A recent US survey states, “Hundreds of employees are hired or terminated from organizations every day.”
This continuous hiring/firing cycle can be attributed to various factors, including organizational restructuring, economic uncertainties, inadequate resource planning, and persistently subpar employee performance.
However, frequent hiring and firing can adversely affect employees’ morale and engagement, ultimately impacting productivity and overall performance. Furthermore, the consistent downsizing of the workforce can lead to higher recruitment costs, which can deteriorate the company’s operational efficiency and financial well-being.
Therefore, it is imperative for companies to adopt effective strategies aimed at reducing hiring and firing cycles, thereby enabling them to maintain a competitive edge in the market.
This blog explains how Saviom’s ERM software can help managers reduce frequent hiring/firing cycles and increase business profitability.
Let’s begin:
1. How do frequent hiring/firing cycles affect businesses?
Recruitment or hiring is the procedure for bringing new employees into a company to provide services. In contrast, firing is the involuntary termination of an employee’s work with a company. When these events take place frequently and in an unorganized manner, it results in the hiring/firing cycle.
Frequent hiring/firing implies recruiting expensive resources to fulfill immediate requirements only to terminate them when the demand falls. This can be costly for organizations as they invest a significant amount in advertising, recruiting, training, and onboarding. Thus, it leads to increased overhead costs and affects the bottom line.
Furthermore, it can erode employee morale, leading to unplanned attrition. These discontented employees who leave may spread negative word-of-mouth, jeopardizing the organization’s market reputation and brand image. It, in turn, makes it even more challenging to attract and retain top talent.
Now that we know the consequences, let’s understand the effective steps to lower it.
2. 5 Ways to Reduce the Hiring/firing Cycles in an Organization
Here are five proven ways in which firms can minimize the hiring/firing cycle and enhance profitability.
2.1. Forecast and bridge the capacity vs. demand gap
When resource managers fail to forecast the supply-demand gaps proactively, it leads to last-minute firefighting. Thus, it forces them to hire high-cost resources at short notice or settle for those who don’t match the project demands fully. Therefore, it is crucial for them to gain insight into upcoming projects and their workforce requirements to identify and bridge the skill gaps.
In cases of resource excess, managers can consider bringing forward project timelines or selling additional capacity. Conversely, resource shortages can be addressed through out-rotation and backfill strategies, training programs, or staggered hiring. These resourcing treatments can help fill the capacity-vs-demand gap actively and avoid hiring/firing cycles.
2.2. Create the right mix of permanent and contingent resources
A balanced combination of permanent and contingent resources can be a strategic approach for organizations to reduce the frequency of hiring and firing cycles. Before hiring, resource managers should thoroughly assess the requirements for a given project to determine whether the skill demands are temporary or long-term. Accordingly, they can decide whether to hire permanent staff or contingent workers.
For instance, retail stores can hire contingent sales executives to handle increased customer traffic during festivities. It allows them to manage the demand surge without incurring any additional overhead costs. Moreover, the store manager can identify high-performing individuals and retain them as permanent employees. This approach will keep resourcing costs in check and help eliminate unnecessary hiring/firing cycles.
2.3. Foster shared service delivery model across different departments
Matrix organizations often struggle with a lack of visibility into the enterprise talent pool. This leads to unnecessary hiring of external resources despite the availability within the organization. In the absence of suitable opportunities, these resources are eventually let go, triggering a hiring/firing cycle.
To address this issue, resource managers can establish a centralized database that houses comprehensive information about available resources and their attributes. This enables them to access and schedule resources from different departments or locations within the organization. It empowers them to curb the frequent hiring and firing of employees while fostering a shared service model.
2.4. Manage ramp-up/ramp-down activities effectively
Projects usually go through ramp-up and ramp-down stages. To avoid unmanaged ramp-up situations, managers can foresee the upcoming demands and find suitable employees beforehand. Besides, they can identify the project vacancies and book the resources to be rolled off based on skill requirements to manage ramp-down.
For example, during an IT project’s execution phase, requirements for developers may be higher. To meet this demand, the managers can implement an out-rotation and backfill strategy. Conversely, during the ramp-down stage, managers can identify suitable opportunities for the resources to be rolled off, bring forward project timelines, or initiate training. Applying these measures can help manage ramp-up/ramp-down efficiently and prevent hiring/firing cycles.
2.5. Implement training and upskilling programs
Due to rapid technological advancements, the competencies of experienced employees may become obsolete and no longer relevant to projects. This can lead companies to consider termination. Instead of resorting to such measures, organizations can invest in relevant training/upskilling initiatives to retain their workforce.
For this, resource managers should create tailored training initiatives, such as Individual Development Program (IDP), cross-skilling, seminars, workshops, sponsoring certification courses, etc. This can help employees diversify their portfolios, enhance job performance, and even qualify for higher-level positions. Therefore, it reduces the necessity for employee terminations or new hiring.
Now that we know the strategies to prevent hiring/firing cycles let’s look at how resource management software can help.
3. How can a Modern Resource Management Tool Help?
Saviom’s resource management software assists in lowering the hiring/firing cycle of a firm, reducing unnecessary cost escalations.
Here’s how-
The software provides enterprise-wide visibility of all the employees and their attributes, such as skills, competencies, locations, schedules, etc. This ensures that the right resources with the right competencies are selected for the projects. It also provides forecasting and capacity planning functionality, which helps managers identify the demand gap and take resourcing measures accordingly.
Moreover, the tool provides real-time reports such as people-on-the-bench and project vacancies. These reports allow firms to manage the bench effectively by promptly assigning employees to suitable vacancies. As a result, it improves the resource’s billability and generates revenue for the firm, decreasing the chances of firing. Further, the skills matrix allows firms to facilitate training and formulate a backup strategy for critical positions.
4. The Bottom Line
Efficiently managing and maximizing the potential of the talent pool is crucial for the success of any organization, as resources play a pivotal role. To reduce the need for frequent hiring and firing, businesses should follow the mentioned steps and leverage all the employees and their attributes.
This approach will help retain valuable employees and ultimately contribute to achieving the company’s objectives, leading to enhanced financial performance.
So, are you ready to take the essential steps and reduce the hiring/firing cycle?
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