In my day-to-day interactions with my clients, I hear one resounding message: We are doing more with less. In a recent Reuters article, we read that Fortune 500 companies shed a record 821,000 jobs last year. Profits grew. Walmart found itself back on top of the list, a result of serving the middle class people who seek lower costs for goods (perhaps, because they are now jobless?).
Are Fortune 500 companies doing more than simply "doing more with less?" Is it possible that the job cuts and increased output are skewed by other factors? In my humble opinion, absolutely. During my tenure with large corporations, especially once I became an exempt employee, my tasks shifted away from what is considered transactional. I had, for lack of a better word, deliverables.
Deliverables: a corporate buzz word. Over the last few years, companies have adopted a model that manages a deliverable rather than a team of individuals. This has led to a movement toward outsourcing.
The argument, even when costs are high, is that the cost is fixed. If the project exceeds budget due to an error in scope detail, the risk is on the third party. This paradigm shift goes beyond project work. Any function in an organization that is not considered a core competency is a target for outsourcing.
Capital spend is more favorable in a scenario where immediate savings is desired. While cost savings are recognized in headcount reduction, the overall cost does not actually decrease or go away. It is simply budgeted differently.
So, a few key points so far:
More people are required to do the work. However, the people are employees of the outsourcing company.
For those that have survived an outsourcing, in many cases, there are pointedly reduced service levels as a result.
Resources are hired with less experience at a higher rate.
New departments are formed to manage the outsource partnership.
So I ask a simple question: More with less, or less with more?
The short term impact is positive from a bottom-line perspective. Talk to the people at the ground level doing the work, and they might tell you it has become more cumbersome and less seamless to both internal and external clients.
The long-term impact might be far greater than anticipated. Eventually the gap will close and the cost efficiencies will be diminished. This leaves us with some key questions:
Does that leave us with a competitive edge to bring that work back in-house?
Will we eventually find that all functions of an organization are a core competency that drives quality and quantity?
How do you quantify and qualify the total cost of the short-term savings?
Where does all this efficiency leave the workforce? As my clients have voiced in our conversations, the workforce that remains feels as though the company is doing more with less. Far worse, this workforce is sometimes left with increased costs to cover benefits (part of those increased profit margins for companies?), decreased vacation time, and long hours.
Many employees are left feeling as though they are doing the more for less. Companies have increased profit while decreasing headcount. However, if we dig deeper, will we find that companies that are doing more with less will pay the price 10 years from now?
With my limited experience and unlimited opinions, I will close with a comparison to the unemployment rate. We are not fully aware of the factors that would report unemployment at a significantly higher rate. I am relatively sure that we are not privy to all factors associated with rising profits and falling headcount, let alone total cost (savings or otherwise). Personally, I'm convinced that Fortune 500 companies doing more with less is not necessarily something to brag about.
This post was written by former Seamless Workforce Contributor Tammy Taylor