“People are our most important resource,” many company executives say, somewhat piously, and then they proceed to show exactly the opposite. They’re perhaps unknowingly harsh in times that call for greater understanding, or they’re misguidedly generous when they should be firm. And the sad truth is this means that when facing tough times, their human resources decisions often work against their big-picture needs.
Solution? HR directors must take the lead and help their organizations think strategically in this area. They need to help position their organizations to deal with the difficult times we face now, so that employers and employees can enjoy the recovery that is sure to follow. Ironically, because of its unfortunate “touchy-feely” image, HR is actually in the best position to help make the company act with “more head, less heart.”
This includes taking a well-considered approach to workplace downsizings, one that considers the reality of financial problems, as well as the company’s strategic needs. What happens if companies do not do this?
All too often, one of the first results of a lighter order book is that the best employees, those most vital to the company’s future, leave to find work elsewhere. This limits the company’s future.
Second, well-intended managers may resist essential cost-cutting steps. This can put the entire company at risk. Managers may want to be compassionate and avoid downsizing, but it may be misplaced if payroll costs sink the entire company, putting everyone out of work.
Eventually, when senior management realizes that costs are strangling the company, too often their reaction is to order line managers to “reduce staff by X per cent” to reach a sustainable payroll cost level. They simply want a company that is less expensive to operate, without thinking much past that objective.
In the absence of clear instructions of what kinds of people to dismiss, however, the company will compromise its overall strategic goals. This is because most of the time downsizing is based, at least in part, on reverse seniority. The last ones hired are the first ones to go. The young workers, including the ones with key skills are pushed out of the company, while some of the longstanding workers, who may be simply putting in time until retirement, remain.
This is a problem tailor-made to give the HR discipline a chance to shine. HR directors have the tools and skills needed to help mould the company for success, both in hard times and in the coming upturn. How?
In the first place, HR can help the company determine what skills and other workforce attributes it needs to survive in the short term. It can then examine the current workforce to see who has these skills and best matches the desired profile.
HR is also well versed in the steps necessary to ensure that the company stops carrying people who, for whatever reason, do not match its future reality. This includes developing severance packages that give the former employee a good start towards a new life, including employment counselling when appropriate. These steps also have the effect of reassuring remaining employees that the company will care for them to the best of its ability.
HR can and must encourage top management to keep employees informed and as much as possible, to obtain their buy-in on the decisions being made. Employees may even suggest innovative solutions, such as unpaid days off or pay cuts, cost-effective solutions they might have resisted if management simply came to them and said, “This is how it is, so learn to like it.”
In a unionized environment, the company’s freedom of action will be limited, particularly if the company wants to “outplace” high-seniority staff instead of the usual “last hired, first fired” practice. However, HR is also in position to foster good relations between management and employees and their union leaders. Responsible union leadership will agree that targeted downsizing is sometimes necessary to save the jobs of the majority.
Appropriate human resource and communications expertise, either internally or contracted from outside, can help a company determine the optimum makeup of its workforce and make recommendations on how to achieve this.
During and after the layoffs, HR can help senior management recognize the importance of retaining its “keeper” employees. Too often, star employees have reported that when they indicated their plans to leave a company, few or no efforts were made to get them to stay. And the really frustrating part is, most of the time their reasons for leaving were not money.
HR can give line managers the tools they need to identify the employees the company needs to retain, to find out what they need to be able to do their jobs better, and to induce them to stay.
There is no doubt about it, the economic downturn is going to be a test for most organizations. However, it is also a prime opportunity for HR to “seize the day” and help provide solutions that address financial threats without compromising future opportunities.
Paul Wilson is vice-president, human resources consulting at Mintz & Partners Financial Services, where he advises organizations on making their people more satisfied and productive. He can be reached at (416) 391-3100 or firstname.lastname@example.org.