Human Resource professionals are being pulled in two seemingly incompatible directions as they manage the immediate effects of the downturn and prepare the organisation for better times.
This requires an ability to deliver practical, risk-free, short-term cost-cutting plans and then switch effortlessly to long-term strategies for growth and development.
There are five areas where HR professionals need to focus to get ready for recovery.
First, embrace new ideas. Organisations need to rethink how they pay senior executives — how they reward good performance when what counts as good performance has changed dramatically. They need to think about how to attract leaders who have the qualities for the new environment, leaders who may look very different from the current senior team.
Second, ensure good governance. Organisations are coming under increasing scrutiny from not only shareholders, but the public, politicians and the press. Fairness and transparency and value for shareholder or taxpayer money are paramount. Pay and performance need to reflect that agenda. HR needs to be a bold, critical friend to the board, providing guidance and minimising reputational risk.
Third, do unpopular things well. Cutting costs will always be the obvious response to hard times. Redundancies will be unavoidable for many, but there are potential savings to be made in managing people costs more efficiently. This would include better absence management; more rigorous expenses systems; use of contractors; pay; incentives; employee benefits; secondments; and flexible and part-time working. HR needs to be facilitating a more creative approach and offering practical solutions. It also needs to challenge the old recipes for cost-cutting, such as cutting training and skilled labour, showing how they undermine future market competitiveness.
Fourth, plan for the future. The landscape at the other side of this recession will look very different and the workforce will need to look different. How many staff an organisation needs, what skills they must have, what they do and where they do it may all have to change. Despite high levels of unemployment, those skills may not be readily available. So HR needs to develop a future-focused workforce strategy and a plan that shows how to build, buy or borrow resources.
Fifth, energise the firm. Even if recovery is on its way, the future climate is not going to be the benign one of pre-crisis days. Companies will need to be creative, innovative and agile if they are to prosper in this new world. Recessions are not good preparation for that approach as they tend to knock the breath out of organisations, sapping people’s confidence and motivation. HR needs to tackle the emotional health of the organisation and look for ways to encourage staff engagement and idea-generation.
Maximising your post-recovery options needs intelligent HR that takes determined action in each of these five areas. None of it will be easy, as the recession probably has a few more surprises in store, but waiting and seeing is not an option. HR professionals need to act now to secure their organisation’s future.
Jonathon Hogg is the head of PA Consulting Group’s People and Organisation Change Practice