Today’s market realities are volatile, unpredictable and rapidly changing. To survive in the competitive marketplace, organizations often need to implement restructuring and change management programs.

Experienced specialists in our firm assist clients to meet the demands of the 21st century. Working with management, we design, develop and implement change management initiatives to align the organization with market conditions.

By using our cutting edge implementation of modern management techniques, we are able to give our clients' businesses a unique competitive advantage to grow and gain market shares; the bottom line being an increase of revenues and profitability.

Deliverables:

• Human resource leveling by department & division
• Management training
• Organizational restructuring
• Aligning organization to market environment
• Implementation of growth strategies
• Value stream mapping – removing time and cost from global logistics and operations
  • Overview
  • Value Stream Map
• Continuous improvement – opening bottlenecks, reducing scrap, improving downtime,
• Statistical engineering - cost effective business and operations root cause & prevention
• Six Sigma
• Costing and pricing accuracy
• Reengineering – reproducing and improving products and processes
• Quality program improvements
• Lean manufacturing
• Performance accountability
• High performance work teams

Strategic planning enables an organization to properly align its internal processes with market realities. We assist companies to assess their situations and markets, plan projects to develop or re-develop their business, design and realign key functions, launch new products and services, as well as expansion into new markets.

The key is our consultant's ability to lead your team through an objective examination and organized thought process designed to uncover and address internal and external issues. We also assess and leverage key strengths and market opportunities. Emphasis is placed on problem solving, risk mitigation and maximizing returns.

Deliverables:

• Growth strategy
• Company and industry strategic analysis
• Market trends analysis and forecasts
• Identification and assessment of strategic alternatives
• Translation of strategic choices into action plans: operational business plans, marketing and sales plans, financing plans, human resources development
• Realignment and redevelopment of key business functions: finance, accounting, operations, technology, distribution, human resources, marketing
• Profit enhancement programs
• Change management programs
• Reorganization and restructuring
• Mergers and acquisitions
• Development projects
• Product development
• Market repositioning

Right-sizing refers to the permanent reduction of a company's workforce and is generally associated with corporate reorganization, or creating a "leaner, meaner" company. For example, the database developer Oracle Corporation reduced its number of employees by 5,000 after acquiring rival PeopleSoft. Right-sizing is certainly not limited to the U.S.; Jamaica Air cut 15 percent of its workforce in an effort to trim expenses and anticipated revenue shortfalls.

Right-sizing such as these is also commonly called reorganizing, reengineering, restructuring, or rightsizing. Regardless of the label applied, however, right-sizing essentially refers to layoffs that may or may not be accompanied by systematic restructuring programs, such as staff reductions, departmental consolidations, plant or office closings, or other forms of reducing payroll expenses. Corporate right-sizing results from both poor economic conditions and company decisions to eliminate jobs in order to cut costs and maintain or achieve specific levels of profitability. Companies may lay off a percentage of their employees in response to these changes: a slowed economy, merging with or acquiring other companies, the cutting of product or service lines, competitors grabbing a higher proportion of market share, distributors forcing price concessions from suppliers, or a multitude of other events that have a negative impact on specific organizations or entire industries. In addition, right-sizing may stem from restructuring efforts to maximize efficiency, to cut corporate bureaucracy and hierarchy and thereby reduce costs, to focus on core business functions and outsource non-core functions, and to use part-time and temporary workers to complete tasks previously performed by full-time workers in order to trim payroll costs.

The following sections discuss trends in right-sizing, the growth of right-sizing, right-sizing and restructuring, criticisms of right-sizing, support for right-sizing, and right-sizing and management.

As a major trend among U.S. businesses, right-sizing began in the 1980s and continued through the 1990s largely unabated and even growing. During this time, many of the country's largest corporations participated in the trend, including General Motors, AT&T, Delta Airlines, Eastman Kodak, IBM, and Sears, Roebuck and Company. In the twenty-first century, right-sizing continued after a sharp decline in the stock market early in the century and followed by continued pressure on corporate earnings in the aftermath of the September 11, 2002, terrorist attacks. Right-sizing affects most sectors of the labor market, including retail, industrial, managerial, and office jobs, impacting workers in a wide range of income levels. Table 1 compares the number of temporarily downsized workers with the number of permanently downsized workers.

