The knee-jerk reaction of most organisations when confronted with a need to reduce costs is to reduce staffing levels.
This typically results in a dictum from on high that x% of staff will be offered voluntary severance, or worse, compulsory redundancy. This is a management no-brainer.
This philosophy was adopted by a company I worked for in the early 1980s. I was managing a team of 80 IT staff. One Monday morning I was called in (as were all the other IT managers) and told I had to come up with a list of 10% of my staff who would be made redundant the following Monday. The selection had to be made on merit and I was not allowed to confer with anyone.
This resulted in some appallingly difficult decisions. Even when poorly performing staff were identified, it was not as simple as selecting on merit. For example, I knew that certain poor performers had large families and had recently taken on huge mortgages. Other better performers were young, unmarried and lived in rented accommodation.
This approach, known colloquially as "squeezing till the pips squeak", is perfectly valid for a number of reasons. It is considered easier and simpler than other approaches and illustrates why there is a case for approaches that place capital asset cost reduction (things) above revenue asset cost reduction (people).
But other avenues for improvement should be explored first, such as optimising the sourcing of IT services, rationalising IT systems or reducing the amount of customised software packages.
If it is still necessary to lose staff, ensure this is achieved as equitably as possible and with a minimal impact on service levels.
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