Monday, January 18, 2010

Difference between downsizing and rightsizing:

Rightsizing and downsizing are both buzz words that have gained popularity among business and management circles. Rightsizing refers to reducing the total size of the manpower employed by the company to cut down on cost. Downsizing refers to the cutting of workforce of any organization to control the problems (like defeciency of funds and other problems like to reduce extra employment levels, to handle bad, economic, poliyical, govt. policies etc.) without any distinction of their performance and need for organization. In this case, organization only focuses to survive by firing of employees.
To some extent, the practice of downsizing resulted in making companies more efficient and cut down cost. But in many cases companies found that in the process of downsizing they have also thrown out the baby with the bath water. They found that the people given voluntary retirement were performing useful function which can't be handled effectively by the remaining staff. Also it was found that in many cases the alternative of subcontracting is neither economical nor effective. Realizing these problems, the experts and management consultants coined a new term (rightsizing). In theory, it implied that companies should determine and maintain the level of employment "right" for its requirement.