You've probably heard the term whispered in a breakroom or seen it buried in a dry press release. It sounds like corporate jargon designed to mask something painful. Honestly, it often is. But when we talk about right sizing, we aren't just talking about a polite way to say "you're fired."
It’s about alignment.
Think about a professional athlete trying to fit into a suit they wore in high school. It doesn't matter how high the quality of the fabric is; if the proportions are wrong, the performance suffers. Companies are the same. They grow too fast during "cheap money" eras, then suddenly find themselves bloated, slow, and leaking cash. Right sizing is the process of bringing an organization’s resources—both people and tech—into actual harmony with its current market reality. It is a surgical restructuring, not a sledgehammer layoff.
The Messy Truth About Right Sizing vs. Downsizing
Most people use these terms interchangeably. They shouldn't. Downsizing is a reactive, often desperate attempt to slash costs by cutting heads. It’s a "we need to save 20% by Friday" mentality.
Right sizing is different because it’s supposedly proactive. It involves looking at the workflow and asking, "Do we have ten people doing a job that three people plus a specific software could do better?" Or, conversely, "Are we missing an entire department that would unlock 30% more revenue?"
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Sometimes, right sizing actually means hiring.
In 2022 and 2023, we saw a massive wave of this in the tech sector. Giants like Meta and Alphabet didn't just wake up and decide to be mean. They realized that the hyper-growth of the pandemic era was a fluke. They had "over-hired" based on a version of the future that didn't materialize. When Mark Zuckerberg discussed "The Year of Efficiency," he was basically describing a massive right-sizing initiative to strip away layers of middle management that were slowing down decision-making.
It’s about velocity.
Why the "Right" Size is Moving Target
Markets shift. Consumer habits die.
Ten years ago, a retail bank needed thousands of tellers. Today, they need developers for their mobile app and a handful of high-level consultants for complex loans. If that bank keeps the tellers, they are "over-sized" in the wrong areas. If they fire everyone without building the app, they’re just dying.
True right sizing requires a deep dive into "utilization rates." Are your employees actually working on high-value tasks, or are they trapped in meetings about meetings? According to data from the Harvard Business Review, many organizations suffer from "organizational drag," which costs the economy trillions in lost productivity. This drag is exactly what this process aims to eliminate.
The Strategy Behind the Shift
You can't just guess your way into a leaner structure. It takes data. Usually, a company will start by mapping out every single process. They look for redundancies. If Marketing is running a data analysis tool and Finance is running a different version of the same tool, that’s a right-sizing opportunity for the budget.
It’s often about the "Span of Control."
This is a fancy way of asking how many people report to one manager. In a bloated company, you might have one manager for every three employees. That’s a lot of salary for a lot of oversight. A right-sized organization might push that to one manager for every eight or ten, empowering the employees and cutting the "middleman" costs.
But be careful.
If you push the span of control too far, your managers burn out. They stop being mentors and start being fire extinguishers. This is where many CEOs fail. They see the cost savings on a spreadsheet but forget that human beings have limits.
The Role of Technology and Automation
We have to talk about AI. It’s the elephant in the room.
Modern right sizing is increasingly driven by the capability of Large Language Models and automation. If a legal firm can use AI to do the first pass of document review—a task that used to take five junior associates three weeks—the "right size" of that firm’s junior class just changed overnight.
This isn't just about cutting costs; it's about shifting talent. Those associates can now spend their time on strategy and client relationships. That’s the ideal version of the story, anyway. In reality, it often leads to smaller entry-level classes, which creates a whole new problem for the long-term talent pipeline.
The Human Cost and the "Survivor" Problem
Let’s be real: for the people involved, right sizing usually feels like a betrayal.
There is a psychological phenomenon called "Survivor’s Guilt" in the workplace. When a company goes through a restructuring, the people who stay are often less productive, not more. They spend their time worrying about the next round of cuts. They lose trust in leadership.
