1/4
Recession: The Human Capital Challenge
By Jack Keogh
www.JackKeogh.com

Year end is a good time to take a look at what you might need to adjust in your HR
department. Here are some ideas to mull over during the holidays. You might decide
to implement some of them to increase the strategic impact of how you manage
Human Capital in your organization during the current recession.

And, if like most, your business is experiencing a downturn, now may be the time to
shift your approach so that it more closely fits the new realities. The key is to be
proactive. Act now to implement a handful of strategic actions that will have a
measurable impact on the firm’s productivity, rate of innovation and competitiveness
in the marketplace instead of waiting for the inevitable budget cuts. When the going
gets tough, HR can choose to be either a victim or part of the solution. Perhaps it's
time to stand firm against calls from the top for a headcount review and possible
recruitment freezes

This may not be the time to focus on organizational growth. Instead you may need to
examine vital strategic areas that you should focus on as you manage through the
current recession. These areas can have an immediate business-impact: increasing
workforce productivity, innovation, workforce flexibility, workforce planning and
metrics. By renewing your focus on these directly related business issues you are
sending an important message that your HR function is strategic.

Nurture Relationships: Recessions are the perfect time to forge new connections and
strengthen long-standing relationships — both inside and outside of your company.
Practice uncommon appreciation. Meet for breakfast instead of over the phone.
Supplement your emails with handwritten cards and notes. Relationships are best
fueled by face to face contact. E-mail and social networking sites are no substitute for
real relationship-building. People are your best sources of information, best advocates
for your success, and best connection to positive energy to keep you going. Leverage
them. Get together with your staff or people in your network to brainstorm
opportunities for thriving during difficult times. View networks as possibilities. You
can build new skills and experiences through the help of your professional networks.
Stay optimistic and be flexible. Check your attitude and make sure that you are
putting your best foot forward. One of the hardest things to do is to remain upbeat and
positive when it feels like the bottom is falling out. So remain in contact with your
network of professionals, friends and family to get you through the rough spots.
It’s important not to be naive. You (like everyone else) could face job elimination. So
use social networking tools to build visibility around your personal brand and what
you uniquely bring to the HR industry. Write a blog and articles, attend industry
events, make connections with movers and shakers, and do field research by speaking
with those doing the work you want to do.

Focus on productivity: your goal as an HR professional is to increase the
productivity of the workforce by providing advice and programs that can directly
increase the effectiveness of employees and managers. To do this you need to develop
metrics to capture the productivity of your workforce. These include the ratio of
dollars spent on people-related costs compared to the dollar value of the output or
revenue produced by employees. Then you should identify barriers to increased
productivity and develop a rapid plan to remove them. Once you have done this, your
department needs to provide managers with the tools that you know have been proved
to increase productivity.

Talent and Performance management: this is the time to have a holistic process is
in place where employee objectives are linked to business goals. Securing existing
talent and investing in them will ensure that a company becomes more competitive so
that when the economy picks up they are much better placed to move forward.
Tackling poor performers head on, and removing from the workforce as part of a
change management program or stand alone process, can help a business survive so
long as fair capability and disciplinary procedures are used to prevent costly legal
mistakes. Poor performers can reduce profits dramatically through low productivity
and disengagement. Talent management can help ensure employee engagement.
Talent needs to be nurtured and rewarded accordingly to ensure employees don't jump
ship and join a competitor. Having clear HR processes in place such as succession
planning and career paths are the basic building blocks together with the right training
and development. There is the need to look at creative ways to reward staff, when
increased financial compensation is not available. Communication to staff about
companies' actions in this area will help employees to understand the “hows” and
“whys”.

Ongoing training and development: Cutting back on training is a false economy
because when key skills are needed in response to market forces in future, the
company will struggle. Training is often the first HR process to go when things get
tough because some companies see this as an unnecessary cost. Consider low-cost
options such as work shadowing and developing coaching and mentoring programs
using existing talent to train developing talent. Evaluate your training partners:
smaller, boutique firms can often offer far more bang for your training buck.
Apportion your resources wisely. Limit activities with limited business purposes.
Instead, organize a sales or other company meeting with a clearly defined profit
purpose.

