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Managing and Restructuring ‘Bench’ Employees in the IT Industry: A Strategic and Legal Approach

Introduction

In an ever-evolving IT sector, efficient management of ‘Bench’ employees and associated restructuring processes becomes crucial. The Employment team at Teodorescu Partners has handled several projects focused on providing strategic and legal solutions, at the end of 2023. These challenges demanded remarkable expertise, in order to successfully complete the complex projects presented by clients.

Context of ‘Bench’ Employees in IT

‘Bench’ employees are vital for the flexibility of IT companies, anticipating reallocation between projects. However, efficient management of these periods of inactivity is crucial for resource optimization and cost reduction.

The concept of ‘Bench’ employees is distinctive in workforce management, often used in industries characterized by project-based or client-centered models. This approach acknowledges fluctuations in project-related demands and aims to maintain a pool of qualified talents ready for deployment when needed, recognizing the challenges associated with employee inactivity during project-free periods.

‘Bench’ employees refer to qualified professionals within a company who, due to the nature of their roles or project cycles, are temporarily without an assigned project or client. This situation occurs when demand for their specific skills or expertise decreases, leading to a period of inactivity. During this time, these employees are metaphorically placed ‘on the bench,’ awaiting the next project or mission.

Challenges and Opportunities in ‘Bench’ Management

A key rationale for keeping employees on the bench is strategic agility. In dynamic industries like IT consulting, software development, or professional services, project deadlines and client needs can vary significantly. Having a group of employees on standby allows companies to promptly respond to new projects, client requirements, or sudden increases in workload, without the delays associated with recruitment or integration.

‘Bench’ periods can be transformed into valuable opportunities through professional development, retraining, and strategic reallocation strategies aligned with the company’s needs.

However, the concept presents challenges. The financial implications of retaining employees during inactive periods are crucial. Companies must strike a balance between having the right talent available immediately and efficiently managing operational costs. This delicate balance requires meticulous workforce planning and a deep understanding of industry dynamics.

In conclusion, the concept of ‘Bench’ employees represents a strategic approach to workforce management in industries characterized by project-based work. While it offers advantages in terms of responsiveness and flexibility, the challenges associated with cost management and employee engagement require a careful and balanced approach.

Legal Implications in Managing ‘Bench’ Employees

Managing ‘Bench’ employees in Romania must comply with labor laws, ensuring that contractual terms protect employee rights in accordance with the Labor Code. ‘Bench’ employees have the same legal status as any other employees throughout the employment contract, including its termination.

It is essential to have transparent internal policies regarding the management of ‘Bench’ employees, defining a maximum acceptable ‘on bench’ period, fair project allocation principles, and preventing any form of discrimination. Specifically, a potential decision to terminate a number of ‘Bench’ employees must first adhere to internal policies regulating this aspect.

In the case of terminating ‘Bench’ employees for reasons unrelated to the employee’s person, the reasons must be real and serious, in accordance with legal provisions. According to Romanian labor law, economic reasons, such as the financial sustainability of the company, are considered real and serious causes for individual dismissal of ‘on bench’ employees. This approach is based on the company’s need to maintain operational efficiency and avoid financial losses. If ‘on bench’ employees are not reallocated to revenue-generating projects and thus become financially unsustainable, the company has a solid legal basis to initiate dismissal procedures, as long as they are carried out in accordance with the provisions of the Labor Code, respecting the employee’s rights, and the internal policy equally applicable to all employees.

Employees have the right to challenge dismissal decisions in court, requiring employers to have solid evidence and legal compliance in the dismissal process.

Effective Management and Restructuring Strategies

1.         Professional Development: Utilize ‘Bench’ periods for learning and professional development programs.

2.         Performance Analysis and Resource Planning: Evaluate individual performance and identify the company’s needs for optimal resource allocation.

3.         Restructuring Decisions: The restructuring process, including layoffs, should be based on objective business needs and legal requirements.

4.         Implementation of Internal Policies: Establish clear policies for managing ‘Bench’ employees, ensuring fair treatment and preventing discrimination.

Case Study: Global IT Client

In a recent mandate, Teodorescu Partners successfully addressed the challenges of restructuring ‘Bench’ employees for a global client in the IT industry. Through detailed analysis, retraining, strategic reallocation, and well-founded restructuring decisions, the company optimized its workforce and improved operational efficiency.

The company faced the challenge of managing ‘on bench’ employees for an extended period, over six months, due to a lack of projects. These employees, although involved in internal projects and upskilling activities, were not accepted by clients for external projects. This situation generated significant costs without bringing in revenue, affecting the financial sustainability of the company.

The company considered the need for restructuring, evaluating positions that did not actively contribute to external projects and did not generate revenue for extended periods. This measure aimed to optimize staff and eliminate redundant positions. The restructuring decision is based on real and serious economic needs and is taken in the context where maintaining these positions would negatively impact the company’s financial balance.

Financial analysis shows that the proposed employees for restructuring have not generated revenue for long periods, and the costs associated with retaining them are unsustainable. Therefore, restructuring proved to be a necessary measure to ensure operational efficiency and protect the financial stability of the company, while also avoiding professional stagnation for ‘Bench’ employees.

Conclusions and Recommendations

Managing and restructuring ‘Bench’ employees requires a holistic and well-informed approach, combining legal, ethical, and business aspects.

Rigorous strategic and legal approaches in managing and restructuring ‘Bench’ employees are essential for success in the IT industry. Clients appreciated the expertise and adaptability of the Teodorescu Partners team, by providing effective and legally compliant solutions, in navigating these challenges together.

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