John Philpott on why HR is better prepared for a downturn than ever before

HR is better placed now to deal with the recession than in earlier downturns, according to John Philpott, chief economist at the Chartered Institute of Personnel and Development.

Despite the recent outcry from agency workers about being laid off by BMW at the Oxfordshire Mini manufacturing plant with just one hour’s notice, Philpott believed HR was learning some lessons from the past.

“It is difficult to generalise, and there will be some bad examples along the way,” he said. “But I get the sense that this [recession] is being handled in a more sophisticated way. The blunderbuss approach to industrial relations is less common than in the past.”

Employers were choosing to deal with a drop in demand for goods and services in a far more flexible way, with the introduction of pay freezes and reduced hours, he said.

“There is a desire to preserve skills and keep the most talented workers, unlike in the past,” he said.

Despite this being the first recession in the working lives of many HR professionals under 40, the profession as a whole has proved it can handle the difficult times. “If people in HR are experiencing this for the first time, the lessons from the past have been absorbed by their study,” Philpott said.

Skills shortage

However, HR still has its work cut out in managing the ongoing ‘war for talent’, which perhaps surprisingly, has not been eased just because more people are looking for jobs at present.

“Despite the downturn, we are still moving towards becoming a more skilled, knowledge-based economy. There is still a search on for the most talented people.”

He added: “Recruiters may have more people to choose from, but they discover that it is more complex than that.”

More important is that HR professionals did not have a knee-jerk reaction to the recession. Although the economic outlook remained unclear, the downturn would continue for a least another year, he said, so it is vital HR encourages line managers to remain committed to improving employee engagement and nurturing internal talent.

“HR’s has to make sure that it does not make rash decisions it must take a rational, considered view. Look for engagement and make sure that people that remain are motivated and committed.

“We all know the recession will be deep, but how long [it will last] is less certain.” he said. “I hope that, economically, we will be emerging from recession this time next year, but the labour market will take much longer to pick up – not before 2010,” he said.

HR security

For HR professionals to feel assured in their own jobs, they should make sure they are fully up to date with the economic circumstances affecting their business.

“If HR is purely a passive role, just doing the bidding of the powers that be, then it is likely to suffer, but if HR has something to say about the strategy and direction, it will be safer. [HR needs to] make sure that is taken into account, so it is not just responding to the business. HR has the ability to do this.”

Philpott admitted that keeping a close eye on the business environment while simultaneously understanding how that affected an organisation’s productivity and profit was nothing new for HR, “but the downturn will speed up the pace of it,” he said, as HR practitioners strive to come out of the upturn proving they added value to their business.

For some HR professionals, the recession will be an opportunity to shine.

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