Building the Business case for Progression: A Key game changer in management of HR costs & Motivation
by Tariq Chauhan, Group CEO of EFS Facilities Services
An old proverb exists; there is an opportunity in every crisis. I believe that in times of austerity, innovation is the only way out. In moments of introspection and organizational strategy, company reviews driven by market pressures delve into the internal functioning of their various departments and devise ways and means for robustness and agility. In this push for a strategic renaissance, especially when driven from recessionary challenges, the human resources department being a key business enabler, assumes a pivotal role.
Within its multiple functions; training and development are one of the key tools that can deliver great results. Although mostly seen as service excellence and employee motivation tool and as a cost center in many organizations, HR is also a powerful resource in employee progression which is emerging as a great enabler. We have learned many lessons that in times of business turbulence the most critical being; don’t just look for out of box solutions when going gets difficult but look within the box too and seek what opportunities lie therein. Employee progression is one such opportunity driven from innovation that we have come across when seeking solutions for cost efficiencies.
Progression not only helps in service excellence and staff motivation but also brings financial benefits that the organization must accrue from. This is becoming an active tool to achieve staff cost efficiencies; and besides, its other advantages are startling!! How does this work? It creates an environment of learning and development which prompts people to adopt this as a way to move up in the organization, resulting in financial restitution and a feeling of recognition plus rewards, spiking higher motivation levels.
How does the enterprise derive cost savings from this strategic push? When an employee in progression moves up in the organization and replaces seniors, they bring with them cost savings due to salary differentials. Stepping up to the next level not only gives an increase in salary, position, and perks but also replaces the higher-grade bracket to lower grade bracket that means savings for companies. In essence, progressions undoubtedly result in definite cost savings, in some cases as high as 20% in compensations. In the past seven years, our organization has accomplished 10% progression over 18000 workforce which in itself is an impressive milestone.
Employee Progression has become relevant in our FM industry as clients are seeking to move to a new generation of contracts wherein the glide path of savings is integral to the contract performance. However, the complex part of this contract condition is how to accomplish this being workforce centric, where 70% of the cost is salaries, and the glide path of savings over the life cycle of the contract is indeed herculean. The salaries revision is an annual feature and achieving savings is difficult as the headcount purge is not always possible. However, adopting the progression approach has emerged as a powerful and effective tool. Empowered by strong training and development, this model has helped organizations as well as EFS, and I can surely confirm that across most of our contracts we have achieved this by successfully employing this measure. This move has 360-degree benefits; Sought by employees, loved by HR Managers and actively bought by Clients.
Apart from other conventional tools of Employee motivation, progression is indeed becoming the most powerful employee retention and brand positioning enabler.