Layoffs '2023: should you do that too?

The article discusses the importance of optimization and cost-cutting measures in today's economic climate, particularly in the realm of IT where artificial intelligence, automation, and optimization are emerging as the top trends.

By adopting KCS, companies can improve efficiency and streamline processes, leading to fewer layoffs and a more stable workforce.

The 2023 year trends

As we look back at the first quarter of 2023, it's clear that this year is shaping up to be an exciting one in the world of IT. When asked about the most important trends we've observed, artificial intelligence and automation are at the top of the list for many. But, there's a third trend that's gaining traction and cannot be ignored - optimization.

In today's economic climate, companies are under pressure to optimize their operations, cut costs, and increase efficiency. It's not just about survival, it's also about keeping up with the competition. Every organization wants to be a market leader and to do that, they need to make smart business decisions.

Optimizing spending is easier said than done. It's a complex process that involves balancing multiple variables, such as budgets, resources, and timelines. And, there are always constraints that come into play at different levels. But, with the right strategy and tools, companies can achieve significant cost savings without sacrificing quality or performance.

The key is to take a holistic approach to optimization. It's not just about cutting costs or laying off employees. Instead, it's about identifying inefficiencies, streamlining processes, and finding ways to do more with less. This can involve everything from automating routine tasks to implementing new technologies, such as cloud computing or virtualization.

And it's the case at all company levels.

  • In times of uncertainty, employees can take steps to protect their job security. Firstly, they can be a top performer in their role, consistently delivering high-quality work. Secondly, they can explore other opportunities within the company. Lastly, they can make suggestions to improve efficiency and reduce costs within their team or department, potentially helping the company avoid layoffs. By taking these steps, employees can position themselves as valuable assets to the company and protect their job security.

  • Managers face a tough decision when considering layoffs. They must meet targets while also supporting their team. They worry about the emotional impact and long-term consequences. To mitigate this, they can use their expertise to improve efficiency and propose new strategies. By doing so, they can help ensure the success of the team and the company.

  • Cost optimization and budgeting are crucial in the corporate world, but layoffs can send a negative signal to the market and cause anxiety among employees, leading to the loss of valuable talent. Companies must be creative and seek alternative solutions to achieve optimization targets, such as improving business processes, streamlining workflows, and investing in new technology or training. Prioritizing employee well-being while maintaining financial performance is the key to long-term success.

Consequences of wrong decision

Companies are constantly looking for ways to optimize their processes and cut costs in order to meet the expectations of their board of directors and investors. Unfortunately, when times get tough, layoffs can often seem like an easy solution. But as we've seen, this can create a whole host of problems.

One department that is often seen as an easy target for cost-cutting measures is Support. Despite the fact that these employees typically earn lower wages than their counterparts in other departments, they are still vulnerable to layoffs. But as we've discussed, this can have serious consequences for the company as a whole.

Support is the face of the company, and if the support team isn't functioning properly, it can have a ripple effect throughout the entire organization. Customers who are already frustrated with a product or service will become even more unhappy if they are unable to get the help they need in a timely manner. And if service level agreements are not met, it can lead to a negative perception of the company as a whole.

Furthermore, the savings that can be achieved through cutting the support team are often not significant, especially when compared to the negative impact on customer satisfaction and overall revenue. It's important for companies to consider the ROI of such decisions before proceeding with layoffs.

So while layoffs may seem like an easy solution for companies looking to cut costs, it's important to remember that they can have serious consequences. By prioritizing the needs of each level of the organization and seeking out alternative solutions, companies can maintain the balance between their goals and the well-being of their employees and customers.

What should they do then?

Support is an integral part of any company that provides products or services to its customers. What sets Support apart from other departments like R&D or Marketing is that it's relatively easy to calculate how many people are required to efficiently handle customer queries and complaints at any given time. It may sound like magic, but it's not! It's simple math that each Head of Support should know like the back of their hand.

If you're curious about the formula, it's quite straightforward. The required headcount is calculated by multiplying the volume of tickets, chats, or phone calls received during a specific period by the average handle time (AHT), then dividing it by the total working hours in the same period, multiplied by the utilization rate and shrinkage coefficient. It's important to calculate the volume of each channel separately to get accurate results.
Required headcount = (Volume for a period * AHT) / (Working hours for a period * Utilization) * Shrinkage
The utilization rate indicates the percentage of time that employees spend working and can be affected by factors like smoking or coffee breaks, lunches, or time for procrastination. It's essential to factor in the shrinkage coefficient, which considers the time employees may be sick, on vacation, or attending training. The standard shrinkage coefficient is around 1.1-1.2.

While it's possible to adjust the utilization and shrinkage coefficients, it's primarily in the scope of HR or general people management. The main variables that affect the required headcount are the incoming volume and the average handle time. Improving these variables can result in a reduced headcount demand, which means lower costs for the company and fewer man-hours for managers to achieve their goals.

The right processes and tools, like KCS, can make all the difference in making improvements and ensuring that customer queries and complaints are handled efficiently and effectively.
KCS® is a service mark of the Consortium for Service Innovation™
People choose KCS because they see the need to scale and expand their customer and technical support capabilities, but don't have endless staffing or budgetary resources.

The use of KCS provides both quantitative and qualitative benefits.
The Knowledge-Centered Service (KCS) framework is a powerful tool for companies that want to improve their customer and technical support capabilities. By using KCS, companies can scale their support services without having to hire more staff or increase their budget.

One of the main advantages of KCS is that it provides both quantitative and qualitative benefits. Companies that use KCS can see improvements in their support team's performance and capacity, allowing them to handle an increased workload with their existing resources. KCS also enables companies to predict and drive cost savings, making it easier to show ROI to executives, board members, and investors.
By using KCS, companies can prepare their support teams to weather periods of turbulence and uncertainty, without resorting to layoffs or other drastic measures. With the right processes and tools in place, support teams can become more efficient and effective, providing a better experience for customers while saving the company time and money.
Max Sudyin
Co-Founder @ Swarmica
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