Five steps to your personnel cost planning

Are you thinking about restructuring your business? Before you do, it’s best to consider the economic and legal ramifications. Whether you are reducing headcount or continuing your operations (using short-time work), the HR Restructuring Analytics Tool helps you make the right decision.

It helps you calculate and forecast the cost of a restructuring and compare this to the cost of starting or continuing operations using short-time work. You can also take into account the current ongoing personnel costs.

The tool, however, can also take into account many additional factors such as the legal options, legislation, and court decisions pertaining to staff reductions. This enables you to directly assess realistic cost estimates.

What are the tool’s key functions?

1. Overview of ongoing personnel costs

The tool helps you keep track of your personnel costs. Various filter functions let you select the areas whose personnel costs you want to simulate or monitor. You can filter by country, company, plant, department, or individual function. The tool displays an interactive dashboard showing you the relevant cost items of your “Workforce Analytics”.            

2. Assessment of the social criteria in a downsizing scenario

If you are considering a staff reduction in which individual jobs are terminated, you must comply with certain legal requirements. Government and the courts demand that you use social selection in doing so. This process involves identifying those employees who warrant greater protection than others, e.g., those with existing maintenance obligations. Our tool uses a scoring method based on guidelines from the German Federal Labour Court and enables you to simulate your social selection. The results provide an assessment that shows which employees have preference in the restructuring process. It thereby provides a sound legal basis for your downsizing decisions.         

3.Simulation of selective downsizing costs

After you have considered the social selection process that will stand up to legal review, you can use the HR Restrucuturing Analytics Tool to find out what the downsizing will cost you. It takes into consideration the current personnel costs and simulates the potential compensation costs, considering all the relevant elements of the compensation.

4. Overview of the personnel costs for a plant shutdown

There is a big difference between terminating individual employees and shutting down an entire plant or even a company. Labour law doesn’t require social selection if you are forced to shut down a plant or the entire company. The tool allows you to simply select the area you want to shut down. It then simulates the personnel costs and, especially the possible severance costs, that you will incur.

5. Cost comparison: downsizing vs. continuation

Before you make a decision, you should compare various scenarios. Our tool lets you make a side-by-side comparison of a downsizing scenario and a continuation scenario. You can simulate the respective scenarios at specific times in the future and compare the respective personnel (reduction) costs. You can also see at what point in the future the downsizing will have paid off, and when you’ll reach the break-even point.