discussion organizing an effective program to reduce costs march 2013

DISCUSSION

Organizing an Effective Program to Reduce Costs

MARCH 2013

The Perfect Storm

Workforce Tsunami

Decreasing Budget/ Revenue

Reductions

Increasing Citizen-Centric

Service Expectations

• Generational changes• Increasing retirements• Talent drain - loss of

institutional knowledge

• Workload increases• Increasing skill needs• Increasing knowledge

requirements

• Headcount reductions• Resource reductions• Reduced contracted

support

Changing workforce demographics, the cumulative effects of years of budget driven belt tightening, and increasing demands and expectations compels new approaches to gain more widespread operational economies while driving headcount reductions.

Confidential and proprietary to North Highland, www.northhighland.com


Budget Reduction Strategy Options

Workforce Management

Strategy

CostReduction

Strategy

Business Transformation

Strategy

While leveraging attrition as a tactic for reducing budget may be expedient and convenient in the short-term, it typically results in either degraded service/mission delivery – or – a return to original workforce levels in the long-term.

Consolidating departments, reassigning resources, succession planning, re-training.

Cost management, lean six-sigma, department or process-level redesign.

Radical and holistic mission, people, process, technology redesign.


ROI

Major savings in months 6-12 Major savings in months 12-18 Major savings in 16- 30 months

Emphasis/Drive

• Emphasis on all or selected parts of the HR life cycle -recruitment to retirement

• Driven by challenges/ opportunities created by turnover and attrition

• Emphasis on cost accounting of programs, services or operations with quantifiable savings

• Driven by priority savings targets where staffing is a part of but not only component of the savings.

• Emphasis on underlying organizational, process and technology realignment based on citizen centric view

• Driven by fundamental realignment of organizations, programs and tech

Benefit

• Departments and agencies stay largely intact

• Minor changes in process and technology

• Strategic attrition, planning and selection of critical workforce

• Includes rebalancing where staffing is sourced – contracted, in-house, or hybrid models based on P3 or privatization analyses

• Focus on incremental organizational, operational, process driven, and administrative opportunities

• Involves concentrated effort to identify major quick-hit and near-term saving opportunities

• Focuses on major cost centers including back office functions, procurement, support operations.

• Wider path of evaluation and results• May reshape the locus and role of

Departments and agencies in providing services

• Relies on process improvements, consolidation of support services, and technology investments to replace work effort.

• Takes additional time and effort, and while more permanent, the recommended changes

Consider

Solely applying a Workforce Management Strategy to address budget reductions can result in the return of workforce levels long term.

Applying Cost Reduction can result in more sustained workforce and budget reductions long-term but does nor achieve optimum savings

Transformational Strategy drives the greatest long-term workforce and budget reductions but requires an initial investment

Budget Reduction Associated Workforce Impacts


Strategy

CostReduction

Strategy


Strategy


Sequencing Strategies to Address Short- and Long-Term Needs

Time

There may be a path that leverages Workforce Management Strategies in the short-term but positions the organization for more substantial Cost Reduction or Business Transformation Strategies in the long-term.

Long-TermMid-TermShort-Term

Wo

rkfo

rce

Solely applying a Workforce Management Strategy to address budget reductions can result in the

return of workforce levels long term.

CostReduction

Strategy

Applying a Cost Reduction Strategy drives incremental improvement that can result in more sustained

workforce and budget reductions long term.


Strategy


StrategyWorkforce

Mgmt Strategy

CostReduction

Strategy

Business Transformation Strategy+ +

Applying a strategy that employs all three strategies by reinvesting a portion of savings from the first into the next succeeding strategy can result in more slowly declining but

sustained workforce reductions.

Investing in a Transformational

Strategy drives the greatest long term

workforce and budget


Sequencing Strategies to Address Short- and Long-Term Needs

Size of Cost Reduction

There may be a path that leverages Workforce Management Strategies in the short-term but positions the organization for more substantial Cost Reduction or Business Transformation Strategies in the long-term.

SignificantDriven by Permanent

Changes in Organization

Driven by Operational Improvements

Driven by WF Size

Tim

e

Applying a Workforce Management Strategy to address budget reductions can result in the return

of workforce levels long term.

CostReduction

Strategy

Applying a Cost Reduction Strategy drives incremental improvement that can result in more sustained workforce

and budget reductions long term.


Strategy


Strategy


Strategy

CostReduction

Strategy


Strategy+ +Applying a strategy that employs all three strategies by

reinvesting a portion of savings from the first into the next succeeding strategy can result in more slowly declining but

sustained workforce reductions.

Investing in a Transformational Strategy drives the greatest long-term workforce and budget

6-12

Mo

nth

s12

-18

Mo

nth

s16

-30

Mo

nth

s

discussion organizing an effective program to reduce costs march 2013

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