Bear in mind that those companies with strong customer bonds have the best chances
of weathering the storm. We believe small businesses and organizations have the
advantage to quickly respond and adjust to their customer’s needs. You may find that
some of your “boutique” providers can best serve your needs in recessionary times.
Increase employee innovation: competition in the marketplace has remained
constant or increased for most companies even though business revenues may be
down. This means that to compete you need to accelerate innovation in product and
service areas despite having fewer resources and provides HR with a great
opportunity to demonstrate leadership in increasing innovation. How? One way to
do this is to implement specific actions to improve your group’s ability to work with
mission-critical business teams. This way you can help identify barriers to
innovation. HR staff can then function as business consultants by providing tools,
training and advice on increasing the rate of innovation.

Increase workforce flexibility: Companies can consider offering more paid time off
such as increased holidays or Friday afternoons off as an incentive to increase
employee motivation in these difficult times. Flexibility is a major motivator and the
introduction of flexible working; flex-time, job sharing, and telecommuting are
surprisingly easy ways to improve the bottom line. Reduce expenses that don't add
value. Instead include low-cost but high-impact benefits at a time when the rest of the
business world is cutting back.

Other action steps might include increasing your firm’s ability to rapidly redeploy key
employees to areas where they can have a greater impact. HR can also help managers
make their labor costs more flexible by providing them with a larger percentage of
contingent labor that can be more easily released. Development efforts also need to
have more impact as the focus shifts from recruiting to increasing the capabilities of
the employees that you already have. For those companies who need to cut costs, the
issue of employee reward is a big factor. Employees tend to expect the minimum
inflation pay increase and, where appropriate, the bonus they have always received.
With the economic downturn this could be the nail in the coffin for some companies.
Offering more tax-efficient benefits that can save the company money could release
funds to offer motivational perks such as company days out or a paid-for social
gathering to improve motivation. If companies involve employees in a survey of their
requirements, benefits can be relevant to both their needs as well as saving the
business money. Educating staff in the value of their total reward package can often
be beneficial. This can be achieved through providing total reward statements either
paper-based or online or by financial workshops, on key aspects such as pensions or
financial benefits.

This too shall pass: To weather the recession in a truly strategic fashion, HR must
increase its workforce planning capability so the organization can quickly recover
when the economy improves. Action steps you can take include building your image
as a desirable employer, preparing managers for changing workforce demographics
and focusing on retaining key performers.
Help your company’s bottom line by communicating more with your supervisors to
make sure you are focused on the right HR priorities to help the business. The key to
surviving a recession is to make sure that you are delivering personal and unique
value to your company. Ask yourself some tough questions to make sure that the
work you’re doing has positive impact on your company’s bottom line such as
increasing revenue, decreasing costs, improving profits, and customer satisfaction.
These must be perceived by your management team as meaningful results. Offer to
head up new projects, committees or initiatives in your organization. Step up your
game and energize colleagues around an important change initiative. Invest some time
in mentoring key people in the organization who may be floundering. A little time and
good will can go a long way.

Provide HR leadership and support for emerging initiatives in your organization like
environmental sustainability, green technologies, clean energy, leveraging social
media, where there may be less HR support. If you can help these groups think
through the staffing, talent, compensation, change management or overall
implications of their decisions, you’ve added tremendous value to your organization.
And if your HR experience speaks to their needs, you’ve set yourself up well when
the recovery occurs. But it’s your job to take the initiative, build the bridge to these
groups and make your case.

Link your HR metrics to the bottom line: During economic downturns, senior
executives require all managers to focus on cutting costs and increasing revenue. To
better comply, the HR function must learn how to convert traditional metrics such as
turnover rate or time-to-fill into dollar impact. For example, instead of simply
reporting that your turnover rate is 7%, you would also report that the cost of that
turnover was $11.9 million in lost productivity or revenue. With this new perspective,
HR can show senior managers the hidden costs of cutting training, as well as the
potential revenue effects that great leadership development and great leadership
development and great hiring can have.

No matter how bad your bosses are, they do not enjoy having to lay off people. So
give them a break. This isn’t the time to push for that promotion you think you
deserve or to start building the case for that change title or equity increase. This is just
common sense. Proactively try to lighten the leader’s burden. Help them defend your
department. Contribute your ideas for restructuring plans when asked and do some of
the heavy lifting yourself.

Keep communicating: Be honest with employees. Let them know how you're doing
so that they understand the true financial picture. Often employees are willing to make
cuts and changes when they understand the facts. There are no winners if the business
goes down. Talking clearly and honestly with your employees also helps to reduce the
rumor mill. And, don’t forget to reach out to your HR clients and ask them for
feedback.