Blog: When the going gets tough

Strategic HR

When the going gets tough

There are several ways HR can actively contribute to organisational changes in a tough economic climate
When the going gets tough

The pink papers over the last fifteen days have probably sent shivers up the collective spines of most HR functions in the country today. The rupee spiralling downwards, investment climate deteriorating, GDP growth slowing, confidence in the government and the financial institutions such as the RBI at an all time low – one can almost feel the HR environment in the country taking a deep breath and preparing for hibernation. Because, unfortunately, that is what HR most often does in tough economic times.

This reaction from HR is not totally unwarranted, because HR is the function that is possibly hit first in terms of budget cuts and layoffs in tough economic times. However I do believe that this is also an opportunity for HR to demonstrate its strategic value to the organisation, and truly earn a permanent and respected seat at ‘the table’.

The very first casualties within the HR function are often Training and Recruitment. So let’s talk about training first.

Many companies will be rethinking budgets and will possibly slash training budgets. But this is exactly the right opportunity for HR to actually take some time out and rethink training strategies. Do we use technology effectively enough to deliver learning in a cost efficient way? Can we use new strategies such as gamification and social media to ensure increased impact of training and thus improve the ROI on training? Is there a way we can remodel commercial and content relationships with vendors and other partners to create a win-win for both – not just slash rates and subject oneself to a compromise on quality? Are there pockets of internal talent that can be used in training activities, which will also provide job enrichment to internal resources? Can we use development as a tool to drive retention and improve the overall quality of the Human Capital in the organisation, while simultaneously allowing people to grow in capability? These are just some of the questions the L&D functions within organisations should be asking themselves at the moment.

Coming to the issue of hiring, it is but obvious that the quantum of hiring will come down as the growth of companies slows down. But here again is the opportunity to put in place smart hiring strategies that focus on quality hiring versus just filling the numbers. Internal hiring programs, which often take second place in the good times, can be improved to bring down the cost of hiring both by reducing dependency on external vendors as well as filling critical jobs internally, which will have the additional benefit of positively impacting morale of employees who see career growth even in a gloomy external scenario.

It is also the right time to ‘cherry pick’. If the organisations’ strategy includes entering different business segments in the future, or if a particular kind of talent has been hard to come by in recent times, now would be the opportunity for organisations to pick up the ‘right’ talent externally, possibly at more attractive price points as well. It is also the opportunity for organisations to rethink their hiring philosophies. For example, is there a particular talent pool that we can leverage that we have not done adequately so far? An example of this is a large conglomerate who has reached out to several mid to senior level women who dropped out of corporate lives due to various reasons, and offered them critical projects on flexi time basis. This strategy is allowing the organisation to execute on a number of initiatives without increasing headcount. It is also allowing the organisation to use much higher quality resources for the same, without incurring the costs they normally would have had to, to do so. And at the same time, some future critical work is continuing to get done, instead of getting postponed which is the more common scenario, which will help the organisation to emerge more competitive in the future.

The other function in which HR professionals must be a worried group is the Compensation and Benefits function. Given the fiscal cycle in India, a number of organisations would have announced raises and bonuses during a time when business sentiment was not at such a low. One of the most difficult things to do in an organisation is to cut salaries of staff, particularly when inflationary pressures in the economy are so high. Some of the strategies that C&B professionals could be thinking of are a focus on benefits rather than compensation. This would help, as there are a number of benefits that need not hit the bottom line immediately as pure compensation does, but will still have value to the employee. An example of this is the sabbatical program one organisation has put in place, where it is offering employees a six month sabbatical for further education or pursuing a hobby, where the organisation will contribute a percentage of the cost of the program. A friend who works for this organisation has taken time out to pursue her passion for photography. The organisation has gained in terms of saving on her monthly salary ( of which she will be paid only a percentage during this period ), has gained her loyalty and possibly enhanced her leadership abilities as well, since we all know that multidimensional people often make better leaders.

The above has only touched the surface of the subject at hand, and has not spoken about many other things such as outplacement programs, increasing operational efficiencies etc. But there is one more thing I want to talk about at this stage, and that is communication.

One of the most important things the HR function can do in a downturn is maintain employee morale, and thus productivity at this time when the organisation needs it the most. Courageous, fast and empathetic communication is the key to this. It has been my experience that employees will often not react to bad news as adversely as one expects. In fact, it is a well known fact that people will pull together and often achieve astonishing results in times of crisis. And one also knows through experience that one of the most damaging things to employee morale are overactive rumour mills, which often churn out baseless doomsday stories. While HR needs to lead the charge on this front, communication has to flow to and from all levels of leadership in the organisation, starting from the top. HR would thus have to co opt managers, leaders and opinion makers at all levels and in all parts of the organisation, to keep up a constant stream of honest and frank communication, and enable every leader in the organisation to answer the questions in employees minds.

So while one can possibly write a thesis on this subject, I would end this piece by saying that this is the time for HR to put on their thinking caps, be innovative, be courageous and use those great influencing competencies with employees and leadership to help the organisation ride through the current scenario and emerge stronger at the end of it.

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Topics: Strategic HR

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