AD HOC COST REDUCTON AND CONTINUATION OF SERVICE QUALITY IN GLOBAL HR CONTEXT

Abstract

HR Cost reduction and optimization has really become a challenge with this global Covid 19 pandemic situation. Unexpected cost factors involved with the pandemic has to be overcome by HRM while enabling its work force to give an uninterrupted and quality service as previous to its customers.

The plan of actions which are taken to minimize the cost must have both short term and long term advantages. For an example reducing headcount may help reduce costs in the short term. But it can also leave the remaining employees demotivated and worried for their own positions, in turn lowering productivity and competitiveness which may directly effect to the service quality of the customers.

So what are the global HR methodologies to use for cost optimizing while maintaining the required level of service quality in banking sector?

HRM has an important role to serve in these cost reduction measures and guide work force to designated targets without having quantitative or qualitative loss to the organization. It's important to think through what the right HR cost reduction means are for your organization's particular situation.

Here we are discussing global HR practices used to being more cost efficient without fading the level of service quality of the organization.

 

Hiring freeze

This is a common practice which is often implemented when the economy goes into a downturn. It is important to reevaluate all the open positions and identify those who are capable within the organization. So that those roles can be reopened and filled in a timely manner.

 

Cancel outsourcing and bring the work in-house

Lot of organizations may be paying a premium for the flexibility offered by a third party. If organizational bandwidth is sufficient to do the work with internal resources it could be a win win situation since the business can able to save money and retain the employees. But it is important to consider tenure of any contractual obligations with the third party before canceling the contract otherwise there may be a fee/penalty due to break the contract.

 

Redistribute work internally 

When projects are canceled or delayed, the demand and the workload on the workforce may low. To avoid layoffs and hiring in different areas, organization can redistribute work within the internal employees. For example, if recruiting slows during a particular period, we may be able to use the recruiters' time in other areas of HR. This is same in the other departments too.

 

Eliminate or reduce external training 

Training is important for organizations and employees, since it can build new skills, help with retention and provide the organization with new ideas. Apart from external training, organization may have subject matter experts within the company who can run training sessions to fill the gap. HR can consider reducing the number of external training sessions taken in the given year, but not hiring them all together.

 

Streamline processes

By reviewing existing organizational processes, we may be able to identify areas where efficiencies can be found or running with excess staff.  So freeing up such employees and assign them to another task would save both cost and time in the organization. This prevent the costing associated with recruitments, trainings and development workshops.

 

Monitor and limit overtime and shift payments 

HR team can play an important role in helping the organization to analyze extra working hours by reviewing practices of employees to reduce overtime and shift payments where possible. There may also be features that HR team can enable in their HR software to flag overtime when an employee is scheduled for too many hours. This provides a proactive approach to reduce costs.

You may also identify works that can be temporarily stopped or eliminated if it's no longer needed.

Encourage employees to utilize their leaves

Having employees use their leaves will reduce the organization's debt. While this doesn't provide a cash benefit but it does improve the organization's balance sheet.

Deal with underperforming employees

Offer VRS and early retirement packages to employees who are not meeting organizational expectations can be used as a productive mean of cost savings and it is an added reason to focus on the higher-performing employees.

Reference

Daniel D. (2020) HR under pressure to cut cost.hrdigitaltrends.com. [online] Available from: https://www.hrdigitaltrends.com/story/14417/hr-under-pressure-cut-costs-know-how-protect-what%E2%80%99s-important. [Accessed : 03 June 2021] 

Seow H. (2020) managing HR cost in a global pandemic.twobirds.com/ [online] Available from: https://www.twobirds.com/en/news/articles/2020/singapore/managing-hr-costs-in-a-global-pandemic. [Accessed : 03  June 2021] 

Hopkinson D.(2020) why is HR cost optimization. planday.com[online] Available from: https://www2.planday.com/blog/what-is-hr-cost-optimization/. [Accessed : 03  June 2021]