Time To Upgrade Talents Within Organisation

The shrinking economy globally has put talent strategies of companies at risk. The deteriorating economic performance is forcing companies to drive aggressive head count reduction. If not planned properly, organizations may easily lose the achievers and will be left with the laggards. Additionally the damage to employee morale and reputation among potential employees can be long lasting.

There are smart ways to do head count reduction that have become inevitable. Employers while planning for headcount reductions need to emphasise talent in cost cutting efforts, strengthen value proposition they offer to current and future employees and position themselves strongly for growth when tide turns in their favour.

Employers can use the tight economic situation to their benefit by looking at many of the company jobs and re-jig them to make it more challenging and interesting for people performing them. From an employee perspective satisfaction in a job arises from the responsibility, autonomy, extent of control and hierarchy level. Head count optimisation provides an opportunity for organizations to break vertical silos and increase the scope of the job horizontally thus improving the probability of engaging key talent in the redesigned jobs.

An integrated steel plant in India successfully used this approach to reduce their headcount by 20,000 employees over a period of three years, when the steel industry was facing pressure on pricing and excess inventory due to lower demand.

This was achieved through cross functional alignment, relooking at the top 20% of high cost activities and eliminating duplication of processes. The greater collaborative approach across various departments helped in fostering better bonding and led to cross fertilization of ideas that resulted in savings for the company and more bonuses for the employees. This initiative by the steel plant was successful because of the efforts made by the company to put in their key talent retention programme in place before the downsizing exercise.

Another area that needs to be tread with caution during the downsizing is training and development programmes. Employees judge their employer not only by the compensation package but by the value they derive from undergoing training and self development at the organization. The training and career development programmes are not only essential to maintain work place morale but also help in employee acquiring new skills that help in improving productivity in the redesigned jobs.


The layoff exercise in any environment is a sensitive issue that needs to be handled with utmost caution. A single wrong move can send signals which can impact organizations in the long run, thus negating all the good work organizations may have done over the years. Companies need to effectively use their performance management system to identify employees who can add value and are critical to the success of the company in the short and long term. Companies need to focus not only on talent requirement that drive the business today but also talent that can take future challenges to the business say, five years down the line. The organization also should take into consideration the fact that fresh talent such as Engineers and MBAs that is easily available during the downturn will continue to be available as the situation improves two years down the line and these can be dispensed with, unless they are a value add to the organization currently. The organization also needs to focus on talent that takes time to develop – for instance good financial auditors, specialised R & D personnel where supply can be a constraint as economy improves. A well driven performance management can minimize if not eliminate the negative cultural impact of downsizing, improve the bottom line, and help identify talented people that the company should try to retrain and retain.

Human resource departments that need to reduce staff in economic scenarios such as the present need to get into the act quickly without worrying too much about external reputational implications of cost-cutting efforts. Packaging the layoff to the external world and to employees within is a task that cannot be taken lightly by the HR managers. Once an organization decides on layoffs, the moves have to be made rapidly with minimum error. The shorter the cycle of layoff and management conveying the completion of the layoff process to remaining employees clearly will help the remaining employees to focus on their current jobs and improve productivity.

Counteracting conflicting tendencies during downsizing needs to be handled creatively. Many organizations provide opportunities for employees to work as suppliers and consultants thus showing the employee that they care for them even during tough economic times.

Cost cutting during a downturn is often a necessary condition to win the current battle and be ready for the future war. Rather than freezing all hiring and employeedevelopment programs, companies should use this period as an opportunity to upgrade talent and better engage existing staff. This implies ploughing back some cost savings from layoffs into carrying process improvements and redesigning jobs so that the remaining employees find the new roles more challenging and fruitful in their long term career plan.

C A.Parthasarathy
General Manager