Cost-cutting HR has biggest challenge

We seem to be developing into a get-rich-quick, game show society. Materialism, speed of work and mutual respect are all changing and fast.

Inevitably, organisations mirror society at large and our experiences and feelings influence how we react to being managed at work.

HR is no exception and it is having to strike a balance between two extremes – on the one hand, performing a hard-edged, commercial role which is being cost driven, and on the other, needing to be able to sensitively read the mood and pressure points of the organisation and anticipate and head off problems.

It is an essential dilemma: do we plough into the issues of cost or do we become facilitators, coaches and organisational consultants? HR is often under pressure to take one side or another and many are choosing the cost-driven approach. The reality is that we have to do both, most of the time. We have to be able to take a lead in both camps and deliver.

While cutting costs is easy to measure, coaching and flexing the business is not – but I know from experience that it’s the latter that really drives a business. It also helps the organisation to grow, develop, learn and ultimately win. The former allows it to momentarily remain competitive against one narrow measure – important though it is – but cost isn’t going to lead to long-term sustainable health.

In the same way that we should be wary of get-rich-quick game shows, we need to be mindful that strength gets built every day through all the people we employ. Get-rich-quick HR strategy doesn’t work either.

We have to be careful that in stripping out the cost we do not also strip out the soul of the company. No amount of retrospective brand building activity lets you recover from that. Business is littered with companies that have tried to paper over fundamental cracks in the soul of their business.

It’s worse than that in the sense that many of the current attempts to strip costs involve yet further damage to the relationship people have with their organisations – for example moving from final salary pension schemes – and while the cost saving looks great, the damage to internal societies within the company is massive.

The old Michael Porter adage is relevant here – we are either different or cheap – there is no middle ground. Anyone can cut costs – but not many can fundamentally understand the heart and soul of an organisation and make interventions that drive it forward.

Cutting costs, while painful is easy, can be done by anyone, and inevitably leads to competitive convergence as everyone does it and it’s hard to gain an advantage. Different means pulling it off in both camps – hard and soft skills to the fore and balance the tough with the caring.

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