Recession lessons: what has HR learned from the downturn?

With job cuts and management challenges in the news every day, the downturn has brought HR into the limelight as never before. We asked HR professionals across a range of sectors what they have learnt from this gruelling recession, how the downturn has affected the profession’s standing, and what their priorities are for the year ahead.


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HR steps to recovery

Q As an HR professional, what has been the greatest lesson you’ve learnt from the recession?

Caroline Waters, director, people and policy at BT Group: “It’s not so much a lesson learnt as something having come to the fore – how important it is to continue to focus on people, to keep them engaged and motivated, heading towards the future.”

Helen Wyatt, senior vice-president HR Europe at manufacturer Unilever: “That it’s all about focusing on our top talent, and its continued development. Lots of companies can come out of recession stronger – that’s what we aspire to.”

Fiona Morgan, HR and change director at community pharmacy group Lloydspharmacy: “Be honest with people. We are dealing with grown-ups, and it’s OK to say that adding fixed costs, such as a pay review, could lead to having to remove jobs later. The downturn has opened the door for a different adult/adult relationship with our people. We need to make sure that we build on that relationship and avoid returning to management speak or adult/child relationships.”

Graham White, HR director at Westminster City Council: “I am not a fan of recession – there are too many people suffering. But I have learned a big lesson: HR has been sitting on autopilot. We let a few HR gurus create a hype. We started to believe our own PR. Life got faster, so we became ‘strategic’. Our organisations became innovative and self-sufficient, so we called ourselves ‘partners‘. Money was available, so we made our systems more elaborate. And, sadly, we spent less time with our families. And what for? So that we could do what we have always done.

“Recession has knocked HR out of its own little ‘groundhog day‘. The mighty role models have fallen and the gurus’ books remain on the shelves. It’s time to be noticed – not for our size or our strategic bent, but for our contribution. No more group hugs to help us reassess, re-evaluate, redefine and realign our engagement strategy. It is time for action. The recession has got our attention; now we must learn from it how to get back to adding real, tangible value.”

Esther O’Halloran, HR director at patisserie chain Paul UK: “My key lesson is around staff retention. We operate in a sector where staff tend to be transient, especially in London, but this year the number of leavers has dropped by more than half, although I expect the situation to change by spring. There’s been a real knock-on effect: we have been left with staff who are better-trained and more efficient. The downside, though, is that there’s only so far for the more ambitious staff to go within the company. That’s one of the reasons we’ve introduced NVQs.”

Danielle Goodsell, head of HR at contact centre services company Sabio: “I’ve learnt that your HR strategy and the HR function will always be driven by the environment in which the business exists, and needs to be agile and adaptable to cope with those demands.”


Sacha Romanovitch, head of people and culture at accountancy firm Grant Thornton: “The biggest lesson has been that by engaging our people in some of the tough business decisions, we’ve been able to achieve a better business outcome, and actually have people better bought in to what we’re trying to do. That has left us emerging stronger from it.”

Richard Neville, head of HR at power plant operator Drax Power: “Like most companies, we have not been immune to the recession. Wholesale prices and demand for electricity have fallen due to recessionary pressures. We have had to manage our costs tightly, which has meant strict vacancy controls and redeploying resources to new areas from existing headcount.

“The lesson is that communication is key. We have launched a new internal communications strategy, including an ‘open forum’ series, where the chief executive and directors will hold face-to-face briefings in small groups with everyone in the business, every quarter. In a 24-hour shift operation, this is quite a challenge, but should pay dividends in terms of engagement.”

Jackie Lowe, HR director at contact centre services provider beCogent: “Operating in a low margin, resource-intensive industry ensures we keep a tight control of costs. Evaluating the return on every pound spent is a healthy and necessary obsession. The greatest lesson has been not to create a self-fulfilling prophecy by expecting and then accepting a reduction in income.

“We have sought out new opportunities and exploited them to buck the recession trend. There’s no doubt that recession bites hard, but it’s also not without its opportunities, and those with the greatest determination and resilience will survive. We have pursued new business and have a clear long-term plan of how the organisation will look when the market recovers.”

Misty Reich, vice president HR UK and Ireland at fast food chain KFC: “Times of recession really push HR leaders towards greater commerciality and prioritisation. Resources are limited and you have to know where to invest to deliver the greatest ROI on the human capital side of the business. Further honing of commercial skills and approach in this way is a real positive lesson from the recession, and if you can balance that commerciality without losing touch of the unique and importantly distinct parts of HR, you can end up in a stronger well-rounded position as a HR function.”

Q The recession has been good for HR’s profile, moving the function centre-stage. Will this be maintained after the upturn – and if so, how?

Caroline Waters: “At BT, HR people are always centre-stage – this is an organisation that doesn’t pay lipservice. For us, HR is always central to what the organisation is doing. It should be looking to the future direction of the business.”

Helen Wyatt: “HR can play a lead role in difficult and challenging times – and I think we have done. We can give a view of the future. One of our roles is to be the experts on the future of work – what it will look and feel like, what we can expect.”

Fiona Morgan: “This is in our own hands. We can continue to focus on real bottom-line benefit, or choose to focus on less tangible traditional HR projects. Put a cost benefit on everything you do, and you might just question whether it’s worth the time and effort to, say, redesign the annual appraisal process every year. HR is a function that can make benefits-driven change happen within organisations, and for many the downturn has been a chance to demonstrate this.”

Graham White: “Helping an organisation survive recession is not about profile, but about relationships. Our future credibility will not be measured against how well we exited unfortunate staff out of the organisation, but about how we helped our organisation retain its integrity and its relationship with the workforce.”

