Optimization of headcount: types, goals, activities, procedures

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Employees in every company need to have the right skills and abilities to get the job done. In order for the activity of the entire enterprise to be efficient and profitable, management must take care of optimizing the number of personnel. The company should employ such a number of citizens, which is necessary for the optimal functioning of the enterprise. Therefore, it is not uncommon, after careful analysis, to find out the need for dismissal, reduction, transfer or hiring of employees. Optimization can be performed by the direct management of the company or representatives of third-party organizations specializing in this event.

Optimization concept

Optimization of the number of personnel in the enterprise is the process of determining the number of employees necessary for the efficient and optimal functioning of the company. It is under such conditions that one can expect that with minimal costs for the remuneration of workers there will beto ensure the excellent work of the company.

Optimizing the structure and number of staff allows you to determine the best ratio of labor costs with the efficiency of specialists. The management of different companies may use different methods to implement this process, but the result is usually a change in the number of employees in the firm. It is allowed to leave the number of hired specialists unchanged, but at the same time, transfers are made between different structural units.

Process Features

Any employer should be aware of some of the nuances that make headcount optimization successful:

• most often, after completing this process, it is required to make certain changes in the staffing of the company;
• often management has to completely change the main aspects of the functioning of the enterprise;
• in large companies, optimization is carried out by direct employees of the company with the necessary education and knowledge;
• small companies outsource the procedure.

It is through this process that firms can determine how many workers are required for the company to generate high profits with minimal labor costs.

What goals are being achieved?

The headcount optimization goals are as follows:

• reducing labor costs for the business ownerhired specialists;
• upgrading the skills of employees, as they only perform tasks that match their skills, education and qualifications;
• getting rid of employees who do not bring any benefit to the company, and in almost every enterprise there are such inefficient employees who do not want to improve their performance and are not interested in the development of the enterprise;
• improvement of the organizational structure of the company, which ensures ease of management of all employees of the company.

While a well-organized process can indeed achieve many meaningful goals, it is important to entrust the procedure only to experienced professionals.

Consequences of illiterate optimization

If the optimization of the headcount is not correctly performed, this can lead to negative consequences for the enterprise. The management will not be able to see any benefits of the process, and this may also lead to a decrease in the profit from the activity.

If employees who are actually important and necessary for the operation of the enterprise are dismissed or reduced, this will cause a loss, a deterioration in the image of the company or the dismissal of other employees of the company. Therefore, the procedure should be carried out only by experienced specialists who will first carefully analyze all the employees of the company.

When is the procedure required?

Measures to optimize the headcountmay be different. They are selected depending on the reason for the process. The process is most often required in the following situations:

• company spends too much to pay a large number of employees, but the profit from operations is considered low;
• certain adjustments are made to the corporate culture of the enterprise, and some employees who are conservatives cannot change the rules of their work, which leads to a decrease in the efficiency of their activities, and this becomes the reason for the need to look for more loyal and successful specialists;
• different technologies or equipment are being introduced into the production process with which existing specialists have not previously worked, so there is a possibility that they simply will not be able to cope with new tasks;
• due to low profits, the management of the company may decide to stop working in any field of activity, therefore, the need for the services of some specialists ceases, which leads to a reduction in positions or staff.

The main goal of this process is to reduce the cost of wages for employees and increase profits from the activities of the enterprise. But in the process of optimizing the number of personnel in the enterprise, it is necessary to take into account the reasons for its implementation.

Process forms

There are different forms and types of headcount optimization. They are selected depending on the reason for the implementation of the process andfeatures of the change in the number of employees. The following forms of procedure are selected:

• reducing the amount of labor costs of employees;
• search for new employees with high qualifications, experience and other necessary skills;
• implementation of various activities, the main purpose of which is to increase the qualifications of existing employees or use motivation to improve performance.

Depending on the available form, the best methods are selected.

What methods are used to optimize headcount?

To carry out this process, the management of the enterprise can use different methods. As a rule, they resort to such methods:

• dismissal of employees (possible reduction, as well as dismissal of their own free will or on the basis of a special agreement of the parties);
• removal from the company of individual units that do not make a profit;
• employee leasing, outsourcing or outstaffing.

The choice of methods for optimizing the number of personnel depends on the reasons for the implementation of the process, as well as the goals that must be achieved by the management of the enterprise. Next, consider each process in more detail.

What effective interventions are used?

To optimize the number of personnel, various methods are increasingly being used, which are highly effective and novel for employers. These include:

• Outstaffing. It is represented by a process during which employees are taken out of the company. They can be registered with another firm, performing the same tasks.
• Outsourcing. It implies the withdrawal of the direct work process from the work of the company. This leads to a reduction in the company's costs, as well as a decrease in the number of employees.
• Employee leasing. He assumes that the company uses the services of an employee who is not officially registered. Such specialists are offered by special leasing companies on the basis of a specific agreement. During a certain period of time, the management of the organization evaluates the abilities and capabilities of a specialist. If the cooperation is successful, then an indefinite employment contract is concluded.

