Let’s face it. It is practically impossible to turn downsizing or staff reduction as we more humanely call it, into a pleasant experience for a firm and its employees. Still, sometimes company owners are left with little or no choice but to resort to such measures like downsizing, be it because of an economic crisis, mergers or acquisitions, or change in management.
Now it is understood you simply cannot change the circumstances that drive you towards making that decision to minimize the workforce. However, you can still opt for smart staff reduction strategies to sustain employer reputation and brand while causing your employees the least amount of stress.
Automation is one of the latest trends in workplace improvement, and most industries are using computer machinery and integrating robots into factories, especially in the manufacturing sector. In this guide, we look at the top automation-related downsizing strategies for manufacturers that can help replace human labor, cut down costs, and maximize productivity.
What Is Downsizing?
Undoubtedly, downsizing is one of the most unpleasant tasks any company ever has to carry out. Downsizing is a term that refers to an action when a company is forced to terminate several workers at the same time due to any change of events, primarily for the sake of reducing excess labor costs, saving money, or increasing company value.
As opposed to terminating employees for a cause, downsizing is usually not due to employee conduct. Instead, it is because of the overall business conditions or economic events.
Besides causing temporary unemployment, it causes significant restructuring and a significant change of duties for others. Company owners usually decide to downsize the workforce with much deliberation and make critical business decisions that are deemed best for the organization and its growth.
Staff Reduction Strategies to Reinforce Your Staff
We all agree downsizing can be no less than a major setback for both the company and its employees. Nonetheless, here are some budget-friendly and simple staff reduction strategies worth trying when companies don't have much choice but to resort to downsizing.
Rightsizing is a straightforward approach to keeping just the adequate number of workers in your company: contractors, in-house staff, non-essential workers, freelancers, etc. It implies accumulating the proper skill set and headcount to cover the business needs of your organization.
Rightsizing cannot be used as a quick fix in the context of downsizing or staff reduction since it is a gradual process that comprises comprehensive workforce planning, making reskilling and upskilling decisions, casual layoffs of those who aren’t performing up to the mark, and natural attrition.
During unforeseen circumstances such as pandemics, hiring new employees seems like a luxury. This is why a hiring freeze, more commonly known as a temporary hiring suspension, can be a lifesaver.
A hiring freeze has been a prevalent staff reduction tactic during the recent coronavirus pandemic. In March 2020, the number of job postings was reduced by 24% in the United States. To endure and survive through such economic turbulence, most firms froze hiring non-priority positions and non-essential workers.
This is a better method since a hiring freeze does not evoke as much negativity and hostility towards bosses and companies as furloughs and layoffs. Secondly, this strategy does not hurt the employer's reputation and brand in a way that the other downsizing and layoff strategies do.
Moreover, the hiring freeze tactic enables HR managers to re-assess their hiring strategy for rightsizing their firm and reskill or upskill their current employees to fill the ranks with in-house talents.
Reskilling and Upskilling
The upskilling and reskilling trend has also gained traction since the recent Covid-19 pandemic hit as a response to the cumulative changes in labor and economic conditions. Upskilling and reskilling are healthier alternatives to laying off employees.
This way, you can keep and retain your employees with development and new learning initiatives while still fulfilling your business objectives.
Like rightsizing, reskilling, and upskilling also call for a long-term commitment, so do not expect instant results. But at the very least, when you encounter an unforeseen economic crisis, you will be able to keep the business intact and retain the valuable talents by introducing them to new responsibilities and job roles.
Other Ways to Save Costs
However, most companies believe staff reduction and layoffs are not really an option can then try out one or all of these simple techniques to save HR costs.
Using productivity and time tracking software, you can keep track of your workers’ productivity to identify the bottlenecks and room for further improvement.
If you discover that some tasks can be completed faster, you might consider staff redundancy and distribute tasks amongst the remaining team. Moreover, you can automate routine tasks that call for minimal human participation.
Some job responsibilities do not need a dedicated job role to be performed. For instance, UX/UI designers can also make simple illustrations, so there is no need to hire an extra specialist just for this job.
Lower job requirements
The more tech-savvy experts you require in your job postings, the higher the benefits and salary expectations there will be. A few companies use this approach to their advantage and hire junior or mid-level specialists and provide them with quality benchmarks and guidelines. This way, businesses can kill 2 birds with 1 stone: get an excellent outcome, and save money.
Top 6 Reasons for Downsizing a Business
While downsizing your company can be extremely necessary for a few reasons, it does not always have to be bad for the company. In business terms, downsizing is typically defined as “ trimming the fat ,” which indicates a company is doing it to minimize the operating costs and make the firm leaner.
