In recent years, cement plants have been battling the economic downturn. That has meant budget cuts, which in turn has led to major headcount reduction exercises. Many plants have cut staff right to the minimum and some have gone lower even than that.
We’ve worked with a number of plants on headcount as part of our human capital services and one of the mistakes we’ve seen management make is to only think about headcount in terms of budget. In reality, headcount should always be considered in the context of the plant and operational issues.
Allocate resources to issues
Any exercise to reduce headcount should begin by looking at the plant. What is causing reliability issues? Are there quality issues impacting profitability? What about raw materials? Every plant has its problems and that’s where any discussion of ways to cut costs should begin. Write them all down and decide if they can be resolved. If they can, develop an action plan and consider what resources will be required both during that process and after the issue has been resolved.
How many supervisors does one worker need?
I’ve noticed in a lot of plants the ratio of supervisors to ‘workers’ – those going out on the plant and physically doing the work – is skewed. This is often symptomatic of using old, out of date plant structures in a world where management information systems and planning are now more frequently used. It doesn’t make sense to have too many supervisors and not enough ‘doers’ – especially when personnel can be trained to do the work and can be paid to operate without supervision.
Optimise headcount the same way you optimise production
Every department head should be continually trying to reduce the costs of their department. Headcount should be considered as part of this. That doesn’t mean continually downsizing the department – it means how can you best optimise the skills and experience you have in your team, while also being mindful of the cost? It’s a difficult calculation to make from the inside, which is one of the reasons our Human Capital services exist – sometimes you need an outsider’s perspective on how to best utilise your resources.
Consider the skills value as well as the money
Before you let anyone go, make sure that those who are staying are properly trained and capable of doing the job that will be theirs in the future. We have a lot of highly experienced individuals in our industry – but not enough to satisfy our future need. It’s worth weighing up the pros and cons of releasing talent, and budgeting for additional training if you do decide to reduce in areas where you don’t have the skills to replace what you’re losing.
Don’t forget the potential cost of reducing headcount
When reductions go too far, too fast, you risk losing much more than you’re saving. For all that automation has done for our plants, there’s still a great deal of value in human skills and human experience. Even the most modern plant requires a certain headcount to run optimally. Going below that threshold can at best place undue pressure on people and equipment, and at worst put people’s lives at risk.
If you’re not sure how best to optimise your human capital, or whether reducing headcount is really the answer, give JAMCEM a call. We’ll be happy to help.