In Russia, the above methods of optimizing the number of personnel in an organization are used quite rarely, but they are effectively used in Western countries, as they allow you to achieve your goals with minimal costs and efforts on the part of the owners of the enterprise.

Retrenchment policy

A manager who plans to optimize must study certain recommendations of specialists, for which he selects the appropriate professional literature. The optimization of the headcount is almost always associated with the need to reduce the number of employees in the company. This may be due to a change in direction, the introduction of new equipment, or other factors.

To reduce the quantityworkers can be used in different ways:

• dismissing citizens by drafting a peace agreement, through which employees can expect to receive good compensation;
• if it is required to stop cooperation with employees who do not cope with their main tasks, therefore their actions lead to poor results in the functioning of the company, then certification is carried out, so if it turns out from the results of this process that the citizen really does not have the necessary skills and knowledge, then he is dismissed due to inconsistency with his position;
• reduction of staff or position, but the procedure must be carried out based on the requirements of the law, therefore, all employees with whom contracts will be terminated are notified of the planned process two months in advance, and some persons also have a preferential right to remain with the firm;
• dismissal of employees who regularly violate labor discipline, since under such conditions they do not bring any profit to the company, therefore, they can be dismissed as part of disciplinary action.

It is the need to stop cooperating with hired specialists while optimizing the headcount rate that leads to the fact that employees have a negative attitude towards this process.

Reasons for having unnecessary employees in a company

Optimizing the number of staff is almost always associated with the need to terminate employment agreementswith different employees. They may not be up to the task or may not be able to work in another field of activity. Identifying such specialists is quite simple, but it is important to know where exactly they come from in the company. The reasons for the appearance of extra workers that do not bring any profit to the company include:

• if the company updates equipment and technologies, then many employees simply cannot cope with these items, and usually this problem occurs in people after 45 years;
• the company uses poorly written and ill-conceived job descriptions, so many employees do not understand what actions are included in their duties;
• the whole office is not divided into any zones and departments, so all employees are in one large room, performing various functions;
• the head of the company is a newcomer to the business, therefore, during the opening of the enterprise, he did not form a competent organizational structure;
• there is no personnel planning in the company, so employees are hired spontaneously, and this usually refers to enterprises where people invite their relatives or friends to work;
• the company does not have a clear division of powers between all employees of the company;
• in each branch, the chief manager can independently perform functional services, which often leads to illiterate work organization of employees;
• a standard employment contract is drawn up with workers who have to perform temporary work;
• inthe company receives new equipment that needs new employees, and past specialists remain as assistants, although they do not actually bring any benefit to the company.

In order not to face the need to lay off employees in the future, entrepreneurs must take a responsible approach to the selection of employees. For seasonal or one-time work, it is desirable to draw up fixed-term contracts.

How are extra employees identified?

Before optimizing the headcount, it is necessary to establish the reasons for its implementation, as well as choose the best methods and forms. Typically, the procedure is required when a large number of employees are identified who do not bring any benefit to the company. You can define them in the following ways:

• a personnel audit is being conducted to determine the structure of employees by position, age and other criteria;
• compares the growth rate of labor costs with the growth rate of profit from the company's activities;
• estimate the number of employees in competing firms.

Before laying off or laying off workers, you should evaluate whether this process will bring a positive result for the operation of the enterprise.

How is the process done?

If the head of the enterprise realizes the need to optimize employees, then he can perform the process on his own or turn to professionals. If the classic approach to this event is chosen, then the following methods are performed:

• the director of the company determines the promising directions for the development of the company, as well as the goals that must be achieved over a certain period of time;
• forms and methods of future optimization are selected;
• the selected procedure is being implemented, for which new specialists can be hired, as well as current employees can be fired or reduced;
• all processes implemented in the company are being reviewed, as the cause of losses can be not only employees who do not have the required level of qualification, but also other nuances of the company's activities;
• drawing up a new staffing table;
• new job descriptions or other documents are introduced, on the basis of which specialists work.

If a company uses layoffs to reduce the number of employees, then the employer must prepare for significant financial losses, as it is necessary to pay severance pay to the laid-off employees.

Often, even budgetary institutions receive an order to optimize the number of staff. This is usually due to the low efficiency of such an organization.

Recommendations for employers

If the head of the enterprise decides to use optimization, then it is advisable to take into account the following tips:

• it is necessary to find an individual approach to the dismissal of each employee;
• employer must prepare for employee dissatisfaction;
• it is desirable to use various incentives that allow citizens to quit on their own or by compilingagreement of the parties;
• if necessary, part-time employment is used;
• if an employee has good experience, but does not cope well with new tasks, then it is advisable to send him to advanced training, and not immediately force him to quit.

If, as part of the optimization, employees are dismissed illegally, they can go to court to be reinstated and receive moral damages from the director.

Conclusion

Restructuring and optimizing the number of personnel in an enterprise are complex processes that can be implemented in various forms and types. Their main goal is to minimize labor costs for employees. They may consist of hiring or firing different workers.

The procedure can be performed by employees of the company or by specialists from outside organizations. If it is planned to dismiss specialists, then it is important to carry out this process taking into account the requirements of the law so that such a decision of the employer cannot be challenged.