Employers find silver linings

Slowdown presents challenges and opportunities
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 09/28/2009

There may not be jugglers at Rare Method’s annual Calgary Stampede celebration this year, as the advertising agency cuts back on some of its expenditures during the economic slowdown. Instead of spending $100,000 on an event that builds up attraction and retention with clients and employees, the agency might be looking at a more realistic budget of about $25,000, said Tom Short, president of the Calgary-based shop.

While adjusting to the new economic reality can be hard, a recession is also an opportunity to look at the big picture.

“Instead of ‘the cup is half empty, the sky is falling,’ we look at it as an opportunity to review all our business processes, our service offering and value proposition and point of differentiation, to entrench and become deeper with our clientele, become way more efficient and start to rebuild based on a model that gives us the greatest opportunity for growth in the future, versus clinging to offerings and practices that worked 12 to 20 months ago,” he said.

Tweaks need to be made and now is a good time, after the “hyper-competitive” environment of two years ago when it was very difficult to find good talent, he said.

“It allows you justification to make changes you probably wanted to make anyhow, so it is an opportunity,” said Short. “It’s less of a morale hit to the organization when you make adjustments in a time that gives you justification.”

Moving out low performers, for example, can improve morale and make employees feel more like they’re part of a team, he said. And by asking people to take on more responsibility, and ensuring the best and the brightest have room to grow, there is a great opportunity for career pathing, learning and growing.

“The advantage is the ability to reshape the business and make it more efficient so when times are good you can grow more effectively and profitably.”

While employers are not necessarily taking advantage of the recession to make cuts, the tightened economy provides breathing room to look more critically at programs and people.

“Everybody is, in a way, affected by the economic slowdown but some organizations are using it as, let’s call it, an ‘opportunity’ to review the cost structure of their organization,” said Eric D’Amours, Toronto-based leader of mergers and acquisitions, restructuring practices, at Towers Perrin.

“You see some organizations saying, ‘We don’t absolutely need money this year but don’t know how long the recession is going to last, so what can we do to prevent it?’ So it’s preventive actions taken by organizations less affected.”

In previous recessions, the focus on attracting and building talent capability was not as strong because it had not built up over the past five or six years, said D’Amours.

“Organizations have spent so much time and energy in attracting talent, training the people, being able to make a difference. They don’t want to just give up on all this energy,” he said. “For now they’re trying to save as much as they can what they’ve built over the last five years.”

Another silver lining to the recession is the potential for recruitment. As many companies trim back by getting rid of marginal performers, a lot of good people are caught up in that, said Claude Balthazard, director of excellence at the Toronto-based Human Resources Professionals Association.

“There’s actually more talent available than there has been in some time — the trick is to be able to tell the difference between talented people from distressed industries and people who are marginal performers.”

Obviously companies are in different financial positions and some don’t have many options when it comes to cuts, but for others the basic fundamentals around investments and rewards have not changed, said Scott Bunker, Toronto-based senior vice-president at Aon Consulting.

“In periods of growth, these things can get away on us,” he said. “Times like now are prompting organizations to reflect on how these programs align to their strategic direction — ‘What is an appropriate mix of rewards and how can we differentiate ourselves relative to competitors?’”

Many organizations have talked about pay for performance in recent years but not actively walked the talk and with the recession, there is “a more heightened awareness and demonstrated need to follow through on that,” said Bunker. “Organizations are taking a more disciplined and thoughtful approach to design compensation programs.”

Panasonic has made cuts globally but in Canada the impact has been small, so reductions have been minimal so far, said Deborah Scott, Mississauga, Ont.-based director of HR at Panasonic Canada. The slowdown is definitely an opportunity, she said, with the organization giving more thought to how it’s spending money.

“You’re thinking about how that’s going to impact the company more than you would have in the last couple of years, which is a good thing — it brings more discipline to the financial part of the job,” she said.

And now is a good opportunity for HR to prove its worth. Decisions about cutbacks often come from the higher ups, said D’Amours, while HR is occupied with finding what savings it can, especially when the biggest cost item is people.

“This is certainly a time where HR can show what it can bring to the table because typically the finance people will be interested in the immediate impact on their balance sheet,” he said. “HR can bring this additional dimension. Get the top of the house more open to what HR can bring in terms of strategic value.”