How to defend against purely cost cutting initiatives
By enhancing the classic cost focus with a strong top-line focus we are supporting the strategic agenda while enforcing line management accountability.
During cost cutting/lean projects many organisations hire large consulting firms to analyse different supporting functions (including HR). Their approach is rather straight forward. They view the HR function as a well-oiled machine and filter out 80% of the value creation potential; areas like performance management, most development activities, talent management, strategic workforce planning, employee engagement, etc. are not emphasised. Their focus is purely on economising headcounts, costs per pay check and streamlining transactional HR without context sensitivity. The main message is: ‘the cheaper, the better!’
However, looking only at transactional/administrational structures and processes doesn’t create much value. As shown in the graph, most value is generated in the upper right corner – where HR sets up the processes and provides tools to be executed by line management. The top line potential is very high and this normally makes the difference — and companies successful and competitive.
Significant potential can be leveraged outside the HR department – whereby HR designs the processes and provides tools and coaching, but the line manager has to execute the actions.
Changing the playing field brings HR into the driving seat – pro-actively managing people management processes where line management has the major accountability – instead of reactively staying in a defensive position answering questions like “how can I deliver the transactional services even cheaper”.
Changing the playing field moves the HR function into one of the most powerful positions – ensuring the success of an organization via impactful people management.