Frank Mulligan

Brrr! Even though the sun is shining, it's cold. It's always cold when the economy slows, and it's not just psychological.

Hiring freezes are in place in many of the world's leading companies, and on a world-wide basis. This means that corporate staffers and line managers cannot hire anyone for a fixed period of time, or until an open-ended freeze is canceled.

Here in China, where we expect the economy to 'slowdown' to 'only' 8% growth next year, there has always been a way of getting around the freeze. But right now it getting harder and harder to keep the ice from forming.

Only one year ago the talk was all about the War for Talent in China, but in the not so distant future some HR staffers will be expected to deal with the consequences of slow or negative internal growth, and this is something few of them have ever had to do in the past.

If you find yourself in this situation, what should you do?

China is Different

The starting point, I believe, is to accept the reality of the market. Many people in China still seem to be in denial about the consequences for China of the world slowdown. They hold desperately to the notion that China is somehow 'uncoupled' from the rest of the world.

So a first step would be to smell the flowers.

Once you have accepted the situation you need to take action, and the first step is a think-through and a mental modeling of your company's functions or departments, and the value they offer.

The battle that is ahead of you will be based on the fact that management often think that if they cut staff numbers, any numbers, they can report better financial ratios to the stock market in the next quarterly report. You have to resist staff reductions that are unsupported by data, and you need your own data to do this.

The world's economy is surely heading into negative territory, and some countries are already in recession, but China will still be rolling along nicely. International companies tend to apply a single brush to all countries, but you have a good rationale for pushing back against this. Hiring freezes are generally issued across the board ,and take no account of the actual situation on the ground.

So map out your understanding of your company's HR challenges such that you can communicate them to management, and let the management team flesh out the details of where changes and cuts should be made. The final HR plan should incorporate the thinking of as many people as possible, and you should expect a contentious meeting but it's a process that you are in control of now.

Englightened Self-Interest

Hiring is Job Number 1 in China. Many HR departments are actually cleverly disguised recruitment functions.

As soon as hiring is reduced to any significant degree, HR will be decimated. Many of your best people will move into different areas or industries, and when you need to rebuild your HR team in a year or two it will be virtually impossible. Fight now and save yourself large amounts of unnecessary work later.

A second, selfish reason for creating a HR plan is plausible deniability. Call me cynical but you want to be in a position where you can show that you are part of the solution, not part of the ongoing problem.

For example, your HR plan should be looking at ways and means to both improve quality of hiring, and ways and means to show that you are improving quality of hiring. The same reasoning applies to:

- new hires salary (reduce)

- overtime (reduce)

- hiring costs (reduce)

- retention (improve)

- business culture (strengthen)

- performance (look for more)

- training (rationalize).


Ongoing Skills Demand

Finally, businesses in China will not find that hiring in China has suddenly gotten easier, and all the wrong hires rectify your retention numbers by resigning en masse.

Exactly the people you want to keep will still be in demand, the people-that-you-have-wanted-to-fire-but-were-afraid-to-do-so will be digging in their heels, and increasing their seniority. China's New Labor Law means that you cannot be so quick to fire as you might have been in the past.

Soon you are going to need people who can really deliver, and these are not the ones who sit, drink tea, make personal phone calls, and wait to be told what to do. You will be dealing with challenges that many people have never seen before, and experience will be at a premium. A steady hand is going to be needed at the tiller, and judgment will be key.

People with these skills are in short supply. They always are.