As organizations look for ways to combat the downturn, many have already had to make reductions in workforce and, unfortunately, many more companies fear they need to make more cuts before the end of the year. The newspapers update us daily on the statistics, but behind those figures lie many stories of layoffs handled well as well as those handled poorly.


HR’s dilemma

Internally, HR is most often perceived to be the “bad guy”, resulting in criticism for the layoffs made in reaction to the downturn, but all too frequently HR is a follower in the situation, picking up the pieces from senior management decisions that they have little influence over. Stuck in ‘follower’ mode, HR is relegated to facilitating the layoff process as best as it can, rather than to focus on doing the thinking behind the decision-making.

Instead, HR should be focused on how it can ensure that the company’s most valuable talent is retained, and also on how it, as a department, can contribute to organizational efficiencies and cost-savings that might prevent headcount reduction. The HR director and their team should also be looking for ways to better support their management colleagues with more intelligence on the workforce, providing insight into their people that facilitates good decision-making.

To avoid criticism, HR must go beyond supporting the layoff and exit process and look for further ways to reduce costs, without reducing headcount.


Learn from the past, prepare for the future

If you look at the past, reducing headcount only shows positive results in the short-term. Inevitably, the long-term effect is a lack of talent and the current skills needed for when the market turns around again. For companies that need to save costs to survive the downturn, the main question is ‘how can we keep performing with fewer costs?’ It is incredibly hard to manage the impact of downsizing. So why not first look at other options, such as improving processes to increase productivity, cutting bonuses and reducing working hours?

In all businesses, staff salaries are a major cost, particularly in the HR team. To reduce salary simply by reducing headcount seems like a quick fix. Headcount reduction can also be an opportunity to lose anything or anyone not essential to the company’s performance. However, how do you ensure you are losing the right people, and that the company will be left with the right people in HR to steer the company through the storm of the recession and back to profitability in the upturn? Talent management must remain the HR team’s top priority, whatever the economic constraints.


Efficient HR delivery, supporting success

So, instead of jumping to the quick-fix answer, companies need to look at what they are doing and what they can do to transform HR delivery – improving the processes and gaining efficiencies that lead to cost savings without culling staff – thus transforming the way people across the company work. As with other solutions across the business, you need to investigate how much it will cost, what the ROI will be and how the business will benefit.

HR needs to take steps to achieve cost reduction before having to consider laying off employees, in their own department and across the organization:
1. Gain insight: Use technology to have the information senior managers need to make decisions that affect the future of the workforce

2. Improve processes: How much data is currently duplicated across the HR and finance processes? Could you reduce workload and improve workflow by unifying your HR and payroll processes? If that’s already been done, does it also include the ‘additional’ processes around booking holiday, choosing flexible benefits and registering illness?

3. Devolve responsibility: Once the processes are in place, it will become apparent that there are some tasks that can be done by managers and individuals themselves, without involving HR. Introducing ‘self service HR’ will improve accountability amongst the workforce and free up HR’s time to spend on the management tasks that need their attention

4. Integrate technologies: How much time does staff waste looking for the right piece of information from other sources across the company? Could you make further efficiency savings by using ‘mash up’ technology to put BI tools in the same place as HR information, or even external information such as news feeds and weather reports that staff refers to regularly?

5. Cut capital expenditure: Belt-tightening hasn’t just meant cutting staff, it has also resulted in a freeze on ‘capital expenditure’ for many departments – or whole organizations. In HR, this means investment in new solutions will be hard to get signed off. But there are models available where software can be paid for ‘as you go’ – using operational expenditure rather than dipping into capital

Best practice can start in HR and be spread across the organization, helping teams to make efficiencies and reduce costs, without leaping to reduce headcount.