Defining people priorities in a downturn

by 02 Apr 2009

The world today is in the grip of the worst recession since the Great Depression. At 14 months in duration it is already longer than any since the early 1980s and, by all accounts, we have not hit bottom. Since December 2007 when the recession officially began, more than 4 million jobs have been destroyed in the Unit ed States alone. In 2009, job losses already exceed 1.4 million, the worst start to a year in more than three decades.

The war for talent

Yet, despite the depth of the downturn, talent management challenges abound. The war for talent in general may be in retreat, but the war for talent with specific skills rages on.

In December 2008, the National Federa tion of Independent Businesses (reporting on its membership) said that nearly three-quar ters of firms wanted to add workers but there were “few or no qualified applicants for the job openings they were trying to fill”. In a late 2008 survey by Ranstad Corporation, more than half of responding companies said that they were “still experiencing skills short ages in spite of the downturn”.

Many organisations are actually taking an aggressive stance in this recession, according to Human Capital Institute and Workscape re search. When it came to firing, benefits and bonuses, an alarming 60 per cent of the or ganisations we surveyed have either frozen or reduced base salaries in response to the down turn. Moreover, half have frozen hiring and more than a fifth have engaged in mass layoffs.

Interestingly, despite the fact that it has become an “employers’ market”, more re spondents are concerned about employee retention today (36 per cent) than they were 18 months ago, before the recession began (28 per cent).

Despite wage, hiring and bonus freezes, organisations need critical skills to keep pace with a constantly changing market. Fifty-seven per cent of respondents are currently hiring new employees. Surprisingly, respondents in the financial services sector report even stronger hiring activity. At 69 per cent, finan cial services firms were the most likely of five key industries to be currently hiring. Further more, government, education, electronics/ technology and professional services firms are also more likely to be hiring than not.

Talent management initiatives

When asked to rank the talent management initiatives they consider most important dur ing this recession, not surprisingly, respon dents said the emphasis has shifted from re cruitment activities to a focus on driving greater performance from the current workforce. By a wide margin, performance management ini tiatives are rated most important, followed by learning. This was generally consistent across all industries and company sizes.

There can be no escaping the fact that economies everywhere are in a serious state of crisis. Nonetheless, as our research shows, hiring continues; as does talent management in general. Most organisations realise that in order to survive the recession and be poised for growth when the economy rebounds, their workforce must remain in good shape. Even if headcount is smaller, critical skills and tal ents are essential and performance is key.

The most surprising and encouraging finding is our respondents’ strong note of optimism throughout the survey.

Most employers are not reducing core ben efits such as healthcare, for example, and a full 27 per cent are either taking a business as usual approach or are actually taking ad vantage of the recession by adopting even more aggressive strategies.