Don’t abandon solid HR practices (Editor’s notes)

Important to motivate and engage employees in tough times

It’s getting ugly out there. Every day, the news seems to get a little bit worse. Companies going bankrupt, thousands of jobs being slashed, workers asked to voluntarily reduce hours to avoid layoffs.

This is undoubtedly the bust part of the boom-and-bust cycle. It wasn’t that long ago the pages of Canadian HR Reporter were dominated with headlines discussing the labour shortage and how employers were unable to find all the talent they needed.

What a difference a few months make. Employers now undoubtedly have the upper hand in the war for talent. And since pretty much everyone still employed feels lucky just to be working, that means employers can take a brief respite from all these expensive, touchy-feely HR programs, right?

Wrong. While it’s tempting to abandon solid HR practices in tough economic times to save a couple of bucks, it’s a move that will undoubtedly backfire.

That’s because the business case for good HR wasn’t built solely on competing for talent. That’s just one very small part of it. Good HR is about motivating employees, it’s about keeping them engaged and increasing productivity. The benefits of this don’t disappear when the going gets tough. Solid HR practices contribute to the bottom line, regardless of economic conditions.

This doesn’t mean HR is on a pedestal and can’t be touched. But it does mean CEOs and CFOs shouldn’t use a hatchet when it comes to HR. Programs should be looked at and evaluated individually. Some will undoubtedly have to be scaled back or eliminated. But the basic tenents of good HR must remain intact.

I’ve written a couple of times about the fortunes of Circuit City, an electronic retail chain in the United States. (To view those editorials, see article #5140 and #5845.) Back in early 2007, the company turfed 3,400 “high-paid” employees and replaced them with lower-paid workers. On paper, it seemed like a sensible cost-cutting reaction to slowing sales.

But in practice, it was a terrible business decision from which the retailer will likely never recover. When Circuit City showed its quality staff the door, customers followed and never really came back. It’s a textbook case of why people matter.

According to a report on CNN, no company has had to cut more jobs so far in 2009 than Circuit City — 30,000 and counting in the first few weeks of January. It’s a painful lesson, but it’s one that shouldn’t be forgotten in a difficult economic climate.

Now more than ever, HR needs to step up to the plate and defend its best practices. The profession has come a long way since the last major recession hit — it has more credibility, more clout and more tools to help businesses weather storms.

HR professionals need to use this to their advantage. Now is the time to dig in and defend all those great programs you’ve been putting in place. When the clouds clear, your company will be in a better position for it and the HR profession will gain even more well-deserved credibility.

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