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Sagar,

You have been given 2 straight forward tasks

The tasks now require you to use your brains, beyond the normal paper work that you have been doing. You said you are here to learn and at the first opportunity to do so, you want to change your job.

The owners have set a target of reducing 25% of corporate staff. They probably know where business is heading and in the tough times they know they have to cut overheads. In that, they are probably right. No hod wants to so that since it brings more pressure in them, in some cases, actually makes them work, brings down moral of the employees and exposes efficiency (or lack thereof). Well, too bad. If the business needs to cut overheads, then corporate salary is the first place to start with as most of the unproductive cost is at corporate administration.

You are asked to compute efficiency of each employee.

So what's the problem ?

Start with each department, get an org chart, check who are wrong there.

Check the work being done

Ask each employee from lowest to highest level, what is the work they are doing, what volume is handled.

You can get enough benchmark for each task from Internet.

Check if same work is being duplicated, if processes are wrong (use common sense). It does not need an MBA to figure out if processes need change.

From this, you will be able to figure out who is working efficiently, who is not and what scope is there for removing people. Brief your management on your progress for each department. If you are doing it wrong, they will tell you. If you actually find that people are already overloaded and your analysis can bring it out, they will accept that and look for other avenues. If they still need jobs cut they will do it anyway and people will simply have to work harder and longer till the economy improves. Lets face it, recession is on and there are few options.

One suggestion, convince your management not to fire anyone till your analysis of all departments are over as it will hamper your work in the next department.

Find out which processes can be streamlined by automation (look at crm, dms, erp as options).

Btw, you may find its the hod that needs to be removed.

I know of a company in USA where during the recession (2007-2008), the board decided to remove all its top managers, and let the next set of managers who were paid much lower, take over. The company survived and is stronger at this time. The new managers were told this is the budget for your department. Reduce your manpower and cost. Some lowered head count, others convinced the entire team to take salary cuts of 25%. If they didn't do it, I am not sure if they would have managed with sharply lower revenues and losses resulting that went on for 4 years. With cost cuts they survived with close to break even.

As for process inefficiencies, I know of a TATA group company that 15 years ago discovered that they had 35 people matching inter department debit notes with inter department credit notes and reconciling them (and god knows how many man hours were spent in having departments made debit notes and the other department make credit noted for the same work). The solution was simple : let the department who has done work for other department make a debit note, get it signed by the receiving department and hand over to accounts to make an entry. The change was logical and common sense. It resulted in reduction of 55 people in accounts.

(Moderators note : I am not naming the company, it was 15 years ago and no one cares since it is not current, and lastly, it's an acknowledged case study and in public domain)

So, Mr suraj, if you want to change your job, by all means do so. Of you thing it's unsafe to work for a company retrenching people, change your job. But, do understand that at times, companies need to make hard decisions and HR has to implement them. Simply because you are given a task that will result on 50 persons losing their job is not the reason to not do that work. Or to feel hurt that they threatened to fire you from the job if you fail.

If you have not done that work before, then it's time to learn something new. If you fail, then at least you tried. Most companies will appreciate the efforts. Unless you got the job projecting that you were capable of doing such an analysis, etc.

Lastly, if you can't do it, and your company management still needs it done, ask them to get in touch with me. My firm does lot of work on profit planning, cost control and efficiency. We can probably do it, albeit, as a professional assignment.

Dear Mr. Sagar,

I agree with the views of Mr. Saswata,

Mr. Sajjad you ideas are also helpful as Mr. Sagar told that it was a mid size mfg family owned business so I don't think they will adopt these facilities in their plant now. Am I right Mr. Sagar?

Many are suggesting to change your job but my view is to face the situation very smartly. What I think that just changing the job is a simple option of running away from the problems. If you can smartly workup this situation, then you will really step forwards quickly towards your growth. I agree its not so easy and its a very big challenge for anybody.

What you will learn by this:

How to face number of persons, people with different minds, opinions, views, how to convince people, facing some litigations and the most important, for handling this situation you have to study and then only you will came to know the deep/internal legal action, tricks etc. This will really help you in your future not frequently. If you can handle labour courts and other litigiations etc.

It might possible some are of the view that keeping your job on delima is not good and you can find other jobs easily but this is the best time of learning and this will definitely take you to the top in term of knowledge, negotiation, litigation knowledge etc.

