How will HR weather the storm of 2009?

The recession will clearly dominate employment issues in 2009, and there will be much discussion about its likely length, reach and impact. Few organisations will be immune, even if the effects might be delayed for some.

The two big questions for me are:

  • Will organisations treat their human resource any differently this time compared with other downturns and, in particular, will there be any focus on the future?
  • How will the HR function fare in the recession, moving from a position where its policies claimed attention in a tight labour market, to one where these might seem fanciful indulgences?

New approach

HR has prospered in the past 10 years or more as the war for talent has raged. The function has had to emphasise strategies on retention and attraction – employer branding, family-friendly policies and flexible benefits are just some of HR’s responses. People have been centre stage, and HR has positioned itself as the agent encouraging their contribution.

Now it has to dust off its ability to downsize effectively. Practitioners will have to (re)learn about redundancy packages, redeployment methods and outplacement services. They will have to dispense with staff with dignity while keeping up the morale of the remaining workforce.

But in these tough times, will HR be able to use the position it developed for itself in the good times to argue the case for protecting skills, retaining talent, and keeping those policies in place that motivated people? Will HR, even if the business news is grim, be able to think ahead about what will be needed post-recession?

Just as those companies that prepared for the downturn will come through it the best, so those that anticipate the upturn will quickly profit.

Now more than ever, HR will have to get close to the business. It will need to think and speak in organisational terms that reflect the demands of the situation. The more an employer is up against the wall, the more HR will have to come up with innovative strategies to reduce cost – changing the skills mix, deferring pay, exiting from expensive benefit schemes, moving work to lower-cost locations – while still retaining quality.

HR should ruthlessly improve its own processes to make them more efficient and effective. But even here an eye should be turned to the longer term: what forms of work organisation, knowledge sharing and employee involvement processes will carry the organisation forward to a successful future? If you work for an organisation that is more insulated from the economic woes, then you could actively seek out talented people unlucky enough to have been in the wrong place at the wrong time.

Broad response

This emphasises another point: HR’s response will have to be aimed at the individual as well as the collective. Whatever situation the organisation is in, this may be the moment to be clear about why people want to work for you. The risk is that people may want to stay for the wrong reasons – ie, there is no alternative for them. When improving organisational performance is critical and you require imaginative thinking, you really have to have flexible people who are committed to the success of the organisation.

These are the people you must nurture almost irrespective of the business situation. You can happily lose those who are only with you because it is easier to remain, are unhireable elsewhere, or are simply too scared by labour market conditions to leave.

One of the disasters of previous recessions was that often staff who were necessary to the effective running of the organisation left. It makes no sense firing a valued group of people on the Friday, only to take them on via a contractor on the Monday – as one organisation I know did.

HR needs to be smarter and braver than that: smarter because workforce planning tells us what future resources are required and braver because it must protect vital assets even in the face of number crunchers with their simplistic cost profiles.

The challenge, therefore, is for HR to deal professionally and sensitively with downsizing innovate in work organisation and processes ensure that talent and skills for the future are retained and plot a course for the time after the recession – having the right policies and practices in place for the new slimmed-down world.

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