The Ups and Downs of Rightsizing
[excerpt]

Determining the proper number of employees in a distributorship is critical to success. Here is some advice from an expert.

Expansion and contraction, upsizing and downsizing, growing and shrinking: within the gases and welding distributorship business it is critical to maintain a correctly-sized work-force to stay profitable.

But, what is the magical employee number? Determining it isn't easy, and to complicate matters, it changes along with economical factors.

As the U.S. economy continues its robust growth, many gas and welding distributors want to expand. Somewhat paradoxically however, it is in times of growth that expanding the number of employees is hardest. Some areas of the country are in the midst of full employment. In economic terms that means two to four percent unemployment. With nearly everyone working, the labor pool has grown shallow.

"Show me the people"
A common concern expressed by a number of distributors at the recent conference about marketing specialty gases, sponsored by Gases & Welding Distributor, was that the expansion plans were hindered by a lack of qualified applicants.

People often think companies are only in crisis during economic decline. For many companies, serious growth can be just as big a crisis. Workers can be over-extended and management can be spread thin. with little relief in sight because additional qualified workers are not available.

Not only are qualified people hard to find in economic boom times, when they are found they can demand higher than normal salaries.

Upsizing has gotten tough.

To help make growth decisions in a logical and rational manner that provides the best benefit for the company – whether it is increasing the work-force or decreasing it – Kathryne Newton, Ph.D., an assistant professor of industrial distribution at Purdue University, West Lafayette, Ind., offers some advice.

Set objectives
"The first thing to determine is the objective of the expansion," Newton said. "Companies need to define clearly why they want growth before jumping in and hiring new bodies."

– excerpt end –