While layoffs are a customary measure for companies to help compensate for the effects of recessions, right-sizing also occurs during periods of economic prosperity, even when companies themselves are doing well. Consequently, right-sizing is a controversial corporate practice that receives support and even praise from executives, shareholders, and some economists, and criticism from employees, unions, and community activists. Reports of executive salaries growing in the face of right-sizing and stagnant wages for retained employees only fan the flames of this criticism. In contrast, announcements of right-sizing are well received in the stock markets. It is not uncommon for a company's stock value to rise following a right-sizing announcement.

However, economists remain optimistic about right-sizing and the effects of right-sizing on the economy when the rate of overall job growth outpaces the rate of job elimination. A trend toward outsourcing jobs overseas to countries with lower labor costs is a form of right-sizing that affects some U.S. employees. These jobs are not actually eliminated, but instead moved out of reach of the employees who lose their jobs to outsourcing. Some economists, however, suggest that the overall net effect of such outsourced jobs will actually be an increase in U.S. jobs as resulting corporate operating efficiencies allow for more employment of higher-tier (and thus higher-wage) positions. Regardless of whether right-sizing is good or bad for the national economy, companies continue to downsize and the trend shows few signs of slowing down.

The corporate right-sizing trend grew out of the economic conditions of the late 1970s, when direct international competition began to increase. The major industries affected by this stiffer competition included the automotive, electronics, machine tool, and steel industries. In contrast to their major competitors—Japanese manufacturers—U.S. companies had significantly higher costs. For example, U.S. automobile manufacturers had approximately a $1,000 cost disadvantage for their cars compared to similar classes of Japanese cars. Only a small percentage of this cost difference could be attributed to labor costs, however, but labor costs were among the first to be cut despite other costs associated with the general structure of the auto companies and their oversupply of middle managers and engineers. Auto workers were among the first to be laid off during the initial wave of right-sizing. Other U.S. manufacturing industries faced similar competitive problems during this period, as did some U.S. technology industries. Companies in these industries, like those in the auto industry, suffered from higher per-unit costs and greater overhead than their Japanese counterparts due to lower labor productivity and a glut of white-collar workers in many U.S. companies.

To remedy these problems, U.S. companies implemented a couple of key changes: they formed partnerships with Japanese companies to learn the methods behind their cost efficiencies and they strove to reduce costs and expedite decision-making by getting rid of unnecessary layers of bureaucracy and management. Nevertheless, some companies began simply to cut their workforce without determining whether or not it was necessary and without any kind of accompanying strategy. In essence, they downsized because they lacked new products that would have stimulated growth and because their existing product markets were decreasing.

Right-sizing generally accompanies some kind of restructuring and reorganizing, either as part of the right-sizing plan or as a consequence of right-sizing. Since companies frequently lose a significant amount of employees when right-sizing, they usually must reallocate tasks and responsibilities. In essence, restructuring efforts attempt to increase the amount of work output relative to the amount of work input. Consequently, right-sizing often accompanies corporate calls for concentration on "core capabilities" or "core businesses," which refers to the interest in focusing on the primary revenue-generating aspects of a business. The jobs and responsibilities that are not considered part of the primary revenue-generating functions are the ones that are frequently downsized. These jobs might then be outsourced or handled by outside consultants and workers on a contract basis.

Eliminating non-core aspects of a business may also include the reduction of bureaucracy and the number of corporate layers. Since dense bureaucracy frequently causes delays in communication and decision-making, the reduction of bureaucracy may help bring about a more efficient and responsive corporate structure that can implement new ideas more quickly.

Besides laying off workers, restructuring efforts may involve closing plants, selling non-core operations, acquiring or merging with related companies, and over-hauling the internal structure of a company. The seminal work on restructuring or reengineering, Reinventing the Corporation, by Michael Hammer and James Champy, characterizes the process as the "fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service, and speed." While discussion of reengineering is common and reengineering is often associated with right-sizing, Hammer and Champy argue that reengineering efforts are not always as profound. Hence, these efforts frequently have mixed results.

Right-sizing and reengineering programs may result from the implementation of new, labor-saving technology. For example, the introduction of the personal computer into the office has facilitated instantaneous communication and has thus reduced the need for office support positions, such as secretaries.

