How to emerge stronger as a workforce after a crisis[Part 1]

April 9, 2020
Chandrasekhar Pingali

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Your daily top 5 updates in the field of Human Capital Management, consolidated from 50 HR-related publications over 15 countries.

A process to reduce some costs immediately and others permanently (without laying off people).

When you review your cost lines threadbare every month, you can eliminate at least 15% of wastage permanently. Yet, research reveals that only 15% of CEOs do so as a matter of routine!

With the COVID-19 crisis looming large, our company – an SME in Asia- recently reviewed our cost lines threadbare. We managed to temporarily park 22% of costs until normalcy returns; identified 28% that can be further reduced if the situation worsens; and as an added bonus, eliminated 15% of wastage permanently!

In Part 1 of this series, we share with you a step wise process to analyse the major cost lines typical for most enterprises. Viz. people; premises & infrastructure; technology; marketing & sales; travel; entertainment; and telecom.

Step 1
  • Engage leadership team to analyse all cost lines and discuss possible solutions  

Step 2 
  • Focus on cost drivers that represent 80-90% of costs to run the business. 
    1. Use company bank statements, credit card statements all accounting systems
    2. Examine auto debits in detail
    3. Look at payroll and benefits
    4. Examine cost patterns for the last 12 months 
  • Understand which costs are disproportionately growing compared to the revenue lines by business or product. 
    1. Analyse costs vs revenue trajectory 
    2. Ask the question “have the costs grown at the same pace as revenue? Are they higher or lower?” 
  • Review the costs of all support functions in greater depth
    1. Identify support cost silos that exist between businesses/products
    2. Ask the question “can they be hubbed?” 

Step 3
  • Identify immediate costs that can be saved from all of the above. Divide into: 
  1. Stop now 
  2. Stop permanently
  • Set cost reduction targets based on Severity of impact on business ratings – high, medium, low

Step 4
  • Sign off and Communicate the decisions across the team

Step 5 
  • Set up / change process of approvals across the company

Why it works…

In a business as usual scenario most CEOs believe some costs do not exist, or more accurately should not exist, because there are processes and people to manage them, but in reality they do. Here’s a list of typical expense cutting hotspots

  • Technology infrastructure:

Cloud storage, unused licences, storage of archived files, auto debits for tech solutions etc. It’s amazing how these costs can creep without us realizing it. Cut them off ruthlessly! If paid in another currency sometimes just the exchange rates are a big saving. 

  • Technology resources

Take a closer look at all outsourced services, resources from vendor partners, internal resources who can be redeployed for product development or improvements.

  • Telecommunication costs:

Hang on! Technology has actually brought a dramatic reduction in our personal telecom bills. So, have the company’s bills reduced too? Now is the time to cast a critical eye on the details in the bills! Watch out for Data plan creep, mobile usage reimbursements, use of direct calls vs internet calls; review the number of people who need to be given company mobiles.

  • Travel, stay and entertainment

This cost line could represent almost 30% of a company’s costs. They should be zero now during COVID. More importantly, rethink and prepare for new ways of working. Take advantage of the paradigm shift in work culture. Do you really have to travel to meet people or clients or events? Which ones are really essential? Do open up this expense tab and look at policy change for the future. There is potential for a more permanent reduction 

  • Premises

Consolidate premises costs

  1. Evaluate seat utilisation rate (normally ~1.3-1.5 per seat);
  2. Hand over premises not required based on potential new ways of working arrangements; 
  3. Explore the possibility of working in shifts permanently

  • Benefits: 

Many employee benefit policies do not get reviewed once activated.  Review the policies and ROI on benefits. By simply changing the nature of benefits, and withdrawing those that don’t provide any real benefit, it is possible to generate real savings without affecting employee morale. 

  • Marketing and sales

Often the least tampered with of all costs because of the fear of impact on revenue. But, a change in tactic may be more relevant for the moment, cost less and prepare you for the upturn. So, take a peep, don’t be shy, the possibilities may surprise you! 

  • People: 

Trust the assumption that in a downturn people would rather have the safety of a job, than be laid off. Besides, when you are back on the upturn you need to be prepared to go full steam ahead. Some best practices that we have observed in Asia are: 

  1. Stop promotions and increments for 6 months
  2. Reduce pay starting at the top with lower reductions at lower levels
  3. Consider paying 50% of salary for next few months and then ramp up after
  4. If you must lay off people, you still have to bear the costs of notice pay and redundancy. Agree to pay in installments every month. It helps in financial planning.

At a point of crisis all enterprises embark on a cost reconciliation exercise to survive.  However, every crisis changes the way work is done, what is relevant and important, and provides opportunity not merely to survive but thrive!

About Author

Chandrasekhar Pingali,

Chandrasekhar Pingali, Founder, and MD of SolveCube, Singapore, is an established and well-known HR and business leader. SolveCube is an award-winning AI talent marketplace platform for short-term, full-time contingent, permanent and integrated talent solutions. Connect with him on LinkedIn

The Future of Business and Employment Landscape

March 24, 2020
Deepa Chandrasekhar

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Your daily top 5 updates in the field of Human Capital Management, consolidated from 50 HR-related publications over 15 countries.

