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Managing Human Resources in an economic downturn
Created by
Jack Keogh
Content
1/4<br />
Recession: The Human Capital Challenge<br />
By Jack Keogh<br />
<a href="http://www.JackKeogh.com">www.JackKeogh.com</a> <br />
<br />
Year end is a good time to take a look at what you might need to adjust in your HR<br />
department. Here are some ideas to mull over during the holidays. You might decide<br />
to implement some of them to increase the strategic impact of how you manage<br />
Human Capital in your organization during the current recession.<br />
<br />
And, if like most, your business is experiencing a downturn, now may be the time to<br />
shift your approach so that it more closely fits the new realities. The key is to be<br />
proactive. Act now to implement a handful of strategic actions that will have a<br />
measurable impact on the firm’s productivity, rate of innovation and competitiveness<br />
in the marketplace instead of waiting for the inevitable budget cuts. When the going<br />
gets tough, HR can choose to be either a victim or part of the solution. Perhaps it's<br />
time to stand firm against calls from the top for a headcount review and possible<br />
recruitment freezes<br />
<br />
This may not be the time to focus on organizational growth. Instead you may need to<br />
examine vital strategic areas that you should focus on as you manage through the<br />
current recession. These areas can have an immediate business-impact: increasing<br />
workforce productivity, innovation, workforce flexibility, workforce planning and<br />
metrics. By renewing your focus on these directly related business issues you are<br />
sending an important message that your HR function is strategic.<br />
<br />
<strong>Nurture Relationships:</strong> Recessions are the perfect time to forge new connections and<br />
strengthen long-standing relationships — both inside and outside of your company.<br />
Practice uncommon appreciation. Meet for breakfast instead of over the phone.<br />
Supplement your emails with handwritten cards and notes. Relationships are best<br />
fueled by face to face contact. E-mail and social networking sites are no substitute for<br />
real relationship-building. People are your best sources of information, best advocates<br />
for your success, and best connection to positive energy to keep you going. Leverage<br />
them. Get together with your staff or people in your network to brainstorm<br />
opportunities for thriving during difficult times. View networks as possibilities. You<br />
can build new skills and experiences through the help of your professional networks.<br />
Stay optimistic and be flexible. Check your attitude and make sure that you are<br />
putting your best foot forward. One of the hardest things to do is to remain upbeat and<br />
positive when it feels like the bottom is falling out. So remain in contact with your<br />
network of professionals, friends and family to get you through the rough spots.<br />
It’s important not to be naive. You (like everyone else) could face job elimination. So<br />
use social networking tools to build visibility around your personal brand and what<br />
you uniquely bring to the HR industry. Write a blog and articles, attend industry<br />
events, make connections with movers and shakers, and do field research by speaking<br />
with those doing the work you want to do.<br />
<br />
<strong>Focus on productivity:</strong> your goal as an HR professional is to increase the<br />
productivity of the workforce by providing advice and programs that can directly<br />
increase the effectiveness of employees and managers. To do this you need to develop<br />
metrics to capture the productivity of your workforce. These include the ratio of<br />
dollars spent on people-related costs compared to the dollar value of the output or<br />
revenue produced by employees. Then you should identify barriers to increased<br />
productivity and develop a rapid plan to remove them. Once you have done this, your<br />
department needs to provide managers with the tools that you know have been proved<br />
to increase productivity.<br />
<br />
<strong>Talent and Performance management</strong>: this is the time to have a holistic process is<br />
in place where employee objectives are linked to business goals. Securing existing<br />
talent and investing in them will ensure that a company becomes more competitive so<br />
that when the economy picks up they are much better placed to move forward.<br />
Tackling poor performers head on, and removing from the workforce as part of a<br />
change management program or stand alone process, can help a business survive so<br />
long as fair capability and disciplinary procedures are used to prevent costly legal<br />
mistakes. Poor performers can reduce profits dramatically through low productivity<br />
and disengagement. Talent management can help ensure employee engagement.<br />
Talent needs to be nurtured and rewarded accordingly to ensure employees don't jump<br />
ship and join a competitor. Having clear HR processes in place such as succession<br />
planning and career paths are the basic building blocks together with the right training<br />
and development. There is the need to look at creative ways to reward staff, when<br />
increased financial compensation is not available. Communication to staff about<br />
companies' actions in this area will help employees to understand the “hows” and<br />
“whys”.<br />
<br />
<strong>Ongoing training and development: </strong>Cutting back on training is a false economy<br />
because when key skills are needed in response to market forces in future, the<br />
company will struggle. Training is often the first HR process to go when things get<br />
tough because some companies see this as an unnecessary cost. Consider low-cost<br />
options such as work shadowing and developing coaching and mentoring programs<br />
using existing talent to train developing talent. Evaluate your training partners:<br />
smaller, boutique firms can often offer far more bang for your training buck.<br />
Apportion your resources wisely. Limit activities with limited business purposes.<br />
Instead, organize a sales or other company meeting with a clearly defined profit<br />
purpose.<br />
<br />
Bear in mind that those companies with strong customer bonds have the best chances<br />
of weathering the storm. <a href="http://www.jackkeogh.com/">We believe </a>small businesses and organizations have the<br />
advantage to quickly respond and adjust to their customer’s needs. You may find that<br />
