5 Best Practices to Reduce Hire/Fire Cycles Using Resource Management Software
According to a recent report by the United States Bureau of Labor, there has been a significant increase in the hire/fire cycle due to the adverse effects of the pandemic.
Moreover, the numbers skyrocketed after the pandemic as global economic growth slowed due to reasons such as recessionary trends, energy crisis in European countries, etc.
This article discusses how value-driven resource management software can help you minimize hire/fire cycles in the organization. But first, let’s understand how it jeopardizes a business.
- What is the impact of frequent hire/fire cycles on a business?
Organizations spend huge amounts of money recruiting suitable candidates, building their skillsand pay ongoing salaries, which are wasted once they fire them.
Additionally, frequent hire/fire cycles can affect an organization’s reputation in the job market, making it difficult to attract and retain top talent. It also reduces the productivity and morale of existing employees, leading to unplanned attrition.
All this has a negative impact on the working environment. It also affects the quality of deliverables, leading to customer dissatisfaction and loss of business.
Now you know the consequences of frequently hiring and firing resources. Let’s see what contributes to it.
1.1 Factors that influence the hire/fire cycle
Hiring and firing of resources leads to increased overhead, loss of business profitability, and loss of reputation in the marketplace. However, there are potential internal and external reasons that influence these activities,
Internal factors such as the organizational framework and policies such as laying off resources to meet annual turnover targets play a critical role in the practice of hire-to-layoff. Additionally, factors such as inadequate resource planning, extended absences, and unethical behavior also lead to hire/fire cycles.
For example, due to poor planning and capacity estimation, managers hire more resources than necessary. Excess resources spend their time on non-billable activities or sit idle on the bench, adding more to the company’s bottom line. After a period of time, organizations should lay off these resources to reduce their impact on profitability.
Additionally, external factors such as contractual issues, economic crises, unpredictable incidents, etc., can increase hire/fire cycles.
Knowing all these factors, let’s understand how to mitigate them with the help of an asset management solution.
- 5 Ways Resource Management Software Helps Reduce Hire/Fire Cycles
here’s how Saviom’s robust resource management software allows companies to minimize the rate of hire/fire cycle:
2.1 Provides forecast of capacity gap to demand
Effective resource capacity planning helps forecast resource demand in pipeline opportunities. With a robust resource management tool, managers can forecast and estimate the precise number of resources required for future projects. This way they can identify excess/lack of resources well in advance and take resourcing action.
If there is a lack of resources, they can initiate hiring or implement training/development, external rotation, shadowing, select a back-up resource that partially meets the requirement, etc. If there is excess capacity, they can advance pipeline projects, sell the resource’s time at a reduced billing rate, and so on. Thus, forecasting and gap assessment prevents last-minute hires and the resulting cost increases.
2.2 Help train the right mix of full-time and emergency resources
Organizations manage different types of projects with varying complexities, resource requirements and timelines (short/medium/long term). Due to a lack of foresight in projects, managers often fail to understand the exact requirement. As a result, they might mistakenly hire a permanent employee for a short-term goal and a casual workforce for long-term needs.
Using resource management tools, managers can analyze whether project requirements are one-time or recurring. Based on this, they can train the right mix of full-time and on-demand resources. This will avoid unnecessary hiring and firing and reduce overhead.
2.3 Promotes shared services model beyond matrix boundaries
A lack of visibility of resources and their skills within the company may result in the hiring of similar qualified resources that are already available in the organization. Therefore, following a shared service model beyond the bounds of the matrix will help control overhead and avoid unnecessary hiring.
Enterprise-grade resource management software provides 360-degree visibility into resource attributes such as skills, competencies, interests, capacity, availability, cost rate, and more. It allows managers to use qualified resources in cross-departmental projects and to promote a service sharing model. Thus, leaving no room for hiring/firing practices.
2.4 Enables effective bench management
Once the project reaches a closing stage, the resources working on the project are removed from the project. If resource managers are unaware of slowdown activities or future plans due to a lack of visibility, resources will end up on the bench for a long time.
With the resource management tool’s forecasting capabilities, managers can predict slowdown activities and schedule them in advance for the appropriate projects. They can go through the “vacant project” and “bench reports” to assign bench resources to billable work. If the resources on the bench lack the skills to meet demand, they can initiate retraining, training, or on-the-job training. This will keep them engaged and reduce unplanned hiring and firing cycles.
2.5 Leverage cost-effective global resources, where available
Have the right resource with the right skills is crucial to completing the project on time and on budget. Therefore, advanced resource forecasting is imperative to forecast project demand, estimate needed resources, and integrate the right resources in advance. This also helps avoid cost overruns otherwise caused by last-minute hiring activities. One can also identify and allocate cheaper global resources across matrix boundaries to reduce overall project costs without compromising quality.
Using an advanced resource management tool, managers can browse profiles of various resources. This will allow them to allocate competent resources cost effectively from global borders. It also avoids the last-minute hiring of costly resources, reducing project costs and maintaining profitability.
Resources drive the success of any business, and it is imperative for businesses to manage their resources intelligently and maximize their potential. Organizations can adopt a robust resource management tool and follow the aforementioned strategies to reduce the hire/fire cycle. This will limit the negative impact, help create the right mix of resources and gain profitability and competitive advantage.