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Software to Smooth Your Restructuring

April 4, 2008
Related Topics: Human Resources Management Systems (HRMS/HRIS), Downsizing, Workforce Planning, Featured Article
If the economy slides into recession and companies cut jobs in response, a slew of relatively new HR software products promise to help.

    The applications include employee performance management and succession planning tools as well as a product from Vurv Technology specifically designed to aid with downsizings and other restructurings.

    Large firms have been investing in these applications in recent years partly to identify and groom key employees in case of talent shortages. The same software tools should be able to help firms pick out the people to preserve amid any job cuts. For example, the products make it easy to compare employee performance and potential ratings. Decades ago, with annual reviews stored in file cabinets, such talent analysis was harder to do.

    "Corporate America should have a lot more data than they had last time they did layoffs," says Rick Fletcher, president of technology consulting firm HRchitect.

    Vurv’s Optimize application may be the most explicit on the market about assisting companies with layoffs. The product is designed to help organizations assess employees according to factors such as skills and performance level, calculate costs associated with job cuts and communicate with affected workers. It facilitates involuntary job cuts as well as voluntary separations, such as early retirement. And, Vurv says, it allows firms to do "What if?" scenarios, showing how different hypothetical decisions would affect such things as costs and the diversity makeup of the workforce.

    Optimize even helps with nitty-gritty tasks such as making sure company computers get returned.

    Kevin Marasco, Vurv’s senior vice president of marketing, says the application is useful not only in a crisis, but also as an aid to ongoing workforce pruning that may stave off the need for layoffs. If a company needs to curb costs, he says, it can issue a voluntary retirement incentive program for a class of employees, where the number of people or total salary amount is capped at a certain level. "By continuously ‘rightsizing’ the organization, companies can reduce their exposure [to] getting too fat or redundant where they shouldn’t," Marasco said in an e-mail.

    About 20 customers have signed up for Optimize, which Vurv obtained in an acquisition announced last year. There’s growing interest in the product, Marasco says.

    One Optimize customer has used the tool both to lay off employees and avoid layoffs. The customer, a Fortune 500 financial services company that asked to remain anonymous, said the software has helped it make thousands of job cuts since mid-2005. But by capturing a fuller picture of layoff expenses—including, for example, the retention costs to keep employees on the job long enough to outsource their work—Optimize has persuaded managers to nix a planned downsizing in favor of a different cost-cutting strategy, says a vice president at the company. "Often they’ll cancel it and say this isn’t our best option," he says.

    Beyond the hard numbers calculated by the application, Optimize has fostered smarter talent management at the company by giving human resource professionals a stronger voice in restructuring discussions, the vice president says. Optimize has lent HR officials credibility, he says, which lets them raise harder-to-quantify considerations such as morale and workforce strategy. "What it really does is it gets HR in the door," the vice president says.

    Vurv and other vendors sell tools for tracking employee performance and potential that also may come into play in a downturn. Performance management software is vital in a restructuring because it allows an organization to get a firm grasp of who its top employees are, says Christa Degnan Manning, an analyst with AMR Research. The products also can serve as a bulwark against employee lawsuits, by demonstrating that workers were let go for appropriate reasons, she says. "People have had more interest in collecting these data points," she says.

    Adam Miller, chief executive of software vendor Cornerstone OnDemand, says companies have been buying software for identifying high-potential employees in order to retain them in the face of a demographic shift that may tighten labor markets. "Those same exact tools can be used in the opposite way," he says, helping firms identify workers to retain and to cut in any downsizing.

    The widespread use of layoffs has come under criticism in recent years. In his 2006 book The Disposable American, author Louis Uchitelle argues that layoffs often backfire for companies and harm the U.S. workforce more generally. Productivity suffers, Uchitelle writes, as commitment, trust and collegial behavior decline for workers touched by layoffs—including those who survive a job cut. In this context, applications that make it easier and more impersonal to give workers the boot might be seen as callous or counterproductive.

    Vurv’s Marasco responds that Optimize helps firms avoid axing employees and at the very least promotes a professional, humane layoff process. He says the application can link employees with outplacement services and is not designed to send out pink slips via e-mail.

   "That’s what we want to avoid," he says.

   Miller of Cornerstone OnDemand adds that software for tracking employee performance and potential can help companies move past the days of mass layoffs that effectively crippled them.

   "In the past, people would cut off their arm," he says. "Now, you’re just doing liposuction."

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