One of the most challenging decisions an organization makes is the decision to perform layoffs. The process is very emotional (and very logistically challenging) as decisions are made to layoff people you know and have come to think of sometimes as family. What I have found is that some—not all—pain caused during a reduction in force can be avoided by strategically staffing your organization using variable staff. This post will discuss this concept as we learn how best to proportion fixed and variable staff. If I have piqued your curiosity, read on.
What Is It?
Business cycles ebb and flow. Ideally, you would have an understanding (or a crystal ball) regarding proportion of fixed and variable workload in your workforce today—with an eye also on what would be needed in the future.
Fixed resources are permanent, though not necessarily full time employees. Although business cycles eb and flow, ideally, these resources would be aligned with stable work volume—work that would need to be done regardless of expansion or contraction of customer demand or market-driven work volume.
Variable resources are temporary members of your workforce. Variable work would increase or decrease in volume driven by known or predictable variables. Ideally, variable work would be aligned to variable resources in the form of temps, independent contractors, vendors, or through outsourcing. For example I was once hired as a temp for a manufacturing company. My role was to proofread orders from buyers during a time when holiday orders were coming in from department stores. The organization predicted the increased volume, but knew the demand would pass. I worked as a temp, was paid through a temp agency, and knew when I would no longer be needed.
Key Organizational Indicators
- You have predictable business cycles impacting volume, but you are not making use of any variable resources. Existing fixed staff are expected to absorb high volume at peak cycles, and, boy are they mad! (and tired, cranky, and at risk for toxicity.)
- You know an upcoming project is going to require additional resources but you also know your need will go away as soon as the project is complete.
- Some work within your organization could be outsourced or managed by a vendor. Some other organization can do it better, faster, and cheaper – and they can manage demand cycles by reassigning staff to other organizations when they are no longer needed.
- You have a need for a specific skill set for a short period of time. For example, I am often hired to coach executives or teams with the understanding that once they have acquired new capabilities, I move on. (This employee status is “independent contractor” vs. “temp” because organizations pay me directly vs. paying me through an agency.)
- You have aligned temps and contractors to work that is relatively stable and would not be impacted by a decrease in business volume. (This practice is actually risky, as certain labor laws define the terms of “employee category” and it exposes an organization to litigaion. Think class action. No fun.)
- Don’t rely on existing fixed staff to absorb significant increases in work volume, even temporarily. There are many downsides to operating this way, including opening yourself up for turnover, dips in quality, and general ill-will. Hire variable staff to pick up a fair share of workload for predictable spikes in volume.
- Sometimes, the argument against what is outlined above is that the work is too specialized, and training someone is too expensive or time consuming. Think of creative solutions. For example: Everyone these days has some element of administrative work embedded in their job. Hire an administrative temp to help take that particular load off fixed staff so that they can turn attention to specialized work. Develop a network of gig-economy workers. They are comfortable working by “gig” and are often highly skilled. Train them once and call them in for spikes.
- Don’t think you can avoid layoffs by having a permanent staff of temps and contractors. Many temps are in search of permanent employment and all the benefits it offers, so they can be at high risk for turnover. In addition, you risk being in violation of labor laws related to employee categorization—a particular target of class action lawsuits in recent years.
- Consider outsourcing as an option. Can a vendor perform a task as suggested better, faster, and cheaper? Can they assign highly skilled staff when volume necessitates it? If so, engage them.
I am really eager to hear your feedback. I would love your ideas, thoughts, and experiences!