Top reasons why some organisations are always retrenching, others never retrench
“IT takes nine months to make a baby, no matter how many people you put on the job” is a popular American business proverb. This proverb makes a lot of sense in the field of workforce planning. There are a number of roles where the number of people you put on the job does not matter but still executives keep adding more. I wish a lot of executives would understand the implication of this proverb on their head count decisions.
Since the advent of the multi- currency regime, a number of employees have retrenched or have had their employer closing down. The top reason cited is unsustainable wage bills. Even those organisations that are doing well are struggling with unsustainable wage bills. Some organisations have never retrenched because they have well-oiled workforce plans.
Some are always threatening retrenchment and in the processes, damaging employee moral because they have never had a well-planned workforce plan to support the business.
A labour budget is not a workforce plan, therefore the big question that each company must ask is: do we have a workforce plan to support the business today and in the future?
Our experience shows that a number of organisations do not do proper workforce planning hence the constant need to retrench. Workforce planning is having the right number of people with the right skill (not qualification but right level of competency) at the right cost at any time in the future.
When local organisations face problems they tend to throw people at problems. Most managers believe that when they face a challenge in their section they must bring in more people. In most cases this does not work. Some problems do not need more hands. They need problem solving skills with the same number of people or even with less people.
The old adage of “hire slow and fire fast” still stands. When you get an opportunity to get rid of those that are not performing, grab the opportunity with both hands and do it procedurally and very fast. When you think of hiring an extra person you must have valid evidence that the new person will add value and help you achieve your goals. This is not about feelings but about facts.
If you do not see the value, do not hire the extra person. Uncontrolled hiring has been the major cause of overstaffing in most businesses. Businesses must know that at some point in the future they may be forced to produce and sell less than what they are currently producing. Before you hire, anticipate all the changes likely to impact your business in the future and plan your head count accordingly.
What is likely to be the impact of technology on head count? It is estimated that 50 percent of the current jobs will not be there by 2030 and this will be largely driven by technological changes. I do not see any business that is immune to technological, regulatory and environmental changes and these impact on your head count.
I feel sorry for businesses where prices are determined international (resources based industries) but most of their inputs’ prices are determined locally. When you are in such a situation, plan your workforce carefully to avoid unnecessarily putting people on the streets when the product price is drastically reduced.
In some instances, organisations may not need to add more people; it could be a reflection of lack of skills to enable the people to be more productive. In such a case, you need to invest in up-skilling the people instead of adding more people.
One other way to counter overstaffing at some day in the future is to adopt the strategy of contract labour especially for non-core activities in your business. The only people who must remain on contract without limit are those positions and people where development of skills will be too costly for the organisation to develop once the current employees leave or too costly for the organisation to source from outside should the organisations products/services demand go up.
Using historical production levels, it’s very easy to plan your workforce into the future even ten years from now. With predictive analytics, this is now an easy task and organisations should never be found in a situation where they are overburdened by excess staff.
Most workforce analytics software have the capacity for forecasting the workforce you need at any given time. Proper workforce planning, especially the forecasting component can assist you to avoid speculative recruitment of staff thereby saving your business a lot of money — money wasted when you go through retrenchment or lost productivity enhancement opportunities due to under-staffing.
Ask your Human Resources manager today if they have a signed workforce plan aligned to the needs of the business today and five years from now. If the answer is no, you are likely to face over or understaffing at some point in the future, with massive cost implications that can take your business down.
Memory Nguwi is the Managing Consultant of Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. Phone 481946-48/481950/2900276/2900966 or cell number 077 2356 361 or e-mail: email@example.com or visit our website at www.ipcconsultants.com