Weathering the economic storms

by 19 Aug 2008

In the last few issues of Human Resources magazine, we have looked at the effects of a possible economic downturn on organisations and how their leaders and HR professionals should respond. The overall line of this coverage is that organisations should not put the brakes on and brace for impact.

Instead, they should think a bit longer-term, and continue with good HR practice and make sure all their talent is in the right place to give them a leg-up on the competition regardless of market fluctuations.

The front page story for this issue, ‘Caution urged on recession talk’, warns leaders against a doom and gloom mentality and that talk of recession could become a self-fulfilling prophecy. Kevin Panozza, former CEO of SalesForce, which took out three Hewitt Associates Best Employer awards, says that rather than pursuing savage cost-cutting and downsizing, companies should focus on growing their business and building market share.

The Australian economy has been booming for years now, and there are always cycles in business. It has been said that when the US sneezes the world catches a cold. While Australia is hardly an economic superpower, it is much better positioned than the US is to weather any economic storms of its own making.

These will come and go, but issues such as the ageing of the population, globalisation of the employment market, skills shortages and competition for talent won’t.

CEOs and sometimes governments are notorious for their short-term views, and anything longer than three to four years is off the radar for many companies when it comes to solid business plans. A longer-term approach to managing their workforces not only makes companies more sustainable, but it helps avoid any tendencies to adopt knee-jerk reactions to economic fluctuations.

HR is in the perfect place to help companies understand this. As long as the HR strategy directly supports a business, good HR leaders can help guide and calm by ensuring that all the right people are in the right place to drive a business through any economic downturns.