If you are truly thinking about creating a robust Human Asset Management Strategy, then the concept of headcount/cost cutting done in the name of rightsizing represents polar opposite approaches to people as an asset.
When we talk about headcount, we are looking at a static numbers game at best, and a leadership and organizational ‘cop out’, at worst. Have you ever worked for a company that reduced headcount by 10%? We’ve all been there. Here are a few scenarios that happen in organizations all the time when we embark on the headcount/cost cutting game:
Scenario 1 - The highly-accepted but strategically-flawed LIFO test – last in, first out.
We somehow justify that longevity is a rational basis to keep people. That process is most often used by people who have longevity in the organization. These people, themselves may be past their human asset ‘sell-by date’.
Risk Impact: LIFO may be the worst way of dealing with headcount issues. What does the LIFO accounting concept have to do with a dynamic, evolving long-term human asset management strategy?