Let’s face it: it’s impossible to turn workforce reduction into a pleasant experience for a company and its employees. Even though you can’t change the events that force you to reduce the workforce, you still can choose smart workforce reduction strategies to sustain your employer brand and cause minimal stress to employees. In this guide, we gathered five simple and budget-friendly staff reduction strategies to try and extra tips to save workforce costs.
The concept of rightsizing is straightforward. It’s an approach to keeping just the right number of employees: in-house staff, contractors, freelancers, non-essential workers, etc. Moreover, rightsizing implies accumulating the proper headcount and the right skill set to cover the organization’s business needs.
In the context of workforce reduction, rightsizing can’t be used as a quick fix. It’s a gradual process that involves thorough workforce planning, the decision on upskilling and reskilling, natural attrition, and casual layoffs of underperformers.
Ideally, rightsizing must be implemented through strategic workforce planning. With strategic workforce planning tools, HR managers can simulate workforce scenarios, mitigate risks, forecast accurate headcount, optimize workforce structure, and more.
Read more about the concept of rightsizing, its benefits, and best practices in our guide to rightsizing.
2. Hiring freeze
During uncertain times like pandemics, hiring new people is a luxury. That’s why a hiring freeze, or simply put, temporary hiring suspension, could be a lifesaver.
A hiring freeze was a popular workforce reduction tactic during the COVID-19 outbreak. For example, in March 2020, the number of job postings in the US decreased by 24% compared to the same period in 2019. To survive through turbulent times, companies froze hiring non-essential workers and non-priority positions.
This method has its benefits. First, a hiring freeze doesn’t evoke so much negativity as layoffs and furloughs. Second, this staff reduction strategy doesn’t hurt your employer brand in a way that other harsh methods do. Finally, a hiring freeze allows HR managers to re-evaluate their hiring strategy to rightsize their organization and upskill current employees to fill the positions with internal talents.
3. Reskilling and upskilling
“The future is closer than you think. You can pay attention now or watch the transformation happen right in front of your eyes” – Nicky Verd, Disrupt Yourself Or Be Disrupted
59% of L&D professionals surveyed for LinkedIn’s Workplace Learning Report claim that reskilling and upskilling are their top priorities. This trend gained traction since the pandemic hit as a response to snowballing changes in economics and labor conditions.
Reskilling and upskilling are healthy alternatives to layoffs as you can keep your employees, retain them with learning and development initiatives, and still fulfill your business goals. Just like with rightsizing, upskilling and reskilling require a long-term commitment. You don’t get quick results off-hand. But when an unexpected crisis hits, you’ll be able to keep your business afloat and retain the key talents by introducing them to new roles and responsibilities.
If layoffs are inevitable, try temporary layoffs to let go of your workforce for a specific time. Each company specifies its terms of temporary layoffs. For example, you can provide full pay, half-pay, or no pay at all. As a rule, employers suspend employee benefits and bonuses during a temporary layoff as well.
A general rule while temporarily laying employees off is consistent and clear communication. For example, a timely notice with employee guidelines and the exact date when you’re going to bring an employee back to work significantly reduces speculations and employee uncertainty. Also, it makes sense to specify possible risks like an eventual layoff (if it’s possible), contract termination, redundancy, etc.
5. Reduction of non-essential staff
Do you remember those good old times before COVID, when you had a chance to get together at the office on a Friday night, enjoy some pizza, play table games, and laugh? What a luxury of personal communication it was. Yet such activities would involve staff like event managers and office managers to plan parties and organize every step.
In a new reality, keeping people employed to organize offline events is surreal. Therefore, laying off non-essential staff is an option. Suppose you want to follow a healthier approach to letting off your non-essential workers. In that case, you could consider options like transferring to a new role, rotation among departments and branches, or combining responsibilities.
Other ways to save costs on the workforce
If you believe that layoffs and workforce reduction is not an option, then you can try out these simple techniques to save HR costs:
- Outsource some functions. Believe it or not, but it makes sense to outsource some business functions like office management. Instead of keeping a full-time office manager (especially during quarantine when everyone’s working from home), you could outsource the service and keep your administrative tasks in order. However, outsourcing companies must keep their margins high, so check the provider’s value for money in advance.
- Improve productivity. You can track your employees’ productivity to find bottlenecks and room for improvement with time tracking and productivity software. If you find out that some tasks can be done faster, you may consider workforce redundancy and distributing tasks among the rest of the team. Or, you could automate routine tasks that require little human participation.
- Combine responsibilities. Some responsibilities don’t require a dedicated job role. For example, UI/UX designers could also create simple illustrations, so you don’t hire an extra specialist.
- Lower your job requirements. The savvier professionals you require in your job postings, the higher their salary and benefits expectations. Some companies take advantage of this approach: hiring junior or middle-level specialists and providing them with guidelines and quality benchmarks. As a result, businesses kill two birds with one stone: save money on a salary fund and get a quality outcome.
No matter what kind of events push you to let people off, it’s always bitter. Besides, layoffs provide a short-term advantage, significantly deteriorating employee engagement and the company’s profits. That’s why long-term workforce transformation strategies like rightsizing, reskilling, and upskilling are detrimental to a thriving and sustainable business.
However, when you’re forced to reduce the workforce, you must act quickly. With smart workforce reduction strategies like temporary layoffs, furloughs, and reduction of non-essential staff, you can avoid a pessimistic scenario.
Or, you can go the extra mile and implement strategic workforce planning to assess your current workforce, detect skill gaps, create an action plan for unforeseen events, and more. Check out our smartPlan solution for that, or contact our team, and we’ll provide you with a free demo.