Companies want to save 10% on people. We know how to reduce overhead costs

The latest figures on the state of the Czech economy present a contradictory picture. On the one hand, it technically fell into recession – which was expected in view of the global supercycles – but on the other hand, it is a shallow recession. This means that it is more like stagnation. And it must be added that the experts were pleasantly surprised by the low drop rate. So far, this is positive news, which indicates that with the spring sunshine, the clouds will blow away again and cautious optimism will prevail in companies. But there is a relatively large unknown in the form of developments at the global level, driven mainly by the USA. And this one clearly shows that it is not won yet – even if there are no “jobs” coming from here yet.

So what to prepare for? That’s the million dollar question. Or rather a billion. Of the three scenarios – rapid recovery and return to growth, stagnation or recovery before the next major decline, unfortunately, we can just cross out the first one. The most realistic is the onset of a phase lasting several years, when the world will get used to the new order, still probably seasoned by stagflation. And if the conflict in Ukraine escalates again, it is also possible to count on the last option.

In any case, companies will have to tighten their belts and reassess their investments. And of course it will also affect the labor market, where companies want to find some of the biggest savings.

Every tenth out of the round

One golden rule of Czech business says – when it flows into shoes, it is possible to immediately cut 10% of human resources and 10% of costs. In other words, every tenth employee is replaceable in companies, their position can disappear or colleagues can take over it. In total, this way can be achieved with costs about a fifth lower. And that is usually known.

For that reason as well, many companies follow this rule. But in order for it to work, one important detail needs to be observed. It is not possible to implement “fall to whom fall”, any cost reduction must be preceded by careful analysis, impact modeling and, of course, a strategy that does not end with the signing of employment termination contracts.

But as is customary in Czech companies, a large part of them is naive in their thinking and individual steps are stuck behind the closed doors of which department. Boss decides, finances are calculated, legal is prepared, HR implements. All this without in-depth comprehensive data.

After all, according to some sources, more than half of the companies can’t even calculate what layoffs will do to the company. After all, as we stated in one of the previous posts, even artificial intelligence has more feeling for layoffs than some Czech managers.

Prune the business so it can flourish

At the same time, the very idea of ​​savings is not misguided. And what are we going to talk about, it will benefit Czech companies, which have been suffering from obvious overemployment for several years. There is a nice comparison – the tree needs to be pruned in early spring so that it hardens and blooms beautifully again. In addition, a number of old rules, according to which companies have been operating since the last crisis, will no longer work – partly due to technological developments, partly due to the global situation. In order to create a new one, it must transform. And slimming down before a more fundamental transformation (whether voluntary or forced) usually gives the company the opportunity to react more quickly.

What changes will companies not avoid?

Data management and digitalization – Under “digitalization”, the vast majority of bosses imagine investments in modern technologies without being able to visualize their true benefit. In the vast majority of cases, switching a company to a digital mindset should lead to only one thing: start managing all processes according to data. Including people and their positions. And it is already clear that these data will show what is dysfunctional and ripe for rebuilding in the company.

Increasing the price of work – Do you think that work in the Czech Republic is expensive? So answer the question: will people in the future be willing to work for less or rather for significantly more money? You probably feel that “B” is correct. For companies, rising wages continue to be a huge challenge that they will have to learn to work with. And above all at the level of efficiency monitoring.

The arrival of a new generation of workers – Generational change is a natural and inevitable part of the company’s life cycle. For many Czech companies, this change will be fundamental this time. Rejuvenation of managerial positions will mean the onset of management with a completely new way of thinking, a new management style and requirements.

AI – Here we are already shooting a bit from the side, but hand on heart, the rapid onset of AI and its immediate usability in the Czech environment surprised even us. We think we won’t be exaggerating when we say that some positions can start saving work almost immediately. We can randomly name, for example, sales, marketing, the customer care department, but of course also HR.

But in order for the company to smoothly sail into the new reality, its management must not dig a trap for itself. And believe me, there are countless opportunities to trip over your own feet while reducing teams and costs. From poorly chosen communication to insufficient initial analysis to neglected follow-up monitoring and the wasted chance that such a step brings – for example, a completely new architecture setting of individual departments in the company.

At the same time, if something prevents companies from doing it well, it is only their ignorance. And partly also the passivity of their HR department, which – as described above – is unfortunately often at the bottom of the entire decision-making chain. We won’t lie to each other, it’s also because they simply won’t say anything.

