Alberta down but not out

Employers get creative with HR strategies

With a major downturn in oil prices, it’s not all doom and gloom in Alberta — but the hiring binge is over, according to a survey by the Human Resources Institute of Alberta (HRIA) in Calgary.

The association’s Hiring Confidence Index has gone down across organizations, regardless of size or sector — from 58.4 for July to December 2014 to 52.3 for January to June 2015. The biggest drop is among small organizations with fewer than 100 employees (7.7). Large organization confidence dropped by 3.2 while medium-size organizations dropped by 5.8.

The number of employers expecting to hire more than five per cent  employees is also lower, with the Alberta industry average falling from 26 per cent to 19 per cent, professional services tumbling from 32 per cent to 15 per cent, and oil and gas falling from 38 per cent to 27 per cent.

Permanent layoffs are also expected to rise. In the spring, 55 per cent of staff returned to work in less than three months — today, that number is 50 per cent. Previously, one in 10 temporary layoffs became permanent, and now it’s 13 per cent, found the survey of 773 employers.

But Alberta has been through this cycle before and there’s still optimism, said Chris McNelly, CEO of HRIA.
“We still have a strong economy, it’s not in the tank at this point... we recognize that while we’ve got some challenges, workplace challenges to deal with the drop in oil and how that impacts us, it’s not the be-all-and-end-all for us, it’s not the end of the Alberta ride,” he said. 

“We were full speed ahead and now we’re just sort of dropping a couple of speeds back.”

Alberta knows what to expect and employers have a good long-term memory, said McNelly.

“They know that you can’t just lay off three-quarters of your workforce and think you’re going to survive. Everything has to be handled appropriately and I don’t think you’re going to see kneejerk reactions. You’re going to see slowdowns, you are going to see some layoffs, but not to the extent that we’ve seen in the past… because we know that as the economy picks up again, it’s hard to get those people back.”

And human resources has an important role to play, he said.

“HR is in a position to provide good guidance and advice to senior management for how to soften the blow and soften the impact.”
In the 2008-09 recession, all of Canada was impacted, said Claudine Vidallo, project manager, labour marketing information, at the petroleum HR division at Enform in Calgary, a safety association for the oil and gas industry.

“Shedding off workers was something that a number of companies did first do, just hoping they’re able to attract back the workers when things pick up. And they did pick up. However, not all the workers came back. So that’s one experience that they’ve learned,” she said. 

“This time, if companies choose to let go of their workers, there are other industries that are more than happy to pick up those workers because they are doing some hiring activities at this point.”

The big difference with this downturn is there’s a real effort to try to mitigate the effect, said Carol Howes, director of the petroleum HR division at Enform. 

“We’re seeing a lot of creative approaches to dealing with this downturn, moreso than in previous downturns,” she said. “Companies are recognizing the need to hold on to their core staff, so they’re trying to come up with ways to be able to do that. 
“Certainly, there’s a combination of activities that they’re undertaking, such as moving workers into different parts of the company, reducing workweeks. They’re looking at pay reductions rather than layoffs, if they can; they’re looking at trying to reduce obviously contract workers first and also rotational workers. So certainly they’re doing this very strategically as much as possible.”

There is still an overall skills shortage and there will eventually be a turnaround, so those skills will be required, said Howes.

“(Employers are) very conscious, I think, of the ability to be able to hire back some of those skill sets that they’re currently losing.”
And with the downturn, employers can take longer to find the right candidates to fill job vacancies.

“They don’t have to jump at the candidates as quickly as they were before,” said McNelly. 

“We just didn’t have that luxury before because of the demand — there were more jobs than there were people so you had to jump fairly quickly so your recruitment turnover time or time-to-fill had to be condensed. 

“So employers were relatively reactive and quick to hire because they knew that if they didn’t snatch the person up, they would be gone.”

As another example of creative practices, a number of companies are implementing salary reductions instead of layoffs, said Vidallo. “It can spread out the losses that way.”

While average salary increases were previously at three per cent to 3.5 per cent, now they’re being halved to 1.2 per cent or 1.5 per cent when it comes to northern Alberta, said Gail Evans, president of the Wynford Group in Calgary, citing her company’s survey of about 400 employers, largely in western Canada.

In northern Alberta, 19 per cent of employers surveyed said they plan to decrease salaries while 13 per cent expect increases (see chart above).

“Certainly in Alberta, there’s lots of ‘Let’s wait and see, let’s not try and panic, but maybe we’ll just not provide any increases now,’ and they’ve done that before — that’s a logical thing to do in this environment,” she said.

Project-based organizations are being hit the hardest, but they are used to it, said Evans.

“They’re using strategies such as project-based incentives and other sorts of longer-term retention strategies is what is critical to keep the key people, because they have to keep bench strength — they can’t let them all go.”

Some sectors are still strong, such as forestry and technology, she said. 

“We’ve got lots of other services that are not maybe directly linked to the big industrial projects and they’re still providing increases, they’re looking at this as opportunity to make sure they are competitive because they know what’s going to happen next year,” said Evans. 

“I do believe that some of the projections are going to slowly come back, I think we’ve already hit bottom and I think that’s what everybody’s hoping.”

Alberta is resilient and there are contingency plans in place, said McNelly.

“We slow down but we’re still farther ahead than anybody else, so we went from great to good, that’s essentially where we are, and that’s why I say it’s not doom and gloom, we’re going to get through this and it’s a blip.”

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