is essential also to consider the potential impact new technology can have on your business. Contemporary technological progress offers unprecedented opportunities to optimise the size of your company. With a spectrum of innovations ranging from AI to diverse software solutions, these technological advancements empower your workforce to operate with greater efficiency, facilitating attaining your organisational goals.

You could start by exploring technologies designed to automate your operations and enhance productivity, including tools for seamless email integration, streamlined sales pipelines, and efficient customer outreach. This integration makes routine and uncomplicated tasks effortlessly executed, enabling your employees to concentrate on high-impact, revenue-generating work.

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While there is no exact method for rightsizing, considering departments and performance evaluations can guide your strategy. To comply with employment law and ensure a smooth rightsizing process, getting expert advice from a Solicitor experienced in change management from the project’s early stages is advisable.

What are the positives and negatives of rightsizing?

Benefits of rightsizing include:

• Increased profitability by eliminating unnecessary spending.
• Identification and remedy of management and employee weaknesses.
• Streamlining of workflow to focus on innovation and customer experience.
• Enhancing competitiveness by allowing your business to concentrate on its strengths and eliminate unproductive or negative elements from the workforce.

However, there are risks involved, such as potential downsizing, which requires adherence to correct procedures, engagement with staff through the human resources team, and professional handling of the impact on each worker. Tension and anxiety may arise within the organisation during a rightsizing project, necessitating a focus on maintaining high employee morale and productivity through transparent communication. One way to minimise the risk of low morale is to treat rightsizing as a continuous review, regularly examining operations and skill requirements and making workforce adjustments as and when required.

Final words

Successful businesses are proactive rather than reactive. Undertaking a rightsizing exercise is tremendously proactive. According to a House of Commons Library paper, in November 2022, 13.3% of businesses surveyed by the ONS reported experiencing a shortage of workers. Furthermore, in August 2022 the Federation of Small Businesses found that 80% of small firms faced difficulties recruiting applicants with suitable skills in the previous 12 months. Rightsizing can help you identify critical skill gaps and plan to fill them, whether through recruitment or upskilling existing employees.

To learn more about how our team can assist with all change management projects, including rightsizing, please email us at [email protected] or phone 0121 249 2400.

The content of this article is for general information only.  It is not, and should not be taken as, legal advice.  If you require any further information in relation to this article, please contact 43Legal.