2003 outlook bleak as conflict is set to grow

It
has been a tough year for HR. Employers have been loaded up with more red tape
than ever, and employee militancy has returned to the workplace

But
the biggest challenge for HR by far has been the economy. The downturn has run
and run, and has ensured that recruitment and retention have dominated
everything that HR has done.

Next
year could be more of the same, with the recovery hanging in the balance.

Businesses
are facing more taxes in 2003, including an expensive increase in their
National Insurance contributions, and further cost-cutting will be needed (see
page one).  

Worryingly,
it could get worse.

If
house prices spiral, interest rates would be raised and consumer spending would
peter out. If we go to war with Iraq, oil prices would go up and confidence
would go down. In both scenarios, any signs of recovery would be wiped out.

A
more optimistic interpretation – in this festive period – would see the threat
of war diminish and house prices stabilise; positive signs in the US would
spread, strengthening global markets; and redundancies would be replaced by the
triumphant return of a strong recruitment market.

What
does all of this uncertainty tell us? We have to be ready for every eventuality
– good or bad.

While
plans have to be in place for an upturn, you also need the flexibility to
handle short-term pain. And it doesn’t matter which economist you talk to about
the next three to six months – it’s going to hard.

If
you do have to shed people, make sure you lose the under-performers and the low-skilled.

Talent
has to identified, retained and nurtured, and the opportunity should not be
missed to recruit more of it, in small amounts, of course. And all this has to
be achieved while trying to up-skill your workforce and improve productivity.

It
is going to be a challenging year, but then would you want to do it if it was
easy?

By
Mike Broad

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