Rightsizing

Published by MBA Skool Team, Last Updated: January 22, 2018

What is Rightsizing?

It refers to the process in which a corporation or company restructures businesses by cutting costs, reduces workforce or reorganizes upper-level management with a view to optimize profits.

 

The term is preferred to ‘downsizing’ as it is less suggestive. Some hold that it is not a euphemism and propose that rightsizing is different from downsizing in that rightsizing is more proactive than downsizing, pointing that this is key to minimizing the disruption or traumatic aspect of downsizing. They also maintain that rightsizing is a continuous process of alignment with strategic vision and must not be seen as expedient option.

 

Downsizing is a process which comes as a reaction when a company suffers from a depressing phase of having losses and not profits, and instability. It is a mechanism of costs cutting, by reducing the employees and hence cutting on salaries and expenses. On the other hand, rightsizing is a process or reorganizing and restructuring, especially of the top management to yield maximum profits. It is a proactive process, and is a necessary step for any growing organization.

 

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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