Rightsizing and downsizing are both buzzwords that have gained popularity among business and management circles. Both these words represent an approach to management functions of manpower planning and staffing.
Rightsizing, which gained popularity before the other word, refers to reducing the the total size of the manpower employed by the company to cut down on cost. Implicit in this practice is an assumption that the company being downsized is essentially over staffed and that performance levels can be maintained or even improved by reducing manpower. Plain retrenchment of the employees, or with some scheme of voluntary retirement accompanied by one time compensation were the primary means of achieving downsizing.
To some extent, the practice of downsizing resulted in making companies more efficient and cut down cost. Bur in many cases companies found that that in the process of downsizing they have also thrown out the baby with the bath water. The found that the people given voluntary retirement were performing useful function which cannot be handled effectively by the remaining staff. Also it was found that in may cases the alternative of sub-contracting is neither economical nor effective.
Realizing these problems, the experts and management consultants coined a new term - rightsizing. In theory the term rightsizing implied that companies should determine and maintain and level of employment "right" for its requirement. This is precisely what the traditional function of manpower planning and staffing are supposed to achieve. However, done in the traditional way, it becomes a slow and activity and lacks the glamour associated with latest management fads. So, under the name of rightsizing companies continue to practice downsizing - perhaps with some extra caution.
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