When companies set out to reduce headcount, the HR team is often first in line for cuts.
The government, seeking to save £2bn from civil service budgets, is planning personnel cuts in Whitehall, according to a report by The Times, and HR staff are atop the list for potential redundancies. Overall, the Cabinet Office is set to shed 2,100 roles.
A government spokesperson confirmed the plan to reduce departmental administration costs by 15% over the next five years, citing an emphasis on improving frontline public services as well as reducing spending.
HR, finance, procurement management, policy advice, communications and office management are among the functions targeted for savings. However, cuts to these areas will come alongside an increase in the number of tech and digital roles in the civil service.
Melanie Steel is founder of the HR consultancy People Change Expertise and former people director for the Cabinet Office. She says HR teams should never be exempt from review when a reduction in headcount is necessary, but organisations often overlook the strategic contributions of HR. “In tough economic times, organisations often focus more on cutting costs rather than recognising the full value of each function,” she adds.
Outdated perceptions blight HR
The civil service is not alone in targeting the HR department for headcount reductions. Google’s people function, along with its cloud-computing department, bore the brunt of layoffs announced earlier this year, Tesla’s senior director of HR left the company in 2024 amid wider redundancies and HR was disproportionately impacted by widespread layoffs in the technology sector in 2022.
Too many business leaders perceive HR as a merely administrative function. This is an outdated perspective, according to Steel. “While some HR tasks are indeed administrative, the broader HR role adds great value to the business,” she adds.
Too much of HR’s work happens behind the scenes
HR’s wider role in an organisation can often be overlooked when cuts are being made. “When HR is reduced to a numbers exercise, organisations miss the bigger picture,” according to Nebel Crowhurst, chief people officer at Reward Gateway, an employee-benefits platform.
“A lot of what HR brings, such as workplace trust and integrity, is hard to measure but very important,” she says. “The challenge lies in identifying the long-term cultural and organisational losses as opposed to short-term cost saving.”
Recruitment specialists are less needed when a company is downsizing and a large HR department might seem superfluous at a business with fewer employees. However, HR’s strategic role is particularly important in transitions or periods of uncertainty.
Crowhurst explains: “HR oversees talent planning, transformation, wellbeing and inclusion. These are all things that determine whether an organisation thrives or stagnates. The admin is part of it, of course, but it’s the foundation, not the full picture.”
She adds, however, that HR is partly responsible for the misperception of its purpose and must do more to communicate its strategic value across the business. “Too much of HR’s work happens behind the scenes. We need to clearly show how it contributes to performance, resilience, culture and broader business goals,” Crowhurst says.
Cuts to the HR function will likely negatively impact workplace morale, retention and organisational performance, she continues, adding that the effects are “not always immediate, but they’re inevitable.”
“When organisations cut HR, they lose more than headcount,” says Terez Rijkenberg, an executive coach and former chief people officer. “They lose the people who know how to spot early signs of disengagement, burnout and breakdowns in team trust. These are issues that can quietly erode performance long before anyone notices it in the numbers.”
Creating a meaningful impact
This is not to say that HR teams should be immune from cuts. Some organisations have even seen significant growth in their HR teams over recent years.
But Crowhurst points out that HR’s strategic importance can be obscured, particularly as firms grow their headcount and operations. “Complexity can creep into larger organisations, leading to lots of red tape and processes over time,” she says. People leaders therefore must continually assess their team’s impact on the organisation’s employees to ensure their work is adding value.
Refocusing HR’s efforts can also help to avoid deep cuts to headcount. “HR now needs to be sharper, more strategic and more confident,” Rijkenberg says. “It must be less about process and more about performance.”
HR now needs to be sharper, more strategic and more confident
Efforts to modernise HR functions may also be used to justify departmental downsizing, particularly with the implementation of AI taking away some of the administrative burden on HR teams. Steel says the civil service recently initiated an HR modernisation programme, which included implementing a new people system.
“The goal was to standardise practices across departments where possible, reduce administrative burdens and eliminate duplication,” she adds. “A review will help determine whether the function can be further streamlined or made more agile. It’s important to ensure that earlier modernisation efforts are fully embedded and that technological advancements are leveraged effectively.”
While technology, particularly generative AI, promises to bring greater efficiency to the HR, it should not be seen as a replacement for the function. Rijkenberg says: “AI won’t replace human connection, emotional intelligence or the ability to lead through complexity. Those are the exact capabilities HR should be cultivating.”
Although HR has been disproportionately impacted by recent corporate layoffs, these cuts are often based on outdated perceptions of the function, not objective assessments of its value. HR leaders must emphasise the function’s strategic importance more effectively to protect their departments from excessive redundancies.
When companies set out to reduce headcount, the HR team is often first in line for cuts.
The government, seeking to save £2bn from civil service budgets, is planning personnel cuts in Whitehall, according to a report by The Times, and HR staff are atop the list for potential redundancies. Overall, the Cabinet Office is set to shed 2,100 roles.
A government spokesperson confirmed the plan to reduce departmental administration costs by 15% over the next five years, citing an emphasis on improving frontline public services as well as reducing spending.