At Sloneek, we are ready to find your “fifth of savings” and make the changes

We know very well that it is not easy to find a partner who will start looking for savings with you and also help you manage the entire challenging period. So look no further. At Sloneek, we will do our best to stand by your side. What can we help you arrange?

So that only those who will no longer be an asset to the company leave

Few people leave the company voluntarily. Especially with a view to troubled times. But it must be admitted that for many people, the “parachute” after years of stepping on the spot can be the thing that turns their life around for the better, because their motivation to work no longer has more than one layer.

In most cases, companies can identify who has ceased to be an asset to the company. They are already worse off when they have to find out if it is really their fault. Poor work performance can be the sum of several aspects that unnecessarily sink even talented workers – inappropriate management, unrealistic goals or a job position whose content is not completely understandable to the employee or moves in the exact opposite direction to the development of the skills of the person concerned.

Solution? Change your mindset in the company and work with your colleagues as someone you really care about staying in the company. Do not box, on the contrary, adapt the work to the real possibilities of the team. You will achieve this when you are familiar with terms such as competency models.

So that there is no waste in the company

Did you know that the average company loses thousands to tens of thousands of crowns worth of company belongings due to improperly registered assets? That’s a huge number. At the same time, a large part of company property is not purchased in accordance with real needs. In other words, while your colleagues are complaining about bad gear, your warehouse is dusting with inappropriately purchased items.

What with this? The solution is two-fold – more effective records of things that you entrust to the care of employees. And also regular validation of what people really use and need from the entire inventory and what they don’t get. A fifth of the savings can then simply be in the world.

So that the new talents bring you what you expect from them

It is often easier to get an industry “superstar” on the team than to keep it. The culprit is the underestimated onboarding – that is, the series of steps that lead to the integration of an individual into the work process. Now we don’t just mean handing over the essentials, but complete involvement in the events, understanding the new role, starting to build a relationship with the company he will work for.

Bad onboardings have a number of negative effects on the company. Firstly, they are expensive (tens and, in the case of headhunting, even hundreds of thousands of crowns for obtaining the right person, the first salary paid without return), secondly, they have a devastating morale on the other members of the team. Well, who wants to work where smart people turn on their heels?

So that the company does not lose drive even during changes

Any changes carry the risk of losing the drive on the goal. A changing company tends to lose performance, to wait for “things to settle down”. Teams tend to be overwhelmed by their responsibilities and at the same time applying new requirements. It is clear that in such a case their capacity will not magically increase and they need to prioritize what they will give priority to. The frequent management request “everything is a priority” is one of the nails in the transformation coffin, because it only gives clear feedback that the situation is not under control.

However, this can be avoided quite clearly – namely by clearly defining the goals for the given periods, which will be set so realistically that the teams will not have a problem with their fulfillment. Most of us have at least one KPI or OKR mania behind us. And most of us have also experienced that they did not bring the desired change. Why?

Think about the effect of goals that are validated once a month at a company meeting, and what the employee can see moving in real time. Because this is exactly the way to make them a real challenge and at the same time allow you to point out unrealistic expectations at the right time. Not until the moment when any “but” at the meeting sounds like a defense of a below-average result.

So that the changes don’t undermine your morale

Czechs are conservative, they like their order and certainty. And this also applies to them in the role of employees. Any changes that companies implement will, in principle, encounter weak but persistent frontal resistance. And the more negative and fundamental these changes are, the stronger and longer-lasting the reaction will be.

Solution? Simpler than it might seem. Quality internal communication, involvement of people in the implementation of changes. Give them enough time to understand them, but also guarantees to make it clear that the policy of change and transformation has a clear end and goals.

Where to start? First of all, it is good to introduce a feedback culture – that is, collect feedback regularly and teach people that it matters. Furthermore, it is possible to regularly monitor the moods in the teams. And regular internal feedback within individual teams should also be a matter of course.

So that we can complain

Sudden changes – even the best planned – will always cost individual people. And even in companies with a good culture, various problems can arise under pressure based on the unpredictable reactions of individuals.

And that’s why it’s important to expand on the previous point and separately point out the creation of a safe environment. This should accompany the announcement of any change. Your workers need to know where to turn if they are losing control of the situation. Both by address and anonymously.

And of course you should give them a guarantee that you will deal with the comments. Because this is precisely the key moment when you are able to identify the problems that come with the transformation in the very beginning and thus prevent completely unnecessary “fermentation under the surface”, which in the best case can mean unnecessarily wasted time and energy of everyone in the company, in the worst case, tangible losses caused by by the departure of disgruntled but good employees whose calls at the right time were not heard.