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Did the CEO Really Right Size Her Business?

October 7, 2022

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At a C suite networking function recently, I listened to a CEO proclaim she’d ‘rightsized’ her business. Her CFO, standing beside her, grinned and nodded in earnest agreement.

Another jumped in and said “Yes, we’re going through that now. We figure we’ll save a lot and improve our bottom line by 12%.”

There were nods of recognition, agreement and approval from the group.

Stupid me asked a question “How do you know you’ve rightsized your organisation?”

There was a long moment of silence.

The proclaimer responded, “Our aim is to trim costs, save on overheads and make sure we aren’t carrying surplus staff.”

“Yes, understood, and how do you know you’ve rightsized your business?” I persisted.

Her CFO chimed in “Well, we’ve trimmed our payroll, the work’s getting done and we expect our EBITDA to show the benefits this coming quarter.”

“OK” I said, “Do your leaders have time to lead or are they too busy churning out work because they don’t have any capacity to delegate to?”

Silence.

“Are your people stressed and working longer hours than have been agreed?”

Silence.

“Are you treating your payroll as an overhead when it’s actually your most important investment?”

A CEO who had previously been nodding at the CEO’s comments quietly slipped away.

Others shuffled their feet as though they were ready to depart.

“Well, you can’t grow a skinny baby” I said. “Their bones become brittle, their brains don’t develop, and their organs fail”.

A CEO who’d stayed put, asked “How do you right-size the business?”

I explained that rightsizing isn’t to be confused with downsizing. Whilst they may both mean shedding staff, rightsizing might even mean adding staff in certain areas if it delivers efficiently on the goals.

I went on: Rightsizing requires a thorough and straightforward investigation:

  1. Examining existing data with current performance against ideal performance.
  2. Examining current job descriptions and time required for optimum quality delivery of work.
  3. Examining existing structures to ensure optimum functionality at all levels.
  4. Based on the above determine the right personnel needed in the right areas to deliver on the strategy and achieve the vision, both in the short, medium and longer terms, where the longer term may not be required at this stage, but you are prepared for it.
  5. Determine how best to protect the payroll investment: hint – invest in developing your people for their and the organisation’s future.
  6. Make sure the staff levels allow for leaders to effectively lead and the staff can deliver the required quality and quantity of work inside the agreed hours of work. Failure to do this will result in burnout, staff churn and diminished performance and productivity.
  7. Assess and mitigate risks that may appear in the process.
  8. Plan the changes carefully following people-centred methods.
  9. Review, measure and adapt as needed.
  10. Recognise that this is a continuous process.

The current global workplace culture has gone too far in cost cutting as a norm and we no longer have a realistic perception of the right sizing of staff.

Instead, we have a common situation where:

  1. Leaders are too busy to lead
  2. Staff are working longer and harder with fewer resources, are more stressed and likely to disengage or become underproductive or quit.
  3. Payroll has been deemed an overhead when it should be treated as an essential investment.
  4. Blindness regarding the fiat currency constantly diminishing in value causes the “chase the money” syndrome – a primary cause of the problem in the first place.

Where are you in this picture?
Want help resolving this?
Contact me.

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