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According to a recent report by the US Bureau of Labor, there has been a significant increase in the hiring/firing cycle due to the adverse effects of the pandemic.
In addition, the numbers skyrocketed post-pandemic, as the global economic growth slowed for reasons such as recessionary trends, the energy crisis in European countries, etc.
This article highlights how value-driven resource management software can help you minimize hiring/firing cycles in the organization. But first, let’s understand how it jeopardizes a business.
- How do frequent hiring/firing cycles impact a business?
Organizations spend hefty amounts on recruiting suitable candidates, building their skills, and paying ongoing salaries, which go wasted once they dismiss them.
Besides this, frequent hiring/firing cycles can affect the organization’s reputation in the job market, making it challenging to attract and retain top talent. It also lowers productivity and morale among the existing employees resulting in unplanned attrition.
All of this negatively impacts the workplace environment. It also affects the quality of deliverables, resulting in customer dissatisfaction and loss of business.
Now, you know the consequences of hiring and firing resources frequently. Let’s see what contributes to it.
1.1 Factors that influence the hiring/firing cycle
Hiring and firing resources result in increased overhead costs, loss of business profitability, and market reputation. However, there are some potential internal and external reasons influencing these activities,
Internal factors such as organizational framework and policies like firing resources to meet the yearly turnover targets play a critical role in hire-to-fire practice. In addition, factors such as inadequate resource planning, prolonged absences, and unethical behavior also lead to hiring/firing cycles.
For instance, due to improper capacity planning and estimation, managers hire more resources than required. The excess resources either spend their time on non-billable activities or sit idle on the bench, adding more to the company’s bottom line. After a certain period, organizations have to fire those resources to reduce their impact on profitability.
Besides, external factors like contractual issues, economic crises, unpredictable incidents, etc., can increase hiring/firing cycles.
Knowing all these factors, let’s understand how to mitigate them using a resource management solution.
- 5 ways resource management software help reduce hiring/firing cycles
Here’s how Saviom’s robust resource management software benefits companies in minimizing the hiring/firing cycle rate:
2.1 Provides foresight into capacity vs. demand gap
Efficient resource capacity planning helps predict the resource demand in pipeline opportunities. With a robust resource management tool, managers can forecast and estimate the accurate number of resources required for future projects. That way, they can identify excess/shortage of resources well in advance and take resourcing measures.
If there is a resource crunch, they can initiate hiring or implement training/upskilling, out-rotation, shadowing, select a bench resource who partially meets the requirement, etc. In case of excess capacity, they can bring forward the pipeline projects, sell the resource’s time at a reduced charge-out rate, and so on. Thus, forecasting and gauging the gap prevents last-minute hiring and resultant cost escalations.
2.2 Help form the right mix of full-time & contingency resources
Organizations handle different types of projects with various complexities, resource requirements, and timeframes (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 wrongly hire a permanent employee for a short-term goal and a contingent workforce for long-term requirements.
Using resource management tools, managers can analyze whether the project requirements are one-time demand or recurring. Based on this, they can form the right mix of full-timers and on-demand resources. This will prevent unnecessary hiring & firing and reduce overhead costs.
2.3 Fosters shared services model across matrix boundaries
A lack of visibility of resources and their skillset within the company can result in hiring similar skilled resources that are already available in the organization. Therefore, following a shared service model across matrix boundaries will help control overhead costs and avoid any wasteful hiring.
An enterprise-grade resource management software provides 360-degree visibility into the resource attributes such as – skills, competencies, interests, capacity, availability, cost rate, etc. It allows managers to utilize skilled resources in cross-departmental projects and foster a shared services model. Thus, leaving no room for any hiring/firing practices.
2.4 Enables effective bench management
Once the project reaches a closure stage, the resources working on the project are rolled off from the project. If the resource managers are unaware of the ramp-down activities or future projects due to a lack of visibility, the resources will end up on the bench for a long time.
With the forecasting capabilities of the resource management tool, managers can predict ramp-down activities and schedule them for appropriate projects in advance. They can go through the ‘project vacancy’ and ‘bench reports’ to assign benched resources to billable work. If the resources on the bench lack skills to fulfill the demand, they can initiate reskilling, training, or on-job-training activities. This will keep them engaged and reduce unplanned hiring and firing cycles.
2.5 Leverage cost-effective global resources as applicable
Having the right resource with the right skills is crucial to finishing the project within a timeline and budget. Therefore, advanced resource forecasting is imperative to foresee project demand, estimate the required resources, and onboard the right resources ahead of time. It 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.
Leveraging an advanced resource management tool, managers can go through the profiles of various resources. This will enable them to allocate cost-effective competent resources from global boundaries. It also prevents the last-minute hiring of high-cost resources, thus reducing project costs and maintaining profitability.
Resources are the success drivers of any business, and it is imperative for companies to manage their resources intelligently and tap into their maximum potential. Organizations can adopt a robust resource management tool and follow the abovementioned strategies to reduce the hiring/firing cycle. This will limit the negative impact, help create the right resource mix and gain business profitability and a competitive edge.