Any excessive workforce?

The “Any excessive workforce?” card aims at keeping your attention to areas that are getting a little too fat and expose you to organizational decline. Without further ado, here are some rough indications that should provide you with some healthy food for thought:

• Revenue-headcount correlation: Your revenue reflects the demand for your products and services, and it changes from one year (or less) to the next. Your cost structure should be adjusted accordingly to sustain a reasonable level of profitability. No type of expenses is fixed in the long term, and labor costs are no exception.
• Functions that do not add value: This one can be tricky to identify. A good starting point is to review the targets set for each and every employee. If no targets were set for a given employee – consider what targets can be set and reflect on the productivity of such a position. Then consider the objectives of such targets. Are these objectives still relevant?
• Low productivity per person: This one is not about the productivity of any one individual employee. Rather it’s about the collective, average productivity of a given department. Does that make sense? What should be considered as reasonable productivity? If you are way off on that, give it a closer look.
• A “tall” organizational structure: Such a situation may indicate there are too many managerial positions that should either be consolidated or cut. See if this works for you.
• Same Support, Different Departments (SSDD, of the other kind): Too often, different geographies have their own support positions that support the main business processes. Some finance, IT, and HR roles, for example, can often be adjusted to support several geographies from just one of them. I’m trying to keep it as generic as possible, so you should see how it works for you.

The ways to address excessive workforce deserve a dedicated post in and of itself, but layoffs are the least creative way. Other options should be pursued as much as possible (if you are experienced with such alternative solutions, please write to me directly, as I am indexing such alternatives). In any case, the action taken must be limited to specific, isolated areas that grow the excessive headcount. Unrelated business units should not be starved (Santana, Valle & Galan, 2017). Let us keep in mind that we should not seek a maximum level of profitability. Rather, we should seek a reasonable one to keep us healthy, and our productive workforce secured.

Last but not least, there are specific risks to consider when dealing with an excessive workforce:

• You need to make sure that the effectiveness of the currently overstaffed functions is not compromised after adjusting related positions or business units. Specifically, mind quality and lead time.
• Make sure to preserve people’s knowledge.
• Involve the union in the situation and view the options for addressing it.
• Make sure to secure the cash required for such moves.
• Take the morale of the workforce into account. Plan your internal communication and make sure people understand the situation.

Overall, this card may provide you with a good starting point towards an increased productivity. Good luck!

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