A recent US survey states, “Hundreds of employees are hired or terminated from firms every day.”
This is attributed to various reasons, such as organizational restructuring, economic uncertainties, improper resource planning, consistent low employee performance, etc. However, frequent hiring/firing can negatively impact employee morale and engagement, affecting productivity and performance.
Further, consistent downsizing will increase recruitment costs, adversely impacting the firm’s operational efficiency and financial health. Thus, firms need to implement effective ways by they can minimize the hiring/firing cycle and maintain a competitive edge in the market.
This blog explains how Saviom’s resource management solution can help managers implement efficient ways to reduce frequent hiring/firing cycles.
Let’s begin:
Consequences of hiring/firing cycle on businesses
Hiring is the process of recruiting employees to provide services for a company. In contrast, firing is the termination of workers that fail to deliver these services adequately. When this process is repeated consistently, it leads to hiring/firing cycles.
Improper resource planning and lack of foresight into resource demand results in wrongful hiring. This can negatively impact the project’s progress leading to compromised quality and schedule overruns. As a result, it will affect the firm’s reputation in the market, making it challenging to attract and recruit top talent.
Furthermore, this poses severe financial risks as companies are forced to hire high-cost resources at the last minute and terminate them after a short period. It increases overhead costs and adds to the bottom line negatively. Besides, firms spend significant revenue on recruiting, onboarding, and training their employees, which is wasted after their termination.
In addition, frequent hiring/firing and layoffs can cause low morale among existing employees, resulting in unplanned attrition. For instance, if an audit team of ten internal auditors is unexpectedly reduced to five due to the sudden termination of employees. This will cause disengagement between employees and lowers their performance, hampering projects. As a result, it will lead to client dissatisfaction, thereby decreasing the brand’s reputation.
Now that we know the consequences let’s read about the effective steps you can implement to lower it.
5 ways to reduce the hiring/firing cycles in an organization
Here are five proven ways in which firms can minimize the hiring/firing cycle and enhance profitability.
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Foresee and bridge the capacity vs. demand gap
When resource managers don’t get sufficient lead time to identify competent employees before the project’s onset, it triggers last-minute firefighting for competent resources and increases hiring costs. Thus, they need to attain foresight into pipeline projects and analyze the gap between the current capacity against the demand.
This will help them identify excess or shortage of resources and implement course corrective measures to bridge the gap. Firstly, if there is an excess of resources, managers can bring forward project timelines, or sell additional capacity, etc. On the contrary, a shortfall of resources can be mitigated by implementing out rotation or backfill strategies or conducting training programs. Further, it will enable them to conduct planned recruitment, eliminating the hassle of last-minute hiring.
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Create a balanced pool of permanent and contingent workforce
The judicious mix of permanent and contingent resources can help organizations prevent last-minute firefighting and reduce hiring/firing cycles. Before hiring the workforce, resource managers can analyze the skill requirement for a project. This will help them determine if the skill demand is a short-term or long-term requirement.
Depending on that, they can hire a permanent or a contingent workforce. For example, a law firm receives a short-term case like a jewellery theft. Here, legal managers can hire contractual lawyers to settle it within the stipulated time and budget. However, firms can recruit permanent attorneys for long-term cases like- land disputes between two parties. This will keep resourcing costs in check and helps eliminate unnecessary hiring/firing cycles.
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Foster shared service delivery model across matrix boundaries
The matrix organizational structure enabled numerous firms to leverage the shared service model and control overhead costs. However, it can lead to silos in information due to a lack of proper visibility into the resource pool. Therefore, managers might hire resources from external channels to fulfill the project demand, even if they already have a similarly skilled employee within the firm.
To prevent this, resource managers can get a centralized database where they can get all the information about resources and their attributes. This enables them to schedule the same resource from another department or location. As a result, they can control frequent hiring/firing by developing a shared service model within matrix boundaries.
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Ensure effective bench management
Due to a sudden ramp-down in projects and a lack of foresight into future demand, resources will end up on the bench for a long time. For example, during the execution of a web-development project, an IT firm may require many developers to complete the project. However, once the project reaches the testing phase, there is a massive ramp-down, and the developers end up on the bench.
These resources are not profitable as they do not generate revenue and may eventually be let go of by the firm. Thus, managers should take measures proactively to reduce the bench size. For this, managers can foresee resources that will end up on the bench and assign suitable work based on their skills. Alternatively, partially skilled employees can be provided shadowing opportunities to upskill, improving billability.
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Facilitate training and upskilling programs
With the rapid development of new technologies such as AI, ML, IoT, etc., the skills of seasoned employees may become obsolete and no longer helpful for the project. In these circumstances, companies will resort to bulk-firing. Instead of that, organizations can invest in appropriate training and upskilling programs to retain their employees.
Resource managers should proactively identify skill gaps and facilitate training and development activities for existing employees. For example, they can organize career-building opportunities, upskilling programs, on-the-job training, webinars, conferences, etc. As a result, they will be able to improve their current job performance or even qualify for higher roles, reducing the chances of firing.
Now that we know the ways let’s look at how resource management software can help.
How can an advanced resource management tool help?
Resource management software assists in lowering the hiring/firing cycle of a firm, reducing unnecessary cost escalations.
Here’s how-
The resource management tool provides enterprise-wide visibility of all the employees and their attributes, such as skills, competencies, locations, schedules, etc. This ensures that the right resources with the right skills are chosen for the projects.
The tool also helps in providing real-time reports like forecast vs. actual, capacity vs. demand, etc. With the help of these, managers can understand and identify the demand gap, etc. Accordingly, they can implement measures ahead of time, leveraging cost-effective global resources, thereby reducing recruitment costs.
Additionally, it provides people-on-the-bench and project vacancy reports that allow the team leads to manage the bench effectively by promptly assigning suitable tasks to the workforce before they hit the bench. As a result, it improves the resource’s billability and by generating revenue for the firm, decreasing the chances of firing.
The Bottom Line
Resources are the success driver for every organization. Thus, the onus is on the firms to manage their talent pool efficiently and utilize them to their fullest potential. By implementing the above steps coupled with the right resource management software, companies will be able to lower the frequency of continuous hiring and firing cycle. This will ensure that top employees are retained, and business goals are achieved, thereby improving the company’s bottom line.
So, are you ready to take the necessary steps and reduce the hiring/firing cycle?
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