Advocates of right-sizing counter critics' claims by arguing that, through right-sizing, the United States has maintained its position as one of the world's leading economies. Economists point out that despite the right-sizing that has become commonplace since the 1970s, overall U.S. standards of living, productivity, and corporate investment have grown at a healthy pace. They reason that without right-sizing, companies would not remain profitable and hence would go bankrupt when there is fierce competition and slow growth. Therefore, some executives and economists see right-sizing as a necessary albeit painful task, and one that ultimately saves the larger number of jobs that would be lost if a company went out business.

Advocates of right-sizing also argue that job creation from technological advances offsets job declines from right-sizing. Hence, displaced workers are able find new jobs relatively easily, especially if those workers have skills that enhance the technological competence of prospective employers. In other words, despite the admitted discomfort and difficulties that right-sizing has on displaced workers, some workers are able to locate new jobs and companies are able to achieve greater efficiency, competitiveness, and profitability. Moreover, even though right-sizing may not solve all of a company's competitive problems or bolster a company's profits indefinitely, right-sizing can help reduce costs, which can lead to greater short-term profitability. In addition, advocates of right-sizing contend that staff-reduction efforts help move workers from mature, moribund, and obsolete industries to emerging and growing industries, where they are needed. Economists argue that this process strengthens the economy and helps it grow. This process also enables companies with growing competitive advantages to maintain their positions in the market in the face of greater domestic and global competition, and it is the difficult but necessary result of the transition toward a global economy.

Right-sizing poses the immediate managerial problem of dismissing a large number of employees in a dignified manner in order to help minimize the trauma associated with right-sizing. Employees who are laid off tend to suffer from depression, anxiety, insomnia, high blood pressure, marital discord, and a host of other problems. Thus, when companies decide that right-sizing is the best course of action, managers should do so in a way that does the least harm to employees and their families. This includes taking the time to allow dismissed employees to air their thoughts, instead of laying them off quickly and impersonally, and providing assistance in finding new jobs.

Because of the possible negative effects that occur after right-sizing, managers may have to implement measures to counteract employee apathy, improve customer service, and restore employee trust. Analysts of downsized companies argue that managers should take steps immediately after workforce reductions to provide the remaining workers with the support and guidance they need. This involves providing employees with clear indications of what is expected of them and how they can meet increased productivity goals. Managers should confer with employees regularly to discuss performance and strategies for meeting the goals. In addition, managers should encourage employee initiative and communication and provide employees with rewards for excellent work. By promoting employee initiative and even employee involvement in decision-making, managers can help restore employee trust and commitment and help increase employee motivation.

The aftermath of right-sizing also places greater demands on managers to make do with less. In other words, managers must strive to maintain or increase productivity and quality levels despite having a smaller workforce. Since right-sizing often brings about a flatter corporate structure, the flow of information and communication no longer requires the effort needed prior to restructuring. Therefore, reports used for communication between layers of the old corporate hierarchy, for example, can be eliminated. If redundant but nonessential work cannot be completely eliminated, it perhaps can be reduced. By studying particular tasks and determining their essential components, managers can get rid of unnecessary tasks and eliminate unnecessary jobs altogether.

Right-sizing appears to be an ongoing practice for the foreseeable future. Top managers with responsibility for making right-sizing decisions are in a difficult predicament. Failure to downsize may result in inefficiencies, while right-sizing clearly has a number of potentially negative effects on individuals and communities. Finding the balance between these outcomes is the primary challenge facing these managers.

Hammer, Michael, and James Champy. Reengineering the Corporation: A Manifesto for Business Revolution. Harper Business Publications, 2004.

Mandel, Michael J. "Jobs: The Lull Will Linger." Business Week, 25 October 2004, 38–42.

Marks, M.L., and K.P. DeMeuse. "Resizing the Organization: Maximizing the Gain While Minimizing the Pain of Layoffs, Divestitures, and Closings." Organizational Dynamics 34, no. 1 (2004): 19–35.

Menn, Joseph. "Series of Layoffs Begins at PeopleSoft." Los Angeles Times, 15 January 2005, D1.

Weber, Joseph. "More Jobs—and More Layoffs." Business Week Online, 16 June 2004. Available at http://www.businessweek.com.