some of your “boutique” providers can best serve your needs in recessionary times.<br />
Increase employee innovation: competition in the marketplace has remained<br />
constant or increased for most companies even though business revenues may be<br />
down. This means that to compete you need to accelerate innovation in product and<br />
service areas despite having fewer resources and provides HR with a great<br />
opportunity to demonstrate leadership in increasing innovation. How? One way to<br />
do this is to implement specific actions to improve your group’s ability to work with<br />
mission-critical business teams. This way you can help identify barriers to<br />
innovation. HR staff can then function as business consultants by providing tools,<br />
training and advice on increasing the rate of innovation.<br />
<br />
<strong>Increase workforce flexibility:</strong> Companies can consider offering more paid time off<br />
such as increased holidays or Friday afternoons off as an incentive to increase<br />
employee motivation in these difficult times. Flexibility is a major motivator and the<br />
introduction of flexible working; flex-time, job sharing, and telecommuting are<br />
surprisingly easy ways to improve the bottom line. Reduce expenses that don't add<br />
value. Instead include low-cost but high-impact benefits at a time when the rest of the<br />
business world is cutting back.<br />
<br />
Other action steps might include increasing your firm’s ability to rapidly redeploy key<br />
employees to areas where they can have a greater impact. HR can also help managers<br />
make their labor costs more flexible by providing them with a larger percentage of<br />
contingent labor that can be more easily released. Development efforts also need to<br />
have more impact as the focus shifts from recruiting to increasing the capabilities of<br />
the employees that you already have. For those companies who need to cut costs, the<br />
issue of employee reward is a big factor. Employees tend to expect the minimum<br />
inflation pay increase and, where appropriate, the bonus they have always received.<br />
With the economic downturn this could be the nail in the coffin for some companies.<br />
Offering more tax-efficient benefits that can save the company money could release<br />
funds to offer motivational perks such as company days out or a paid-for social<br />
gathering to improve motivation. If companies involve employees in a survey of their<br />
requirements, benefits can be relevant to both their needs as well as saving the<br />
business money. Educating staff in the value of their total reward package can often<br />
be beneficial. This can be achieved through providing total reward statements either<br />
paper-based or online or by financial workshops, on key aspects such as pensions or<br />
financial benefits.<br />
<br />
<strong>This too shall pass:</strong> To weather the recession in a truly strategic fashion, HR must<br />
increase its workforce planning capability so the organization can quickly recover<br />
when the economy improves. Action steps you can take include building your image<br />
as a desirable employer, preparing managers for changing workforce demographics<br />
and focusing on retaining key performers.<br />
Help your company’s bottom line by communicating more with your supervisors to<br />
make sure you are focused on the right HR priorities to help the business. The key to<br />
surviving a recession is to make sure that you are delivering personal and unique<br />
value to your company. Ask yourself some tough questions to make sure that the<br />
work you’re doing has positive impact on your company’s bottom line such as<br />
increasing revenue, decreasing costs, improving profits, and customer satisfaction.<br />
These must be perceived by your management team as meaningful results. Offer to<br />
head up new projects, committees or initiatives in your organization. Step up your<br />
game and energize colleagues around an important change initiative. Invest some time<br />
in mentoring key people in the organization who may be floundering. A little time and<br />
good will can go a long way.<br />
<br />
Provide HR leadership and support for emerging initiatives in your organization like<br />
environmental sustainability, green technologies, clean energy, leveraging social<br />
media, where there may be less HR support. If you can help these groups think<br />
through the staffing, talent, compensation, change management or overall<br />
implications of their decisions, you’ve added tremendous value to your organization.<br />
And if your HR experience speaks to their needs, you’ve set yourself up well when<br />
the recovery occurs. But it’s your job to take the initiative, build the bridge to these<br />
groups and make your case.<br />
<br />
<strong>Link your HR metrics to the bottom line:</strong> During economic downturns, senior<br />
executives require all managers to focus on cutting costs and increasing revenue. To<br />
better comply, the HR function must learn how to convert traditional metrics such as<br />
turnover rate or time-to-fill into dollar impact. For example, instead of simply<br />
reporting that your turnover rate is 7%, you would also report that the cost of that<br />
turnover was $11.9 million in lost productivity or revenue. With this new perspective,<br />
HR can show senior managers the hidden costs of cutting training, as well as the<br />
potential revenue effects that great leadership development and great leadership<br />
development and great hiring can have.<br />
<br />
No matter how bad your bosses are, they do not enjoy having to lay off people. So<br />
give them a break. This isn’t the time to push for that promotion you think you<br />
deserve or to start building the case for that change title or equity increase. This is just<br />
common sense. Proactively try to lighten the leader’s burden. Help them defend your<br />
department. Contribute your ideas for restructuring plans when asked and do some of<br />
the heavy lifting yourself.<br />
<br />
<strong>Keep communicating: </strong>Be honest with employees. Let them know how you're doing<br />
so that they understand the true financial picture. Often employees are willing to make<br />
cuts and changes when they understand the facts. There are no winners if the business<br />
goes down. Talking clearly and honestly with your employees also helps to reduce the<br />
rumor mill. And, don’t forget to reach out to your HR clients and ask them for<br />
feedback.
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