ICL Services

How to Keep Going: HR Budget Reallocation

Lilia Mingaleeva, Head of the Human Resources Operations Department at ICL Services, explains how HR expenses can be redistributed in a situation of uncertainty and crisis


Kazan, Russia -- (ReleaseWire) -- 09/21/2020 --The primary mission of the HR department of any company is to maintain a well-functioning and efficient team. Currently, it means bolstering the staff's confidence in the future. But how can this mission be reconciled with budget cuts, all but inevitable in a situation of uncertainty and crisis? Lilia Mingaleeva, Head of the Human Resources Operations Department at ICL Services, explains how HR expenses can be redistributed.

ICL Services is a major system integrator. It has 2,000+ employees and eight offices in Russia and abroad. The HR Department is responsible for recruitment and onboarding, performance review and motivation, internal communications, employee training and related processes.

Conventionally, the HR budget is comprised of three large components: payroll budget, budget for employee training and development, and operating HR budget (covering the rest of the expenditure categories from recruiting to office parties). Initially, the budget for a year was drawn up, later on, earlier it took place twice a year, more recently — every three months. This allows for better budget management in a dynamic environment.

A pandemic is not just a change of environment, it's "a black swan". It didn't take us long to realise that nobody knows how events would unfold in the long term (no-one knew, really). However, in just two weeks, ICL Services managed to transfer 90% of the employees to remote work and ensure prompt response to the daily inflow of the Government decisions (particularly, those imposing lockdown). The HR budget has been revised appropriately as well.

First of all, plans were reviewed and selected those that could be implemented remotely and those that could not (meaning that company had to scrap them or change their format). In the face of uncertainty, several scenarios were elaborated:

- The optimistic scenario was based on the previously approved HR budget for 2020.

- The realistic scenario involved amendments in response to the changed conditions (the motto was, "everything essential is done but not overdone").

- The moderately pessimistic scenario was formulated as follows: "the customary is abandoned in favour of the critically important."

- The worst-case scenario included "the bare minimum needed for the business to survive". Company hasn't yet developed the latter in detail; hopefully, it won't have to.

The feature specific to the IT industry is the qualified personnel everyone lines up to hire. It's not an "employer-driven market" but rather a "candidate-driven market". And this defines the boundaries ICL Services navigatess: unlike at some other companies, it is crucial to maintain the budget for the key HR expenditure categories at the level to which the employees are accustomed. If the situation was different, company's way of approaching the budget reallocation would be different as well.

So, to sum up, what has been adjusted? First and foremost, those expenditure items that are technically impossible under lockdown.

1. Corporate events: 50% reduction for the 2nd and 3rd quarters.

In 2019, 200+ events were hold. The most expensive ones were the company's summer anniversary celebrations held at regional offices (Kazan, Moscow, Voronezh, Vladivostok, and Belgrade). Mass events are currently banned in this country - not that company is going to hold them anyway. First, they pose a certain risk to the employees' health. Second, many employees will choose not to attend for fear of infection.

Rewarding the best employees according to the year-end performance review has been switched to a different format: the director will congratulate the winners in a special address but their awards will be waiting for them at their workplaces — those will be the first things they will see on their first working day after the lockdown is lifted and the remote work mode is over. In doing so, company has cut down expenses by skipping the official part and saved on renting and catering.

Naturally, some of the activities related to sports (sports grounds rental, taking part in marathons, running courses) and environment protection (planting trees together, lake clean-ups) are not in demand now. Company is going to return to them in the second half of the year.

Some events have not been waived, for example, giving presents to the retired employees on Victory Day. Company has moved a lot of activities online: yoga classes, training courses, parties, home concerts, quests, environmental lectures. That has significantly reduced the costs while the engagement increased. For example, an online party brought together 400+ people. Most of the events have been organized by employees — DJs, yoga instructors, quest writers. You can't put a price on that.

2. Branded products and merchandise: up to 50% reduction (depending on the expenditure item)

Company has cut the costs of corporate gifts for offline and office events by half. Online events have been supplied from last year's stocks. Buying souvenirs in bulk for future use has proved to be both cheaper and more reliable: the contractor market and international shipping are currently under threat.

However, the budget for welcome kits for entry-level employees has remained intact. In 2019, company's staff expanded by 400+ employees. This year, despite the lockdown, 100+ new employees have already been hired. Recruitment and new employees are priorities, and company is not going to cut these expenses down.

3. Recruitment: redistribution of expenses within the expenditure category

Company has opted out of renting premises for group job interviews because of the ban on mass events, factored in a slight reduction in costs due to the natural decrease in recruitment in other cities, and waived the services of recruitment agencies. Unfortunately, in ICL Services' s case, they have rarely provided the desired result. However, company has allocated more funds to the access to job search resources and preserved the referral program budget (a referral bonus is granted to anyone who successfully refers a candidate for a vacancy to be filled).

4. VHI (voluntary health insurance) and employees' health and wellbeing: no reductions

The COVID-19 pandemic does not cancel out all other health issues; therefore, company do not cut the costs for voluntary health insurance. If any of company's employees feels unwell, they'll make an appointment at a commercial medical clinic and see a doctor at a specific time thus minimizing contact with other people waiting in line. They will also undergo a thorough examination and receive high-quality treatment. Moreover, voluntary health insurance is included in the employee benefits package that company provides upon recruitment. Making amendments to it means violating the employment contract. Company hasn't suspended the new employees' application and enrolment for the VHI coverage either.

Maintaining loyalty is the key

The first thing that should be triggered by a crisis is common sense. And common sense dictates that the "lost cause" attitude will not get things done. Budget reallocation forms a part of the crisis management strategy that company has developed during the pandemic and it provides valuable experience in a fast-changing environment.

Let stress this point: when you decide to eliminate something that you've always provided for your employees, make sure they understand your decision. Otherwise, you risk losing their loyalty. Currently, the prime HR objective is to preserve the staff's confidence in the future. And what works best here is a decent salary and benefits, open communication, the ability to maintain corporate spirit online and help your business develop while meeting its recruitment needs.

About ICL Services
ICL Services is a large system integrator (member of the ICL group of companies), providing a full range of services on domestic and international markets. The company employs more than 2,000 workers who successfully interact with more than 80 clients from 30 countries around the world, providing IT services 24 hours 7 days a week in Russian, English, French and German. ICL Services offices are located in Kazan, Moscow, Voronezh, Vladivostok and Belgrade (Serbia).


Additional information for the media:
e-mail: arina.vasilieva@icl-services.com
tel .: 8 (800) 333-98-70