hr team presentation cityu mba (final)
DESCRIPTION
HR Costs OptimizationTRANSCRIPT
Team presentation
HR costs optimization
Iordanka Nikolova Director Clinical Operations at QuintilesLatinka Pernicheva Integration Manager at EnelPlamen Petrov Business Analyst at IBMDessislava Tsenova Operations Lead at IBM (excused for today)Liliana Velkova Maternity Leave
City University of SeattleJanuary 24, 2010
Speakers: Plamen
IntroductionLilyAlternatives overview
DanyAlternatives evaluation
LatyConclusion &
Recommendations
company overview*
Company “Restart-your-PC” Ltd operates in Bulgaria and delivers CRM services to a small customer base of US clients.
Currently “Restart-your-PC” Ltd has a headcount of 300 FTE.
* fictional company with real-life problems
Problem definition & justification
Problem definition: - Excessive HR costs are driving profits down
Internal factors- Resource utilization (varies around 60 %)- Effectiveness (work overlaps)- Efficiency (tools performance)
External factors - Economic crisis (customers are couscous on new signings) - Competition (price pressure) - Demographics (aging workforce)
List of Alternative Courses of Action
Temporary lay off Reducing working hours Reduction of salaries Decrease in rewards and benefits Reduction of budget for T&D Termination
Evaluation of Alternatives – criteria
Potential benefits
Risks
Speed of savings
Evaluation of Alternatives – assessment matrix
Potential benefits
Risks Speed of savings
TOTAL SCORE
Nr criteria Assessment matrix
weight 4
0 %
weight 3
0 %
weight 3
0 %
100%
Alternative
1 Temporary lay off2 Reducing working hours3 Reduction of salaries4 Decrease in rewards and benefits5 Reduction of budget for training and development6 Termination
weight 4
0 %
weight 3
0 %
weight 3
0 %
100%
Evaluation of Alternatives: Temporary lay offs
Potential benefits:- Significant labor cost reductions;- Keeping the employees
Risks:- Risk of losing the employees/Higher in case of highly
skilled employees- Delays in projects’/tasks’ delivery
Speed of savings: - High
Evaluation of Alternatives: Reduced working hours/week*
Potential benefits:- Salaries adjustments to reflect the reduced working time =
proportional labor costs savings - Increased productivity- Improved work-life balance- Could be selective depending on the volume of work
Risks:- Delays in projects’ completion- Decrease in customer satisfaction- Work overload- Turnover
Speed of savings:- Average
*reduced working week = lay off strategy
Evaluation of Alternatives: Reduction of Salaries
Potential benefits:- Significant portion of the HR-budget – labor cost
savings;- Freeze of salary form
Risks:- De-motivation of the employees- Decrease in the productivity- Turnover
Speed of savings:- Average
Evaluation of Alternatives: Decrease in Rewards & Benefits budget
Potential benefits:- Could be significant portion of the HR-budget - significant cost
savings- No reduction in salaries
Risks:- De-motivation of the employees, if all are taken out- Decrease in the productivity- Turnover
Speed of savings:
- Average/High
Evaluation of Alternatives: Reduction of budget for training & development
Potential benefits:- Could be significant portion of the HR-budget - significant
cost savings- No reduction in salaries & benefits
Risks:- Issue with qualification of employees- Quality issues- De-motivation - Turnover
Speed of savings: - Average/High
Evaluation of Alternatives: Terminations
Potential benefits:- Significant cost savings- Could be selective – implemented in departments with reduced
volume of work Risks:
- Delays in projects’ completion- Decrease in customer satisfaction- De-motivation of employees, who stay- Turnover- High cost for training and on-boarding new people
Speed of savings:
- High
Evaluation of Alternatives – assessment matrix verbatim
Speed of savings (the higher the speed - the higher the score, max 30 %)Speed of savings (the higher the speed - the higher the score, max 30 %)
Potential benefits
Risks Speed of savings
TOTAL SCORE
1 Temporary lay off 25% 25% 26% 76%2 Reducing working hours 30% 10% 30% 70%3 Reduction of salaries 25% 15% 30% 70%4 Decrease in rewards and benefits 20% 25% 28% 73%5 Reduction of budget for training and development 25% 10% 25% 60%6 Termination 15% 5% 25% 45%
* Potential Benefits (the higher the potential benefits - the higher the score, max 40 %)** Risks (the higher the risks - the lower the score, max 30 %)*** Speed of savings (the higher the speed - the higher the score, max 30 %)
Nr
Assessment matrix
Alternativecriteria
Evaluation of Alternatives – overall standings
Speed of savings (the higher the speed - the higher the score, max 30 %)Speed of savings (the higher the speed - the higher the score, max 30 %)
0%
10%
20%
30%
40%
50%
60%
70%
80%
Temporary layoff
Reducingworking hours
Reduction ofsalaries
Decrease inrewards and
benefits
Reduction ofbudget for
training anddevelopment
Termination
Att
rac
tiv
en
es
s
Potential benefits Risks Speed of savings
Recommendation & Conclusion
Implementation roadmap
Assess feasibility and applicability of cost reduction alternatives versus
external and internal factors
Align cost reduction practices with cost reduction stage of the
company prior to adopt them
Anticipate and handle aftereffects on survivors/people who stay at
work
Establish open communication channels pre and post implementation
of selected strategies
Recommendation & Conclusion
Keys to success
Responsible cost reduction: cut the cost, keep the
quality
Be prepared: ensure workforce flexibility & have
contingency plans
Build and maintain motivation and commitment
Respect the people, be honest and deliver on promises
BACK UP slide 1
Speed of savings (the higher the speed - the higher the score, max 30 %)Speed of savings (the higher the speed - the higher the score, max 30 %)
* Potential Benefits (the higher the potential benefits - the higher the score, max 40 %)
Potential benefits
0% 5% 10% 15% 20% 25% 30% 35%
Temporary lay off
Reducing working hours
Reduction of salaries
Decrease in rewards and benefits
Reduction of budget for training and development
Termination
BACK UP slide 2
Speed of savings (the higher the speed - the higher the score, max 30 %)Speed of savings (the higher the speed - the higher the score, max 30 %)
** Risks (the higher the risks - the lower the score, max 30 %)
Risks
0% 5% 10% 15% 20% 25% 30%
Temporary lay off
Reducing working hours
Reduction of salaries
Decrease in rewards and benefits
Reduction of budget for training and development
Termination
BACK UP slide 3
Speed of savings (the higher the speed - the higher the score, max 30 %)Speed of savings (the higher the speed - the higher the score, max 30 %)
*** Speed of savings (the higher the speed - the higher the score, max 30 %)
Speed of savings
22% 23% 24% 25% 26% 27% 28% 29% 30% 31%
Temporary lay off
Reducing working hours
Reduction of salaries
Decrease in rewards and benefits
Reduction of budget for training and development
Termination
References
1. Anthony, W. P., Perrewe, P. L., & Kacmar, K. M. (2006). Human resource management: A strategic approach (5th ed.). Orlando, FL: Dryden.
2. Gandolfi, F. (2008). Cost Reductions, Downsizing-related Layoffs, and HR Practices. SAM Advanced Management Journal (07497075), 73(3), 52-58.