Headcount Optimization: How Not to Make Mistake

How to make sure your company actually needs headcount optimization, how to avoid subjectivity and bias, and why should we not seek the fired employees to want to come back? Answers to these and other questions CleverContol got from Daniel Lewis, Director of Human Resources in Resort Mind.

Daniel, the manager in charge of optimization has is an amazing opportunity to get rid of “undesirable” employees.

I strongly disagree with the wording of that: “undesirable” to whom and why? This kind of talk sets the wrong tone and creates an opportunity for subjectivity and bias.

How not to fall into such extreme and not to start firing people because of some subjective parameters?

The parameters on which the evaluation takes place must be announced in advance to everybody starting with the management. They should be agreed on and accepted for evaluation. Any changes or interpretations in parameters are not acceptable in the process of assessment, except in the case of bankruptcy.

It is important for managers (leaders) to understand that they will need to explain in detail the reasons, with pointing out specific parameters that were evaluated for each employee/subordinate.

How should executives control this?

Executives should not control this process but they should support and guide it. Control of the quality of assessment is a job of the HR department as the arbitrator. The assessment itself is a job of line managers, and not vice versa. Everyone must do their job.

Assessment control is a duty of HR-business partners and/or of the head of HR department in the absence of specifically appointed to each unit/department of the company HR staff member.

Especially for HR staff there is a variety of different tools to evaluate employee's workflow and to make their attendance into work more productive.

Which main manifestation of the need to optimize can you name?

The objective necessity of reducing costs, particularly, staff costs.

Restructuring and organizational changes:

• optimization is associated with a change in the corporate culture of the company: new business conditions, a merger or acquisition;

• optimization of business processes and redistribution of employees’ functions, which leads to a change in headcount.

Identified inefficiencies in work for the following reasons:

• unreasonably large number of personnel in the sector of management;

• the structure of the company was built chaotically, during the period of growth it was not revised, the roles in the organizational structure were not reallocated;

• the company has no human resource planning, recruitment is spontaneous (often via nepotism or favoritism and with the lack of competencies, new jobs are created for a person and not for goals or work functions);

• there is no clear description of the operating functions and the separation of powers of specialists and departments;

• duplication of administrative functions of the branches and the management company, a mixture of autonomy and centralized control;

Employees were hired full time with open-term employment contracts when in fact they should have been hired as fixed-termed employees. And now their project is completed.

Automation of jobs or introduction of new equipment/technologies/processes so it becomes impossible to train employees in the shortest time.

Redistributing work of fired employees among the remaining ones is a common practice what do you think about it?

The practice is common but ineffective. Clear plans, a real link between achievement and getting the reward, a good PR-campaign, supported by regular reports on achievements are the best advice for handling the optimization.

How to fire employees so that they would still want to be hired back?

This is only an option if the company’s policy allows employees to return. Usually, this practice is bad for the motivation of other members of the team. Or the loyalty is not a big value in the company which is very unusual!