To do this correctly, transparency is the only currency that matters.
Dr. Wayne Cascio, a professor at the University of Colorado who has studied downsizing and restructuring for decades, points out that companies that cut purely for short-term stock price gains almost always underperform in the long run. The "right" size is not the "smallest" size. It is the size that allows for sustainable growth without burning out the remaining workforce.
Real-World Examples of Right Sizing Done Wrong (and Right)
Look at the airline industry during the 2008 recession versus the 2020 pandemic. In 2008, many carriers cut so deep they couldn't recover when travel bounced back. They lacked the pilots and ground crew to meet demand. That wasn't right-sizing; it was self-mutilation.
On the flip side, look at how some manufacturing firms have adapted. Instead of laying off workers when a line becomes automated, they invest in "reskilling." They move the worker from the assembly line to the maintenance team for the robots. The headcount stays similar, but the capability of the company increases.
That is the gold standard.
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How to Audit Your Own Organization
If you're a leader wondering if your team is the correct size, you need to look at three specific metrics:
- Revenue per Employee: Is this trending up or down? If you're adding people but revenue is flat, you’re over-sizing.
- Decision Latency: How long does it take for a "yes" to move from the bottom to the top? If it takes weeks, you have too many layers.
- Turnover in High Performers: If your best people are leaving, your "right sizing" might actually be "under-sizing," and they’re tired of carrying the load for three people.
It’s also worth looking at your "Shadow IT" or "Shadow Headcount." These are the freelancers and agencies that departments hire because the internal process is too slow or understaffed. Often, a company will claim they are lean while spending millions on external contractors. That’s just creative accounting, not efficiency.
Practical Steps for Implementation
If you are moving toward a restructuring, do not lead with the budget. Lead with the mission.
Identify the Core Competencies
What is the one thing your company does better than anyone else? Every person and every dollar should be tethered to that. If you are a software company that somehow ended up running an in-house catering service and a massive internal travel agency, those are the first things to go.
Analyze the Work, Not the People
Don't start by looking at names on a list. Look at the tasks. If the tasks are redundant, the roles are redundant. It’s less emotional this way, and it leads to more logical outcomes.
Communicate Once and Deeply
The "drip-feed" method of restructuring is toxic. Cutting 2% of the workforce every month for a year kills morale. It’s better to make one significant, well-researched change and then guarantee stability to the remaining team.
Invest in the "New" Structure Immediately
Right sizing fails if you just remove pieces and don't rearrange what’s left. You have to redefine roles. People need to know exactly what their new boundaries are.
Final Thoughts on the Evolution of Work
The concept of right sizing is going to become even more prominent as we move deeper into the 2020s. The traditional 40-hour workweek and the rigid departmental structures of the 20th century are crumbling. We are moving toward a more fluid, project-based economy where the "right size" of a company might change from quarter to quarter.
The goal isn't to be small. The goal is to be fit.
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A fit company can pivot when a competitor launches a disruptive product. A fit company can weather a high-interest-rate environment because it isn't carrying the weight of 500 unnecessary middle managers.
Ultimately, right sizing is about respect—respect for the company’s capital, respect for the employees' time, and respect for the customers who shouldn't have to pay for a firm’s inefficiency.
Actionable Next Steps for Leaders
- Conduct a "Meeting Audit": Track how many people are in every meeting for one week. If you have 10 people in a meeting where only 3 speak, you have a structural sizing issue.
- Map Your Decision Tree: Trace a single decision (like an $800 expense) from request to approval. If it touches more than three people, your management layer is likely oversized.
- Evaluate Your Tech Stack: Look for overlapping subscriptions. Consolidating your digital tools is the easiest form of right sizing with the least amount of human friction.
- Review "Ghost" Positions: Check for job openings that have been vacant for more than six months. If the work is still getting done, you probably don't need to fill those roles. Eliminate them and reallocate that budget to the high performers who are actually doing the work.