Assess and Right Size the Organization – Essential Element #3
Deploying a Lean, Agile, Properly-Sized Organization
Assess and Right-Size the Organization is the 3rd of 8 articles based on:
“Profit Improvement Planning Blueprint: 8 Essential Elements for Underperforming or Distressed Companies” – Post dated Feb 24, 2024
Assess and Right Size the Organization – Essential Element #3
Assess and Right-Size the Organization
- Essential Element #3
Deploying a lean, agile, productive and properly sized labor force is the goal of every organization. Over time, however, many businesses encounter situations where certain segments of their workforce either cease to add value or expand beyond what is necessary to meet operational needs.
Addressing these areas, although challenging, becomes key to ensuring the ongoing financial health, competitiveness and sustainability for the organization.
Prudent businesses make this an ongoing activity...
Although Assessing and Right-Sizing the organization is being presented as an Essential Element to successful Profitability Improvement or Turnaround efforts, it should be noted that well managed companies do this as part of their normal course of business.
Their ongoing proactive assessments helps prevent underperformance or distress situations while promoting sustainable revenue growth, customer satisfaction and financial health.
The "What to Do" versus "How it's Done"
Workforce reduction or reallocation opportunities were likely identified/confirmed during the Baseline Current Performance (Essential Element #1) efforts. Although this provides for the “what to do” the effort’s overall success will be dependent on the “how it’s done.”
Properly resizing organizations yields immediate cost reductions, enhanced individual accountability, improved agility, and greater competitiveness, but poor implementation can negate these benefits. Thoughtful planning and implementation will be required.
Success will be enhanced by:
- Empowering functional leaders to pinpoint excess, non-contributing individuals, drawing on their insights into key contributors, growth potentials, and potential morale drains.
- Prioritizing the largest, least-difficult changes first to accelerate the benefit stream, keep resources focused and test the implementation approach.
- Adopting a surgical approach, focusing on non-contributors while preserving high-performers, institutional knowledge and critical skills (i.e., avoid eliminating essential resource – cutting fat without hitting muscle or bone)
- Leveraging HR professionals to lead planning, timing, communication events and execution.
- Seeking legal guidance to help anticipate/mitigate potential legal issues such as discrimination claims or WARN Act compliance issues.
- Communicating transparently with retained employees to dispel rumors and foster a sense of inclusion and respect. HR should play a pivotal role in crafting and delivering messaging.
- Showing compassion towards those being let go, treating each individual with the dignity and respect they deserve to avoid burning bridges.
As was emphasized in the initial article, while reducing a workforce may be challenging, it’s important to remember that contributing individuals thrive in a secure, robust and agile work environment.
Summary and Benefits
Like with Essential Element #2 – Implement Immediate Cost Control & Pricing Changes, the urgency of implementing these changes will differ based on current performance. Yet regardless of whether in distress or underperforming expectations, a properly sized organization is a key to long-term success of any organization.
A well sized organization can expect:
For the Company
- improved financial health & performance
- increased employee productivity & accountability
- streamlined decision making
- greater agility
- enhanced competitiveness
- better company culture/morale
For the Employee
- improved work environment
- clearer understanding of expectations
- increased job satisfaction
- enhanced contributions / overall worth
- higher individual morale
A well executed right sizing campaign often is a true win-win for the company and its employees.
* * Essential Element #3 Summary from Original Article * *
3. Assess and Right-Size the Organization
An organization that is sustainable with a productive workforce is the goal of any organization. Right-sizing the organization involves evaluating workforce capabilities, roles and structures to boost productivity and reduce costs. A lean, nimble and properly sized organization is better positioned to adapt to change, enhance competitiveness and sustain long-term viability.
Pro Tip: While reducing a workforce is difficult, it’s important to remember that contributing individuals thrive in a secure, lean, robust and agile work environment.
