The current crisis provides an outstanding opportunity for HR to show real leadership, writes Les Pickett
Over the years I have been involved in many corpo
rate downsizing and restructuring initiatives and cor
Perhaps the most challenging was the board decision of
an Australian company to reduce their staff from just over
6000 to less than 4000 in under six months – without los
ing customers or sales. This was not a negotiable decision.
I had recently joined the company at a very senior level
and found out a couple of weeks before the action date of
the program that it was my job to make this happen. It
was a really steep learning curve and an exposure to an
aspect of HR that I had not encountered before.
On a more positive I have also led successful cost reduc
tion and performance improvement projects that have min
imised or eliminated the need for large scale redundancies.
Getting HR involved
From these experiences, it is very clear that the chances of
success are significantly greater when there is full involve
ment by competent HR people in the early planning and
decision making. While it is the role of the board of direc
tors and executive management to focus on financial and
legal issues the implementation and longer-term success is
all about people.
The current crisis brings the HR function into focus.
It really is crunch time as corporate functions are criti
cally reviewed in the context of adding value. Past per
formance and contribution by the most senior HR
executive and of the entire HR team is reflected in their
level of involvement in any downsizing and retrenchment
exercise. Credibility, capability, reliability, responsive
ness, initiative and competence are taking on a very high
level of visibility.
Far too often HR people are dragged into the discussion
process well after the critical decisions have been made and
the way ahead locked into the executive mindset. After the
strategic planning people and the accounting and finance
team have finished the figures probably look good, but
potential disaster looms if the human factor is not addressed.
We have known for some time now that tough times
were coming. An effective proactive HR function would
have initiated action months ago to minimise possible neg
ative action. All the usual things would have been consid
ered – voluntary early retirement, hiring freeze, reduced
working hours, job sharing, long service leave, restrict
travel, salary freezes, and so on. Some may have looked at
an extended leave without pay option.
Re-skilling and skills upgrading longer serving employ
ees can be both difficult and rewarding. Then there is the
opportunity to facilitate the acquisition of new skills. We
frequently overlook the capability of people to learn,
develop and use new capabilities. I have seen people who
have become cynical bored employees – virtual deadwood
– change into excited, turned on, highly motivated out
standing performers. Their lives transformed as they dis
covered and mastered new competencies and challenges.
Taking the lead
Effective HR teams will have shown a lead in the identifi
cation of critical core competencies so if and when staff
reductions are necessary people with the essential capabil
ities are retained. They will also know which of the high
potential people are important to retain and which roles can
be eliminated or filled by outsourcing or by the use of
interim professionals or managers.
The effective proactive HR team will have reviewed
investment in training and development and will know
which programs really add value and which ones are just
being done because the training staff enjoy running them
or because they look good in the annual HR report or com
pany annual report.
HR will have worked with corporate affairs people and
the top management team to develop and introduce an
internal communication program that lacks the spin doc
tor stigma and has real credibility – one that does keep
people informed. They will have taken action to ensure
that all operating line managers have developed their com
munications skills so they can run departmental briefing
sessions, handle questions and have learnt how to listen
and to look for early warning signs of potential problems.
Effective HR teams will already be working on strate
gies to address the post termination slump in morale and
motivation, which are accompanied by high levels of anx
iety and the departure of high performing key staff. The
people left in employment after the redundancies are com
pleted are too often the neglected people. This applies at all
levels from the very senior, through middle management
to frontline employees. This requires honesty in commu
nication, understanding and a rebuilding of the trust. These
people remember that the big boss keep telling them that
they were the company’s most valuable asset. So why were
so many sacked?
A realistic look at delegated authorities – the ability to
enable people at all levels to be able to make decisions that
impact work performance – can be very productive. The
hidden costs of approval processes and associated docu
mentation, time delays, frustrations related to not being
able to do what is obviously beneficial nor to get any
prompt response to suggested action is both demoralising
The HR function continues to be in the firing line. The
current crisis provides an outstanding opportunity to show
real leadership. It is not too late. Even if the HR team has
failed to recognise the early warning signals and take pre
ventative action the can still redeem themselves. It is time
for bold, innovative action that will help protect people
and contribute to enterprise survival and future success.
Les Pickett is chief executive of the Pacific Rim Consulting Group and partner, Australia and South East Asia, for McBassi & Company