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Reference check of Careercare with the industry's best know-how in the human resources market
has been recognized from global companies. Careercare provides reference reports with expertise and insight.
The Value of companies and organizations is generated from human resources.
The goal of Carecareer is to develop the best talent to contribute to the country, companies, and individual lives.
Executive search with powerful Data Base system over 200,000 prospects has been the foundation of the our business since 2000.
Careercare has 100 top tier of experts who has business experience and overseas experience for many years.
Restructuring is not about ‘slashing head count’ but securing ‘talented people’
Financial transparency is not all… shaking up top management first
Hyeonman Shin(CEO)
Careercare Newsletter(March, 2015)
Many companies choose restructuring when they face difficulty in management. Although they do their best to make the situation better, they reach the limit and have to make a decision, restructuring. The decision is a desperate attempt, and it is hard to downsize the workforce, especially for company providing services. For service businesses, workforce is their asset, and the prospect of the projects become unclear without them. If restructuring is necessary, how they are going to implement the measures of whom should be cut?
Ultimate goal of restructuring is not saving the expense, but it is to restore the competitiveness of the business after putting the pieces together and assessing the organization via saving the expense. Therefore, the focus should be on how to restore the business.
Unlike manufacturing businesses making products with machines, for service businesses, employees are the most important assets. Cutting experienced workforce who knows the needs of customers, provides services, and respects the company culture is like removing manufacturing facilities of manufacturing businesses. Without facilities, no product can be made. Similarly, cutting headcount means giving up the core asset of the business.
It is true that new employees can be hired when the company is ready again. Occasionally, the company may encounter better employees; however, companies pay high price and spend time to recruit someone and to train them. The true cost for educating and training one new employee is very high.
In addition to qualified skills, it is hard to train employees to understand and fit to company’s value, CEO’s management philosophy, and company culture. These workforce is the source of the power of organization.
Decreasing headcount is one of the ways of reorganization, but it should be done very carefully. This should be the last option after trying all the other ways to protect the company; however, circumstances are often inevitable for restructuring.
The most important factor in restructuring is keeping the core workforce for the business. As it is mentioned above, the ultimate goal of restructuring is putting the pieces together to restore the business, not saving the expenses. Therefore, if reorganization is inevitable, a way of maintaining the core members should be concerned.
This is very difficult process. In restructuring the company, less competitive employees tend to survive and stay in the company while competitive employees leave the company. It is because talented people can easily search other jobs while less competitive people are not capable of changing jobs. Thus, failed reorganization may weaken the company and become less competitive, without the core members. In this case, neither restoring nor maintaining the business gets hard.
Therefore, the executives pay close attention to prevent losing core members while undergoing restructuring. In addition, they try to present company’s new visions to lessen feeling of dejection and to show them a bright future of the company.
One of the common mistakes they make on restructuring process is that employees who have close relationships with executives stay without considering their abilities. People, who worked for a long time, used to have close bondage with executives such as executives or board members stay, and people who do not have close relationship with top management tend to leave the company.
However, it is better to cut a few executive members than numerous workers for efficiency. It costs more to keep one executive member than several workers, and reorganizing workforce takes more efforts without decreasing much expense.
It is very painful but necessary decision. Most of cases, executives have been worked together with CEO for a long time. In addition, they are more experienced with more knowledge and show high royalty to the company. They are essential for the next big step, but it is hard to have successful restructuring with them. Letting executives remain and cutting employees do not have great effect but give negative emotional influence to the employees.
Recently, due to gloomy economic trend is continued, a need of restructuring is emphasized. When a business is in struggle, they choose restructuring in order to cut the expense and cost price. They sell unnecessary assets and undergo capacity adjustment. Often they move their facilities to abroad where manufacturing cost is low, and decrease the headcount. If restructuring is succeeded, the business would improve financial transparency, and net profit would increase as low profit programs are removed.
But temporary improvements in financial transparency and in net profit do not mean successful restructuring. If the business cannot find a new system to survive in the market, the crisis may occur again. The core of system for surviving in the market is workforce. Without having experienced team of specialist, it is hard to have successful restructuring.
Restructuring is necessary for the survival of business; however, the main goal is not about reducing headcount but securing experienced specialists. Therefore, if you lose talented employees through restructuring process, you may have obtained financial transparency but you have not reached the goal of restructuring in way of preparing for a next step.
CAREERCARE
Careercare is the largest recruiting and executive search firm in the Korean market for the last 15 years. It is time for us to make a new leap forward. With our three core values, ‘Respect People’, ‘Differentiate the Differences’, and ‘Social Responsibility’, we are giving more efforts to achieve the vision of ‘Advance through Talent’.