Technology brought speed and cost efficiency into work life, changing the focus of our attention.

Economic crises drilled into us the importance of agile and prudent management when the going is good.

But, medical emergencies like COVID-19 underscore the plethora of work engagements we have in the market. The highlight of so many conversations has been people costs versus output. For many companies, the COVID-19 crisis has presented an opportunity to change how we work – a way to manage costs without compromising on effectiveness.

It’s natural that those functions that obviously fall on the side of cost rather than revenue are the first to be targeted for cost management considerations. Minimum Full Time Employee (FTE) headcount has always been the easiest way to control cost. But the question is, is that the most efficient way of doing business. A lower headcount doesn’t mean that key business functions or services won’t suffer for it.

In my experience of running primary and secondary healthcare business, the solution is obvious – a combination of FTE, outsourcing and freelancing. They were the norm. In a business as socially integral as healthcare, FTEs provide necessary continuity, consistency, culture and brand building; but freelancers and outsourcing provided continuity, cost efficiency and convenience. Together they form the people strategy for business efficiency.

So having understood the value of FTEs, the real debate for me has been between outsourcing and engaging freelancers. From a cost perspective, outsourcing is often a matter of convenience rather than real savings. Legal compliance, cost of management time and effort, and convenience considerations generally tipped the balance towards outsourcing for me. Outsourcing offers continuity without the cost and hassle of attrition and re-hiring. On the other hand, it entails employing the outsource provider’s ‘person’ so it doesn’t necessarily provide the same flexibility as a freelancer.

Then, at some point, it becomes a challenge to distinguish between an outsourced contractor and an FTE. Simply because of daily proximity in the workplace, and the sense of belonging achieved, managing human expectations of reward and inclusion becomes difficult. It’s one thing to invite the contractor to a team dinner, it’s quite another to deal with the disappointment of not receiving a special holiday or gift granted to an FTE but not a contractor just by virtue of the ‘company’ being on the payroll not the person. And terminating the services of an outsourced consultant group or technical services company can have an impact similar to the retrenchment of your FTE!

Instead, freelancers are independent contractors – entrepreneurs, beholden only to themselves. Though not without its concerns, freelancing permits flexibility and the freedom to choose what you need done, when, and by whom, without commitments or remunerations outside of that job. The advantage of hiring freelancers for those functions where investment can in fact be scaled down is obvious – domain specialists, accountants, legal, finance and HR specialists are not always roles that require permanent resources.

Larger organizations and the healthcare industry have practiced this for so long that there are now systems in place, and processes to contract, manage, govern, and measure effective freelance performance and delivery.

With more and more members of the workforce, from Boomers to Gen Z, opting to contribute to the economy through freelance consulting and flexi-work, either out of choice or necessity, even small enterprises are able to utilize the available skills and talent freely. To harness this, the employment eco-system has intelligent deep technology platforms whose matchmaking abilities go beyond simply listing, allowing even SMEs to access valuable talent in a structured and trusting way.

COVID-19 has shown that working from home no longer needs to be an afterthought option for employees – in fact it has the potential to be of strategic advantage to business. So much so that with a combination of offsite-onsite working, it’s clear that freelance hiring is here to stay.

And let’s face it, the enterprises that have stood the test of time are those who have demonstrated prudence and adaptability in their business strategy. It’s time for Start Ups and SMEs to emulate them, build new ways of working into their business and people strategy, and benefit from the changing employment landscape.

About Author

Deepa Chandrasekhar

Deepa Chandrasekhar has been a health care entrepreneur for over 13 years. She is currently a principle consultant at iCube Consortium, working closely with its e-marketplace platform SolveCubeHR.
Connect with Deepa on LinkedIn

Must know for HR experts operating in Freelance Economy

March 11, 2020
Deepa Chandrasekhar

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Your daily top 5 updates in the field of Human Capital Management, consolidated from 50 HR-related publications over 15 countries.

Statistics show that 30% of all HR experts operate in the freelance economy. And, this percentage will grow to 35% in 5 years. This statistic is important to HR professionals because one of the outcomes of digitalization is a stronger freelance economy.

By reducing cost, effort, and increasing speed, digitalization delivers higher efficiency for routine, repetitive, administrative and even some complex time consuming jobs.Also, technology has a way of taking over to strip tasks down to the core, where then, for an expert to make an impact means having specialized skills. It is fair to say therefore, that digitalization has changed not just how we work, but also what we work on, and, consequently what constitutes desirable skills. The focus of expertise, specialized skills and experience, is on tasks related to core strategy and problem solving at the very human relationship level.

All of HCM may be logically divided into 20 components, many of which require specialized knowledge to be impactful. The fallout of increased digitalization in HR is,that while some expertise and certain skills are necessary to partner a business effectively, specialized knowledge is required in spurts. This challenges not just the need for full time employees (FTE), but also poses the question of whether it is in fact possible to run the HR function with professional HR managers who are jack and master of all trades rolled into one.
Without the justification of enough work for a FTE, it will rest on Freelance Experts (FLE) to fill in the gaps cost effectively. This is then the logical outcome especially fora function like HR given that HR is a direct cost whose perceptible contribution to revenue is not as obvious as may be desired.

