Workforce reduction: not necessarily the best option for your business

Posted by: Joel Capperella

Last week, CareerBuilder and USA Today released their Q3 2009 Job Forecast. It surveyed more than 2,600 hiring managers and HR professionals, and found that most respondents — 68 percent — expect staff levels to remain the same in the third quarter. Only 15 percent expect to increase their full time, permanent headcount.

The survey also asked employers to identify the cost containment measures they have employed in the past six months to help them survive during the challenging economy.

Typically, workforce reduction is seen as the most immediate way to achieve cost savings, but a “bare bones” strategy risks project delays, missed deadlines, and lost opportunities. In other words, this could result in a significant negative impact to the business.

Rarely do we see productivity as a trade-off for the cost savings associated with initially reducing headcount. Given the reductions that have occurred in almost every sector, control over a firm’s talent inventory is even more critical.

The ongoing workforce evolution is driven by the need to invest in HR in a way that does not only leverage contingent employees, but recognizes the need of the entire workforce to produce, sell, and deliver goods and services. To maintain productivity and costs with minimal staff levels, HR must compose a workforce that can easily adapt to changing market conditions.

The enhancement of the full time workforce must be more than simply plugging in temporaries where they are needed. Rather, augmentation must be a strategy for driving operational efficiency with the right quality personnel in a fiscally responsible manner. This requires a deeper analysis into what functions are related to this talent.

A firm would be remiss to enforce a workforce reduction without evaluating the entire makeup of labor. A complete evaluation will help ensure productivity when staff levels are low, and prepare for a more cost effective and efficient talent inventory when market conditions change.