The entire process of downsizing entails plant closures, minimizing the workforce size, and making the firm's departments more efficient and productive. Now that we've seen some of the more human staff reduction strategies, let's look at some of the top reasons that might stimulate a company to turn to downsize in the first place.
Economic crises are probably the most significant causes of why companies resort to downsizing their business. The most recent economic recession elicited many layoffs in some of the most popular and reputable companies worldwide.
As per the survey, most small and big companies consisted of a high percentage of staff downsizing to enhance productivity and efficiency.
In most instances, companies tend to hire excess employees to meet the rising business needs during high demand. Similarly, when a recession strikes and the demand is low or in less boom, most companies are forced to downsize their workforce.
Under such circumstances, companies stop hiring additional or new workers and only focus on retaining existing employees.
Change in Management
A change in a company's management, such as changes in the working procedures and methods, can also lead to downsizing. Hence, a drastic change in the company management can directly affect the staff size for suiting a particular working style.
Merging of Companies
The merging of companies is another popular reason for company downsizing. To expand market reach or stay profitable, some companies merge their business operations with another company and form a merger where they operate as a single entity.
In such cases, companies usually cut down staff to eliminate severance in work. Hence, some workers leave the company by layoffs or voluntarily.
Companies that deal in global markets need a vast and efficient workforce. They can obtain the labor by “exporting” some of the most important jobs to other countries to acquire more effective business growth and better working experience. Thus, outsourcing is another significant reason that can lead to downsizing.
We live in a technological world, where most of the physical work can be performed by machines in a much better, proficient, and cost-effective manner. As a result, companies might be required to reduce the number of employees.
Moreover, if the work processes in an organization are incredibly fast and effectively meet the market requirements, companies might have no choice but to downsize a division of their workforce.
How Automation Affects Workers Less than Mass Layoffs
According to a publication, Fortune Business Insights, it was stated that the industrial automation market reached $157.04 billion in 2018 and is further projected to reach up to $296.70 in 2026, almost two-fold of what it was 3 years ago.
The rising interest of companies in technologies that assist automation like blockchain, Internet of Things (IoT), and artificial intelligence (AI) is due to the significant array of benefits they bring. It primarily represents excellent advantages in many ways, but the most important are cost and time savings.
To make the most of these benefits, factories today need to automate industrial machinery and carry out their operations via industrial automation systems. Integrating robots into factories can be an excellent way to replace human labor, reduce high labor costs, and increase workplace safety.
When speaking of automation, most people seem to get the whole idea of automation wrong. To begin with, automation does not refer to the complete wipeout of human workers as it is typically made out to be, as per the research published by Boston University School of Law.
In the study of tenured workers with a minimum of 3 years on staff and new hires, the research results revealed that automation negatively affected only a few workers. Moreover, only about 2 percent of long-term workers quit their job in the very year automation spiked at the organization where they were working. This is, in fact, a number that rose to 8.5% after 5 years.
Suffice to say, automation tends to impact workers less than downsizing and mass layoffs, making automation-related downsizing a much better strategy than simply laying off employees. Thus, more industries and companies should focus on integrating robots and automating industrial machinery within the business.
Introduction of Industrial Automation Systems and Robots in the Manufacturing Sector
Thanks to the cutting-edge technologies that trigger a streamlined working structure, there’s been a drastic shift in the way industrialists worked earlier. Not long ago, factories would hire many workers to perform every activity, which only created chaos and consumed more time. Now, tasks are efficiently accomplished and automated with high-tech machines and gadgets.
Automation is a vital concept with an increasingly escalating value amongst manufacturing companies. It refers to the use of automated control systems like computers, robots, and IT for managing processes and machines to replace human efforts.
Run by bots, it eliminates data redundancy while computerizing rule-based, repetitive tasks with a programmed setup, and its main aim is to enhance the flexibility and quality of manufacturing processes.
Manufacturers are obtaining the most significant benefit from present-day manufacturing. It has significantly transformed the nature of employment, factory floors, economics in the industries, and the quality of end-user products. The world is now rapidly evolving in terms of machine learning, artificial intelligence, and robotics.
Automated industrial machines are systems used to monitor and control processes, devices, or machines in a computerized way that typically fulfills repetitive tasks and functions. They’re primarily intended to function automatically to improve and reduce human work in the industry.
Moreover, the application of robots in the manufacturing sector has been particularly valuable. Robots have long been used for carrying out high-volume operations. Still, with the advancements in technology and the decline in the cost of industrial robots, more opportunities and options are unlocking for small and medium-sized operations.
