Layoffs Are Blunt, Rightsizing Is Sharp: A Data-Driven Approach

We are living in an era of intense workforce recalibration. Companies are being forced to think strategically about their talent pools and workforce skills, driven by increased automation, shifting economic conditions, and a heightened focus on efficiency. The rise of AI, with its ability to catalog and analyze vast personnel data, has made it clear that not all workforces are structured optimally, and executives are looking for ways to realign their people with their most critical business objectives.

Efficiency is certainly much in the national conversation. Elon Musk’s dramatic shake-up of the federal workforce with his DOGE initiative and Mark Zuckerberg’s latest round of layoffs at Meta are grabbing headlines. Zuckerberg is chalking up the cuts to removing low-performers, a performance-based cut to roles which he intends to backfill for throughout the year. 

Intel, Tesla, Google, Amazon, Microsoft and many other growth companies have all announced fairly broad-based layoffs. Other companies are choosing "quiet layoffs" by issuing return to office mandates and other seemingly "purposeful disengagement" initiatives.

If you are tasked with a workforce management project focused on reduction, these types of broad and performance-based layoffs are not the only tools available to increase efficiency and performance. Rightsizing, when done correctly, is not just about cutting headcount. It is a data-driven approach to ensuring an organization has the right people, skills, and infrastructure to execute its long-term vision. This process can involve upskilling, reskilling, strategic hiring, as well as targeted layoffs, but the goal is always alignment, not just cost-cutting.

Want to master rightsizing with data-driven insights? Explore how Aura Intelligence helps businesses optimize workforce planning—book a demo today!

Rightsizing vs. Downsizing: What’s the Difference?

At first glance, rightsizing and downsizing might seem interchangeable, but there’s a key difference.

Downsizing is primarily about reducing costs by shrinking the workforce. It often happens in response to financial pressures or economic downturns.

Rightsizing is about strategic alignment—ensuring an organization’s workforce matches its evolving priorities. It could mean reducing roles in some areas while increasing hiring in others. It’s a proactive, long-term approach rather than a reactive cost-cutting measure.

For example, if a company realizes it needs to invest more in AI-driven automation but is overstaffed in administrative roles, rightsizing would involve redeploying or retraining some or all of those employees rather than simply laying them off.

Why Rightsizing Matters Now More Than Ever

Layoffs will, unfortunately, likely continue to be in the news this year. A recent survey by ResumeTemplates.com found that 45% of U.S. companies anticipate layoffs in 2025, with many citing economic concerns, AI automation, and the incoming Trump administration’s policies as influencing factors. While 11% of companies say workforce reductions are definite, another 34% report that they are likely. Most expect relatively modest layoffs, with 28% planning to cut fewer than 5% of employees and 44% expecting reductions of 5% to 10%.

In addition to layoffs, 31% of companies currently have a hiring freeze, and another 13% plan to implement one this year. Companies are also taking other cost-cutting measures, including reducing or cutting bonuses, bringing people back to the office in an effort to incentivize voluntary reduction, downsizing office space, cutting employee benefits, and even reducing salaries.

As workforce reductions become more widespread, companies that take a smart and strategic approach to workforce changes may actually be particularly positioned for long-term success.

How Workforce Analytics Makes Rightsizing Smarter

Modern rightsizing is data-driven, not gut-driven. Workforce analytics platforms like Aura Intelligence are transforming how companies approach strategic workforce planning.

Identifying talent gaps and surpluses is one of the first steps. With AI-driven workforce analytics, companies can assess where they have too many employees with outdated skills, where they have critical talent shortages, and how competitors are structuring their workforce.

Competitive benchmarking is another key component. Understanding how competitors allocate their workforce helps businesses identify where to invest talent to most successfully compete. Aura Intelligence, for example, provides outside-in workforce insights, tracking hiring trends, talent flows, and skills evolution across industries and 20M companies.

Predictive hiring and reskilling strategies also play a crucial role. Instead of waiting for workforce gaps to become crises, companies using predictive analytics can anticipate the skills needed and start reskilling employees before layoffs become necessary. Being proactive in workforce planning by strategically using workforce data can help eliminate the need for dramatic reductions.

Best Practices for Rightsizing

• Start with data, not gut feelings. Use workforce analytics tools to create a talent inventory, assess talent distribution, skills, and industry trends. Evaluate attrition risks, job market demand, tenure and seniority, and workforce sentiment to make informed decisions.

• Prioritize redeployment over layoffs. Identify employees with transferable skills who can transition into new roles. Offer upskilling and reskilling programs for roles likely to be impacted by automation and other market or technology factors.

• Think long-term, not just immediate cost savings. Rightsizing should align with a company’s three-to-five-year strategy, not just next quarter’s financials. Consider whether short-term layoffs will create long-term hiring challenges.

• Communicate transparently. Employees should understand the reasons behind workforce changes. Uncertainty and poor communication during reorgs can lead to attrition of high performers.

• Consider multiple factors. Retention is but one factor influenced by layoffs. A solid rightsizing strategy should consider additional business metrics such as productivity, sentiment, engagement, skill development, and succession planning.

• Leverage external workforce insights. Compare workforce structures against industry peers. Use external labor market data and benchmarks to inform and validate hiring and workforce investment decisions.

The Future of Workforce Optimization

Rightsizing is not just a reaction to economic pressures, but, in times of great change, can be a strategic necessity. Companies that take a data-driven, forward-looking approach will avoid the pitfalls of reactionary layoffs and instead build a resilient, future-proof workforce.

As AI and automation accelerate change, businesses that embrace workforce intelligence platforms will have a competitive edge. Whether through targeted hiring, reskilling, or strategic reallocation, the companies that get rightsizing right will emerge stronger, leaner, and more innovative, while still keeping brand and trust intact.

Instead of layoffs, which can symbolize corporate failure, workforce management projects can be part of broader transformation strategies that ensure business survival and growth. Learn more about how to use workforce analytics to drive smart and effective projects.