Esther O’Halloran: “Good HR directors and teams will be able to maintain the function’s reputation, and while some companies will revert to type, the majority of industries will embrace the changes that HR has introduced during the recession. One of the key changes is that HR people are now much more open about sharing their problems with peers in other companies.”

Danielle Goodsell: “HR has advised organisations to communicate with their employees about the realities of the recession. Anticipating a post-recession need for talented staff, and not wishing to repeat the mistakes of the past, HR has proactively offered employees reasonable options rather than redundancies – including unpaid compulsory holidays, a period of part-time work, and agreed salary reductions – to retain the skills that organisations undoubtedly competed (and paid handsome placement fees) for in the war for talent, not to mention the investment in development.

“The net result: HR professionals have demonstrated they are pragmatic, solutions-oriented, and commercial business partners to business leaders. This flexible, consultative ‘we’re all in it together’ approach to dealing with the economic crisis has been well-received, though employees will need to see a real business case if they are asked to co-operate with these sorts of measures in an upturn. I believe that HR can continue to drive the communication of business realities to keep employees engaged in and supportive of the business.”

Sacha Romanovitch: “The recession has focused HR professionals on the commercial impact of what they do, and it’s enhanced their credibility by showing they can actually deliver when it matters. It’s gone from something that seemed soft and fluffy to something which has a hard business consequence. Through those discussions, it’s allowed HR teams to discover the language that allows them to articulate what they want to do on the people front in a way the business understands.

“In terms of maintaining that, we talk about things such as employer brand, which can sound very ethereal to the wider business. It’s helped us think about issues such as how much we have spent on recruitment fees, how many of those people have we kept, how many of the people from the best universities are we attracting, and what is the financial cost of us doing these different things. If we get our message out into the market, and create the environment to keep people, what’s the commercial consequence of doing that? It’s helping us discover the language which has enabled us to get more traction on some of the things that really will make a difference in keeping the best talent for our firm.”

Richard Neville: “It has particularly raised HR’s profile in terms of employee relations and engagement. For those who haven’t experienced a recession, it has provided valuable learning for when the next one comes along. The difference compared to previous recessions is that more employers have consulted effectively and explored creative ways of managing reductions, including redeployment and retraining, flexible retirement, reduced hours and so on. These ‘win-win’ alternatives to redundancy are likely to be retained in the HR toolbox, as they enhance the business case for flexible working.”

Jackie Lowe: “I don’t agree that the recession has been good or bad for HR’s profile. We have tended to become obsessed with how others perceive us as a discipline, when it’s far more important to be judged by our acts and our contribution. If we are confident in our ability to add value and deliver, our profile within our employing companies will be where it should be. What others think is of little regard.”

Misty Reich: “The profile of any function is directly correlated to its performance, HR is no different. If HR leaders retain the commercial focus that has been sharpened during the recession, grow and develop key talent and drive to deliver against key business objectives, they will continue to have strong influence in the organisation.”

Q What are your priorities for 2010?

Caroline Waters: “It’s all about getting the business in really great shape, so that we’re ready to respond when the markets start to go again – and we are already beginning to see one or two tiny green shoots. And we’ll be making sure to communicate our strategy really clearly, and the role that every employee has to play in delivering it.

“We’ll also be focusing on the part that BT has to play in the 2012 Olympics – it’s a fantastic opportunity to engage and inspire people, and to show the part that UK Plc can play globally.”

Helen Wyatt: “For me it’s about capability, growth and talent development.”

Fiona Morgan: “In my broader role encompassing HR, IT and business transformation, my priority is to drive our transformation programme that’s targeted to deliver £200m over the next five years, to better serve a changed marketplace in the pharmacy sector. On the people side it’s about building change capability and optimising our new organisation structure to drive new sales opportunities. Our people need real clarity about the role they will play, and engaging hearts and minds is as important as equipping them with the right skills.”

Graham White: “To avoid complacency, and to remind myself and my HR colleagues to be more aware, more accountable and more responsible. My priorities are to step up and be a credible part of my organisation’s management team. It’s not about another name change or another crazy philosophy to follow. If we are to survive as a profession – and industry and commerce needs the optimism, creativity and innovation we bring – then we need to stride out, take criticism on the chin and be the responsible, mindful and fully accountable players we can be.”

Esther O’Halloran: “To move Paul into a natural selling culture. This is a real challenge for us, as we operate in a traditionally French way – staff have to serve every customer and to know the products.”

Danielle Goodsell: “More thought around the cost of enterprise and corporate development and the resulting resource and recruitment requirement, and creative resourcing and attraction. Secondly, a greater focus on driving and retaining value from our training budget.”

Sacha Romanovitch: “Our focus is two-fold. First, it’s about our employer brand, which is having absolute clarity about what’s special about us as a firm, and also the people we need to be really successful in our business strategy.

“The second aspect is taking on the performance culture, so that we can then focus on developing our talent appropriately. That is both developing the succession for leadership, but also recognising that we have very valuable people in our firm who may not be progressing to leadership level. We want to invest in their continual development and improvement in their existing roles. We want to have a really talented workforce.”

Richard Neville: “Collective bargaining arrangements, and embedding our internal communications strategy.”

Misty Reich: “Further progress in building the skills and capability of all our colleagues. Providing opportunity, tools and capability for every colleague to have a career plan. Supporting our franchise partners in continuing to grow the capability of their teams. Progressing further with HR technology that makes a difference to the business and our teams and continuing to drive excellent results on our key people metrics.”

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