Together, these automated systems and/or robots are helping manufacturers address some of the most significant challenges they face, such as global market competitiveness, tight labor pools, and safety. They are also replacing all the tedious, mechanical, and monotonous tasks performed by individuals through powerful machinery and logical programming commands.
Why Manufacturers Are Choosing To Automate Their Manufacturing Processes and Operations
Automation boosts productivity, minimizes labor shortages, reduces labor costs, enhances worker safety, and ultimately helps produce a better and more efficient product. By all means, manufacturers must remain updated on the advancements of automation.
Automated industrial machines and manufacturing systems perform these applications on physical products within the factories. Some of these applications include:
- Material handling
Here are 8 reasons why automation-related downsizing has become so necessary for manufacturers:
To Reduce the Cost of Labor
Labor can be incredibly costly in the majority of industries across the economies. As a result, you should always adequately reward and compensate your labor force and at least meet the minimum wage standards.
Automation significantly aids in reducing high labor costs. If you replace all the manual applications in the factory, you can minimize the labor workforce greatly. This ultimately works brilliantly for the company’s production and profit margins.
To Lessen the Impact of Labor Shortages
Most manufacturing firms face shortages of the labor force, especially when it comes to non-cognitive operations. Many of these operations include repetitive and monotonous tasks that are not quite popular amongst human personnel.
Moreover, employee turnover has been a growing concern. Luckily, automation can help minimize the impact of labor unavailability or shortages since it mostly takes up these boring, unpopular, and repetitive tasks.
To Enhance Worker Safety in the Workplace
With automation, the workers are no longer workers since they are no longer involved in handling all the manual and physical aspects of the applications. Instead, they are now required to supervise all the work that’s being done.
When automation steps in and takes over the tasks, especially the dangerous processes, most workplace injuries, and accidents are also significantly eliminated. The law expects organizations to ensure the protection and wellbeing of their employees, and automation does just that by helping companies to meet the required safety standards.
To Boost Productivity and Production Capacity.
The rate of production escalates since automation functions all day and all night. Thus, companies can realize a more significant labor output and benefit from increased productivity. In addition, some labor laws and human limitations restrict the labor force from doing work.
On the contrary, industrial automation systems have no such restrictions. They can operate 24/7, without any shift changes, breaks, or human interaction. As a result, this enhances the capacity and quality of production processes.
To Improve the Quality of the Product.
Besides boosting production volumes, automation helps improve the quality of products. It further eliminates the component of human error and produces brilliant and consistent results that meet and sometimes even surpass quality expectations. Consequently, your company will also encounter fewer defects and faulty products.
To Accomplish Impossible Manual Tasks.
There are a ton of manufacturing operations that can’t be performed manually. This is primarily because the requirements of the operations far surpass manual abilities, and such manufacturing processes cannot be completed without the involvement of automated systems.
These examples include quick prototyping via graphic modeling, creating complex surfaces with the integrated fabrication of circuits and numerical controlled systems, or Programmable Logic Controllers (PLC). These requirements include the intricacy of geometry, accuracy, and miniaturization. These processes can only be achieved via machines.
Moreover, some parts might be extremely delicate or small to be worked on, and the margin of error for such complex tasks is practically non-existent. As a result, this makes the need for automation for manufacturers more significant than ever.
To Avoid Higher Costs of Not Automating.
Automation offers numerous benefits that can lead to improved productivity, better quality, higher sales, a better company image, and a better bottom line due to increased efficiency.
Manufacturers who do not adopt and integrate robots and industrial automated systems might find themselves lagging behind competitors who’ve chosen to automate their processes and systems.
To Reduce Manufacturing Lead Time.
Automation aids in reducing the elapsed time between the customers’ orders and product deliveries.
Manufacturing Automation in the Future
The manufacturing of the near future will definitely be fully automated. Again, we would like to remind you that full automation doesn’t indicate zero humans within the facility. Robots and automated industrial machinery perform most manufacturing tasks and operations today, with only a handful of humans acting as supervisors, mainly performing supervisory roles.
Therefore, factory managers looking to save money, increase safety, increase production capacity, and reduce human labor requirements should opt for automation-relayed downsizing strategies and consider automating industrial machinery to enjoy the many advantages of automation.
In conclusion, human presence and intervention are still required because they must always prevent and look out for manufacturing failures. AI, however, might enable machines to understand and execute more complex and challenging applications.
Hence, humans in the factories might only come in to conduct periodic checks to ensure everything is running efficiently and smoothly.