More importantly, this statistic is important because the best skills are out there in the open market, available to hire as and when required for only as long as is needed without the obligations that follow full time employment. The freedom of cost agility, with the ability to safely balance the need and want conundrum, is probably the best reason to pay attention to the growing freelance economy.

About Author

Deepa Chandrasekhar

Deepa Chandrasekhar is an entrepreneur and a Principal Consultant with iCube
Consortium Pte. Ltd.
Connect with Deepa on LinkedIn

Can HR tech disintermediate the expert?

January 1, 2020
Runa Agarwal

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Your daily top 5 updates in the field of Human Capital Management, consolidated from 50 HR-related publications over 15 countries.

Human capital management (HCM) is an investment approach to an organization’s talent acquisition strategy that perceives people as assets (human capital) whose current value can be measured and whose future value can be enhanced through investment. 

The prime question here is the translation of human resources into human capital through a sharp investment strategy. In other words, Human Capital is a well-employed human resource that is actively engaged in a meaningful, worthwhile job or role and delivering a desired level of productivity. Many like to talk about these two terms within the purview of a cost center (HR) and profit center (HRM). To me, being in the profession for nearly two decades, the two complement each other, it is the transition process that is the key factor.

Years of research and expertise realized that humans cannot forever be treated as assets but are in actual terms “value adders” or “capital”. Analytics drew show HRM is based on the cost incurred or the “input” and for HCM searches for the value-added or “output”.

Enterprises, in its catch for the BHAG, are always looking to optimize costs and timelines and in the process of this business growth, HR is often sidelined or does not receive the attention it deserves. But recent trends show that enterprises, as they have evolved, started recognizing human resources like capital, and are keen towards its development. It’s at this point technology plays a big role. The Human Resource Capital technology, unlike other HR software’s no more plays the role of a directory, but the real enabler in improving workforce management, acquisition, development and optimization.

About Author

Runa Agarwal

Runa Agarwal, a Senior Practitioner, HR in ICube Consortium Pte. Ltd., has led and executed various HR Digital Transformation Programs with over 20+ years of experience across various industries .

Getting to be Strategic in HR

Sridhar Ganesh

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Your daily top 5 updates in the field of Human Capital Management, consolidated from 50 HR-related publications over 15 countries.

Human Capital Management ( HCM)  has been gaining usage and momentum in recent times – particularly in the Digital HR space. HCM is indeed HR as we know and practice. As we know, HR has traditionally evolved from the role of  Administration in an enterprise to managing various people functions such as recruitment, performance management, career planning ( rather rare in Organisations), compensation administration and training. However, over the last two decades or so the profession has indeed made many big strides and there is a growing sense of specialism in these areas, which is commanding good value for HR professionals. HR professionals are no longer just generalist HR practitioners but are gaining considerable stature and value in becoming “specialists” in these areas. Today an Employee Engagement specialist or an L&D professional is generally hard to find and if you do, they command a considerable premium and often difficult to afford! This development is good news for business as it now has talented professionals to lead and manage these functions well and thus deliver good value to both the employee and the business.

The not so good news though is the reality that often times HR is not seen as strategic and contributing to the strategic goals of the business. They seem to have remained operational in content and delivery. And that is the usual lament amongst business leaders. The big question, therefore,  for HR,  is how to play a strategic role?

In offering a response, let us first understand, the specific connotations of the word “strategy” as is being referred here. To me, strategic would mean making choices that lead to a distinct competitive advantage for the business. In this sense, HR of every business needs to know (and identify), what areas and actions if focused upon on the people side, could take the business to a position of advantage with its competitors. While this exercise needs to be undertaken specific to each business, we can offer or make suggestions of some areas that are generic to all businesses and will add to their competitive advantage. For example, Talent, the quality of people across the business and or specific to levels will be one. In an ever-increasing technology-centered world, skills of AI & ML are commanding a great premium for the reason that they add to a business’s competitive advantage. Another area would be the depth of Leadership pipeline as this would offer business, an ever available set of talent!  Another area that is gaining considerable attention is this whole area of “Culture” – shared behaviors based on shared beliefs! New-age companies such as Netflix or  Google are leveraging this dimension to stay ahead of the competition! As we started with strategy and its meaning to our context, these are the conscious choices that HR  can and must make.

Thus moving the focus from the transaction and the routine to areas or activities that will truly bring competitive advantage to a business will make HR and its leadership more strategic! It is about a mindset more than competence and skill!

About Author

Sridhar Ganesh
MD & CEO, Adrenalin eSystems Limited

Sridhar Ganesh is a seasoned HR professional and a thought leader with vast experience in various facets of HR management, at both operational and strategic levels. His interests are in the areas of Business Strategy, Leadership, and Coaching for Performance.