Regards,

Anurag

Dear Sagar,

Deep regrets. Sorry for the kind of work you are literally forced to do or quit.

What is most disturbing is why cost cutting is always focused on reducing people employed. Without employees no organization can succeed. The moment there is a crisis they chop their labour.

Cost cutting need not be with cutting on manpower. In fact it should start with other areas such as;

1. Inventory - Raw material stock in excess / work in progress and kept in piles without being completed, / finished goods stock left unsold.

2. Plant utility in terms of resources being used well - power, machine output, quality of the job done, machine condition to deliver etc., which can improve productivity

3. Marketing - focus on increasing sales/ or profits / expanding the market with available resources / pruning channel members

& many more, administrative expenses, logistics etc.,

In fact a good job is where the employees are given more responsibilities during crisis. When HR takes the responsibility of role negotiation and involves employees in organizational goals, there can be excellent results.

In my opinion downsizing has to be the last option. When this is the first thing a company wants to do the organization is not professionally managed. Once the job is over you will also be sent out. That is the value they will hold to HR. This work is not a feather to add in your cap. Just quit if it cannot be truly justified.

In case you need help call. 09952419530

Thanks

Nalina.K

HR consultant

Neither you not I know what is actually happening in that company, so,both of us are shooting in the dark. We don't know if they have tried other methods of cost control or profit improvement before asking for 25% reduction in manpower.
I just had a major argument with someone who is implementing cost cutting for his company, asking unions to forgo wage hikes, take some layoff, etc but where the company just spent 6 cr on a work hard play hard conference in Macao.
One good thing I see in this case is that they are reducing corporate staff and not touching manufacturing employees, which is critical. I hope sagar will give us more details

Brilliant Suggestions Saswata and absolutely Bullseye!!!

Sagar - Your dreams have just been answered and now you are wondering how to get out of it. The single most important platform to learn for an HR is when you are required to restructure the organization in a depressed market condition. Are you aware of the amount of knowledge you will gain out of this one single experience? Even if at the end the promoter says get out, you will come out 100 times a better HR professional than what you are now.

You are talking of an opportunity to learn about Employee productivity, team formation, change management, restructuring, conflict management, grievance handling , cost optimization, management interaction, people interaction, exits, employee motivation all in one single experience.

Leaving is an option that is omni present!!! you can LEAVE now and not learn but be happy that you didn't have to face uncomfortable situations or STAY and learn, evolve as a HR professional, face some tough unpleasant situations but come out of it a better HR professional. The Choice, as usual, is yours!!! It always will be....

Cheers

Navneet

Saswata is right. Top Management have their calculations. These are hard times and if the company is running in loss or in thin profit margin, it is right on the part of the company to retrench few staff members to save the Company as a whole.
If 25 people are retrenched today, tomorrow organization might itself sink, resulting in job loss for 500 people.

Thanks everyone,
I'm gonna take this challenge, and definatly will give a try at-least.
Mr. Saswata, production staff has already been reduced and the other problem here is, that all the VP, CEO & CFO are from the owners family/relatives/friends who are getting 2-5 Lac every month.
and I m sure owners not even going to reduce thr salary.
so whats the sense of firing a employee who is drwaing 30-50k/Month.
sagar

Salary for Top Mgmt depends on what value they bring. Of course, top management people can take a cut in their pay, if company is struggling. There have been many instances where top mgmt cut their pay voluntarily. A classic example Vikram Pandit of Citigroup, who took $1 when company's performance was bad.
In a family run enterprise, normally one would expect the top mgmt to make some sacrifices. After all it is their baby. In your case, it is unfortunate that they are unwilling.

Hi, I know this is not connected with the actually query, but since you mentioned Vikram Pandit: note that he had latter regretted to having taken such decision of $1. Ukmitra
Hello Sagar,
I went through all the points discussed.. As first HR of any mfg. co. ( specially family owned), one has to go through this..
First of all.. you need to go through the job profiles of each employee, there are chances that you are not utilizing your resources 100% coz reducing 25% of staff says that many of them are underloaded..
Gather the employee data, their experience and qualification data, their profiles and grade them.
You will need assistance of the directors/ the person who was handling/ hiring people previously.
Nothing is impossible :)


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